Accredited Investor Regulatory
An individual or entity meeting SEC wealth or income thresholds (e.g., $1M net worth or $200K annual income) to participate in private securities offerings. Accreditation enables access to impact investment opportunities not available to the general public.
Additionality Impact
The positive outcomes that would not have occurred without a specific investment or intervention. A core principle in impact investing that asks: "What change did this investment uniquely enable?"
Angel Investor
A high-net-worth individual who provides capital to early-stage companies in exchange for equity or convertible debt. Impact angels specifically seek investments aligned with social or environmental objectives.
AUM (Assets Under Management)
The total market value of assets that an investment company or fund manages on behalf of investors. Global impact investing AUM reached $1.57 trillion in 2024.
B Corporation (B Corp) Certification
A certification issued by B Lab to companies that meet rigorous standards of social and environmental performance, accountability, and transparency. B Corps legally commit to stakeholder governance.
Benefit Corporation
A legal corporate structure (available in 36+ US states) that requires directors to consider impact on all stakeholders, not just shareholders. Different from B Corp certification.
Blended Finance Structure
The strategic use of development finance and philanthropic funds to mobilize private capital for sustainable development. Combines grants, concessional loans, and market-rate investments.
Bottom of the Pyramid (BoP)
The largest but poorest socioeconomic group, typically those earning less than $2.50/day. Impact investments often target BoP populations through affordable products and services.
Catalytic Capital Structure
Patient, risk-tolerant, and concessionary capital that accepts below-market returns to generate positive social or environmental impact and/or to unlock additional investment.
CDFI (Community Development Financial Institution)
Private financial institutions dedicated to delivering responsible, affordable lending to underserved communities. CDFIs are certified by the U.S. Treasury Department.
Concessionary Capital
Investment capital that accepts below-market financial returns in exchange for greater social or environmental impact. Often used as first-loss capital in blended finance structures.
CSR (Corporate Social Responsibility)
A business model where companies integrate social and environmental concerns into operations and stakeholder interactions. Distinct from ESG, which focuses on investment criteria.
DFI (Development Finance Institution)
Government-backed financial institutions that invest in private sector projects in developing countries. Examples include IFC, CDC, DEG, and OPIC/DFC.
Double Bottom Line
A business framework measuring success by both financial performance and social impact. Extended to "Triple Bottom Line" when environmental impact is added.
Due Diligence
The comprehensive investigation and analysis of a potential investment before committing capital. Impact due diligence adds assessment of social/environmental claims and impact measurement systems.
ESG (Environmental, Social, Governance) Framework
A set of non-financial factors used to evaluate corporate behavior and sustainability risks. ESG integration considers these factors alongside traditional financial analysis.
Exit
The method by which an investor realizes returns from an investment, typically through IPO, acquisition, secondary sale, or buyback. Impact investors may also consider "impact exits" to mission-aligned buyers.
First-Loss Capital Structure
A tranche of capital that agrees to absorb initial losses before other investors, reducing risk for senior capital providers and enabling investments that might not otherwise occur.
Financial Inclusion
Ensuring that individuals and businesses have access to useful and affordable financial products and services. A major impact investing theme, as 1.7 billion adults remain unbanked.
GIIN (Global Impact Investing Network) Organization
The leading nonprofit organization dedicated to increasing the scale and effectiveness of impact investing. GIIN maintains IRIS+ standards and produces industry research.
GIIRS (Global Impact Investing Rating System)
A comprehensive impact rating system that assesses companies and funds on social and environmental impact, similar to credit ratings for impact.
Green Bonds
Fixed-income instruments where proceeds are exclusively used to finance projects with environmental benefits, such as renewable energy, clean transportation, or sustainable buildings.
Greenwashing
The practice of making misleading claims about the environmental or social benefits of a product, service, or investment. A significant concern in impact investing requiring rigorous verification.
Impact Investing Core
Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Characterized by intentionality, measurement, and additionality.
Impact Measurement & Management (IMM)
The systems and processes used to measure, assess, and manage the social and environmental effects of investments. Includes setting targets, collecting data, and reporting outcomes.
Impact Thesis
A statement articulating what positive change an investor or company intends to create, for whom, and through what mechanism. The foundation of intentional impact investing.
IMP (Impact Management Project)
A forum that built global consensus on how to measure and manage impact. Introduced the "five dimensions of impact" framework: What, Who, How Much, Contribution, Risk.
IRIS+ Framework
The generally accepted system for measuring, managing, and optimizing impact, managed by the GIIN. Provides standardized metrics, thematic frameworks, and evidence-based guidance.
L3C (Low-Profit Limited Liability Company)
A hybrid legal structure combining characteristics of for-profit LLCs and nonprofits. Designed to attract private investments and foundation PRIs for socially beneficial purposes.
LTV (Lifetime Value)
The total value a customer provides to a business over the entire relationship. In impact, "Impact LTV" may consider the cumulative social value created per beneficiary.
MRI (Mission-Related Investment)
Investments from a foundation's endowment that align with its charitable mission while seeking market-rate returns. Different from PRIs which may accept below-market returns.
Microfinance
Financial services (credit, savings, insurance) provided to low-income individuals or small businesses who lack access to traditional banking. A foundational impact sector.
Outcome
The changes that result from outputs—e.g., improved health, increased income, reduced emissions. Outcomes represent the actual impact on stakeholders' lives or environment.
Output
The direct, tangible results of activities—e.g., number of people trained, loans disbursed, or solar panels installed. Outputs are the immediate deliverables, not the ultimate impact.
Patient Capital
Long-term investment capital that accepts extended time horizons for returns, allowing social enterprises to scale impact before achieving profitability.
Pay for Success (PFS) / Social Impact Bond
A results-based financing mechanism where private investors fund social programs and government pays based on achieved outcomes. Also called Social Impact Bonds (SIBs).
PRI (Program-Related Investment) Structure
Investments made by foundations to advance charitable purposes. PRIs may accept below-market returns and count toward the 5% annual distribution requirement.
PRI (Principles for Responsible Investment)
UN-supported network of investors committed to incorporating ESG factors into investment decisions. Over 5,000 signatories representing $120+ trillion in AUM.
SDGs (Sustainable Development Goals) Framework
The 17 global goals adopted by the UN in 2015 to end poverty, protect the planet, and ensure prosperity for all by 2030. A common framework for categorizing impact investments.
Social Enterprise
A business that prioritizes social or environmental mission alongside financial sustainability. Social enterprises reinvest profits primarily to advance their social objectives.
SROI (Social Return on Investment) Metric
A framework for measuring and accounting for social value created by an organization. Expressed as a ratio of social value to investment (e.g., $3.50 social return per $1 invested).
Stakeholder
Any party affected by an organization's activities, including employees, customers, communities, suppliers, shareholders, and the environment. Impact investing considers all stakeholders.
Theory of Change (ToC) Framework
A comprehensive description of how and why desired change is expected to happen. Maps the causal pathway from inputs and activities through outputs and outcomes to impact.
Triple Bottom Line (TBL)
An accounting framework measuring organizational success across three dimensions: People, Planet, and Profit (social, environmental, and financial performance).