Impact Investing Glossary

Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return — the GIIN definition that has become the industry standard. The term was coined in 2007 at a Rockefeller Foundation meeting at the Bellagio Center in Italy. GIIN's 2024 market sizing counted more than 3,907 organizations managing US$1.571 trillion in impact assets.

The largest global network of impact investors, launched in 2009 at the Clinton Global Initiative annual meeting after the 2007 and 2008 Bellagio meetings convened by the Rockefeller Foundation. It maintains the IRIS+ measurement system and publishes the field's benchmark market research. Amit Bouri, a co-founder, has served as CEO since 2015.

The requirement that an investor sets out to create social or environmental benefit before investing, rather than attributing impact after the fact. It is a necessary element of the GIIN definition and the first of GIIN's four Core Characteristics of Impact Investing (2019). Its presence is the clearest line between impact investing and ESG investing.

The test of whether an investment produced outcomes beyond what would have happened anyway. Paul Brest and Kelly Born defined it in a 2013 SSIR article as an increase in the quantity or quality of an enterprise's social outcomes beyond what would otherwise have occurred. It remains debated and is not part of GIIN's formal definition — a stricter criterion than the industry baseline.

A framework first published by Bridges Fund Management in 2013 and adopted by the G8 Social Impact Investment Taskforce report in 2014. It orders capital in five segments: financial-only, responsible, sustainable, impact, and impact-only (philanthropy). Impact investing sits between mainstream sustainable investing and pure philanthropy, and can target below-market through market-rate returns.

The practice of integrating environmental, social, and governance factors into investment decisions, primarily for risk management and value protection. ESG investing does not require an intention to create impact, and relies on ratings and disclosure standards rather than outcome measurement — the core distinction from impact investing (SSIR: ESG is not impact investing).

A free public system for impact measurement and management, developed and maintained by the GIIN. It includes a catalog of metrics, standardized Core Metric Sets, and a thematic taxonomy, with built-in mappings to the UN SDGs and alignment with the Five Dimensions of Impact.

A consensus framework asking five questions of any impact: What outcome occurs, Who experiences it, How Much (scale, depth, duration), Contribution (what changed beyond what would have happened anyway), and Risk (the chance impact differs from expectations). Developed by the Impact Management Project, it is now stewarded by Impact Frontiers.

A social and environmental performance certification for for-profit companies, issued by the nonprofit B Lab (founded 2006). The first 81 companies were certified in 2007; under the pre-2025 rules a company needed at least 80 points on the B Impact Assessment, legal stakeholder commitments, and recertification every three years. As of June 2026 there are more than 10,800 B Corps across 102 countries and 163 industries.

A legal corporate form — distinct from B Corp certification — that obliges directors to consider stakeholders alongside shareholders. Maryland passed the first US law in April 2010; Italy's Società Benefit (effective January 2016) made it the first European and second country worldwide to legislate. Unlike certification, the legal form requires no verified performance, usually only an annual benefit report.

B Lab's free online assessment of a company's overall social and environmental performance, covering five areas: Governance, Workers, Community, Environment, and Customers. Scoring at least 80 points was the certification threshold until B Lab's 2025 standards replaced the point total with mandatory requirements across seven impact topics.

A payment-by-results financing structure, not a conventional bond: investors fund a social service upfront, and government pays only if pre-agreed outcomes are achieved. The world's first, the 2010 Peterborough SIB in the UK, raised £5 million; reoffending fell 9% against a 7.5% target, and in 2017 the 17 investors were repaid with an annualized return of just over 3%.

Contracting in which payment is tied to verified social outcomes rather than services delivered. The SIB is its classic structure, with variants such as Development Impact Bonds. Korea's SK Group ran a private-sector version from 2015 — the Social Progress Credit program, which monetizes the social value social enterprises create and pays them in proportion.

Small, collateral-free loans and financial services for people excluded from banks, pioneered at scale by Grameen Bank (formally established 1983) using five-member solidarity groups; about 97% of Grameen's borrowers are women. The Microfinance Barometer 2019 counted roughly 140 million borrowers worldwide with a US$124 billion loan portfolio. Randomized trials find effects that are modestly positive, but not transformative.

Muhammad Yunus's model: a company created solely to solve a social problem, financially self-sustaining, in which investors take back only their principal and receive no dividends — profits stay in the company. Yunus codified it in seven principles. Grameen Danone (2006), a 50-50 joint venture producing fortified yogurt for undernourished Bangladeshi children, is the flagship case.

An organization that applies business models to a social mission — a broader category than Yunus's dividend-free social business, spanning nonprofits with earned income to profit-with-purpose companies. South Korea's Social Enterprise Promotion Act (January 2007) was among Asia's earliest special laws; certified enterprises there grew from 55 in 2007 to 3,701 by May 2024.

Long-horizon, high-risk-tolerance investment that puts social returns first and recycles repaid capital, sitting between philanthropy and market-rate investing. The concept was introduced by Jacqueline Novogratz, whose nonprofit venture fund Acumen (founded 2001) is willing to wait 10–15 years for returns while backing enterprises serving low-income communities.

Jed Emerson's proposition, developed in the late 1990s and 2000, that all organizations and capital create value as an inseparable blend of social, environmental, and economic elements. Set out in his 2003 California Management Review article, it is one of the most important theoretical foundations laid before the term impact investing existed.

Applying venture capital methods to philanthropy: highly engaged, long-term support of social purpose organizations through tailored financing, capacity building, and impact measurement (the EVPA definition). Omidyar Network (2004), which pairs an LLC with a foundation so it can both invest and grant, is a prominent structural example later copied by others.

US institutions with a primary mission of financing underserved urban and rural communities, established as a statutory category by the 1994 Riegle Community Development and Regulatory Improvement Act, which also created the CDFI Fund under the US Treasury. Certified forms include banks, credit unions, nonprofit loan funds, microloan funds, and venture funds.

The global body founded in August 2015 by Sir Ronald Cohen to succeed the G8 Social Impact Investment Taskforce, whose 2014 report he chaired. It develops a network of National Advisory Boards across countries and was later renamed GSG Impact. Taiwan's TIIA connects to this lineage, having begun preparations after a 2018 GSG workshop in Seoul.

Long-unclaimed bank balances redirected by law into social investment. The UK's 2008 Dormant Bank and Building Society Accounts Act seeded Big Society Capital (2012) with £400 million of dormant-account money plus £200 million from four banks. Japan followed with its 2016 dormant deposits law, channeling a net of roughly 70 billion yen a year into public-interest activities from 2019.

A model in which paying customers subsidize free or discounted service for those who cannot pay. The classic case is Aravind Eye Hospital (founded 1976 in Madurai, India, with 11 beds): more than half its patients are treated free or at heavily subsidized rates, yet standardized processes and volume — over 720,000 eye surgeries a year — keep it financially self-sufficient.

Marketing investments or businesses as impactful without the intent, measurement, or substance to back the claim. GIIN published its four Core Characteristics in 2019 partly to guard against it. The B Corp world illustrates the pressure: over 20 B Corps protested Nespresso's 2022 certification, and top scorer Dr. Bronner's dropped its certification in 2025, calling the standards too weak on supply chains.

Deploying a foundation's endowment principal — not just its annual grant budget — into investments that seek both mission impact and financial return. The landmark commitment came in April 2017, when the Ford Foundation announced up to US$1 billion over 10 years from its roughly US$12 billion endowment, then the largest MRI pledge in private-foundation history.

A regulated venue where social organizations raise capital from the public. India's SEBI created SSE segments on the NSE and BSE in 2022, including zero-coupon zero-principal instruments — legally securities, economically regulated donations; SGBS Unnati Foundation became the first listed NPO in December 2023. The concept traces to IIX, founded in Singapore in 2009 by Durreen Shahnaz.