Can capitalism be the solution for easing pressing social problems? These days, the concept of "impact investing" is all the rage among high-powered do-gooders. It's an emerging field that allows investors to make money and make a difference at the same time. The Rockefeller Foundation has spent some $40 million funding the kind of network needed to make impact investing possible--from supporting social entrepreneurs to developing new metrics. And it has put $140 million of its own endowment into impact investments.
National Journal's Sophie Quinton recently talked with Rockefeller Foundation President Judith Rodin about how private capital can help alleviate government budget pressures and address some of the challenges that weigh on our economy and society. Edited excerpts follow.
First things first: What is impact investing?
We hosted a conference in 2007 where the term was coined. It was to refer to investments that were designed to deliver both financial and social or environmental returns. Impact investors are making an active decision to invest in a company, or in a fund, for both profit and for social good.
Who — or what — are impact investors?
The most interest, so far, has been from large family wealth management companies, high-net-worth individuals, and pieces of funds that have a specific designation for double bottom-line returns. I think the field is starting to develop enough data that more people are going to come into the space. An early analyst report that we did with J.P. Morgan suggests that ultimately, if this continues to move and accelerate at the pace it is now, it could unleash somewhere between $400 billion and $1 trillion in capital markets. That's a long-term, optimistic analysis. But there are billions being invested right now.