Impact Investing: Q and A With Jessica Jones

September 8, 2022

Many investors find themselves torn between a desire to create positive change in the world and the need to turn a profit. Jessica Jones, assistant professor in the Department of Management and Entrepreneurship at the University of Tennessee, Knoxville’s Haslam College of Business, says impact investing, one of her main research areas, offers opportunities to do both. Two papers Jones co-authored on the topic were published in the Journal of Business Ethics earlier this year. 

When and how did impact investing begin to take off?

Impact investing stems from the socially responsible investment (SRI) and corporate responsibility movements, which aim to consider social impact in investment decision making. In contrast, impact investing rests on the intentionality to generate positive, measurable social and environmental impact alongside a financial return. 

The term was coined by a multi-sector group of investors and philanthropists in 2008 with the goal of improving transparency of meaningful measures of impact. The Global Impact Investing Network (GIIN) reports annually on the market to date, best practices in standards and reporting, and ways to improve the sector. The 2020 Annual Impact Investor Survey estimates the current impact investing market at $715 billion.

What types of issues do impact investors typically target?

Impact investors can invest in diverse issues across various asset classes. Investors and investment organizations can establish their own inclusive definition of “impact.” Issues of impact include diversity and inclusion, climate change and capacity-building for marginalized populations. 

How can someone get started with impact investing?

First, ask yourself how you define impact and to what extent you prefer to control overseeing impact measurements. Once you’ve identified your impact preferences, you can pursue different ways of investing. 

If you have a retirement fund, one small step you can take is to ask your institutional investors about “impact-focused” investment portfolios. Other ways to pursue impact investing include crowdfunding platforms such as Wefunder or Crowdfund Mainstreet. Becoming a member of the GIIN or any local investment organizations are also possible next steps.

What risks are associated with impact investing?

Understanding the risk profile of the particular investment organization is critical to assessing the importance of financial returns. Some investors intentionally invest knowing they won’t generate a return (e.g., philanthropic organizations), while others pursue above market-rate returns (e.g., institutional investors in private equity funds).

It’s up to the investor to do due diligence not only on whether the organization can execute on its fiduciary duties but also how well it can achieve its intended impact. Take, for example, a women’s health organization that aims to reduce poverty by delivering health-related products to rural areas. While it’s possible to measure the output (how many products are delivered), it’s harder to measure the outcome (whether poverty is reduced).

What is one of your favorite impact investment success stories?

Acumen Fund, which was founded to close the gap between market-based financial approaches and the social impact of the philanthropic sector, invests in “patient capital” — typically philanthropically backed dollars in early-stage companies with longer time horizons. Acumen has invested more than $135 million all over the world and continues to provide the funding and capacity support that young ventures need for growth.


Stacy Estep, writer/publicist,