Social impact investing finance (or Impact Investing) includes a wide range of investment strategies that aim to allocate financial resources to projects, companies and funds that aim to generate social benefits compatible with the economic return to be provided to the investor. It has, therefore, the dual objective of producing positive changes in the lives of the beneficiaries involved in the intervention (in terms of responding to needs, knowledge, attitudes, living conditions, values) and generating positive returns for investors.
The impact investments are characterized by the coexistence of five dimensions:
• the investor’s intention to generate a social impact;
• the expectation of an economic return that motivates the investor;
• the flexibility of the expected rate of return, which can be below the average market level or align with market returns;
• the variety of financial instruments used and forms of intervention ranging from debt to pure equity (fixed income securities, private equity, public equity, real assets, hybrid instruments);
• the measurability of the impact, fundamental to ensure transparency and accountability.
Social impact finance therefore promotes experimentation with results-oriented multi-stakeholder intervention models: these are highly innovative projects, aimed at generating measurable benefits to which a precise financial value can be associated, approximate in terms of future savings compared to current levels of expenditure for the provision of services.
Adherence to the model of impact finance requires overcoming the paradigm that sees the financial world, public administrations and the social economy interested in different and parallel areas of intervention: adherence to this model in fact generates mutual benefits for the different actors (banks, pension funds, financial advisors, financial asset managers, family offices, corporate enterprises, philanthropic bodies, public sector, social enterprises and Third Sector organizations) of the socio-economic ecosystem in which it is embedded. The adoption of impact investing models can therefore support a virtuous evolution of financial markets, with positive repercussions for the different economic and social agents of society: improving the efficiency and effectiveness of public spending for welfare services, strengthening and developming social entrepreneurship, and allocating new resources towards investments in areas not considered of interest by traditional investors.