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Finance or philanthropy? Exploring the motivations and criteria of impact investors

Philip Roundy (Department of Marketing and Entrepreneurship, University of Tennessee at Chattanooga, Chattanooga, Tennessee, USA)
Hunter Holzhauer (Department of Finance, University of Tennessee at Chattanooga, Chattanooga, Tennessee, USA)
Ye Dai (Department of Management, Southern Illinois University Carbondale, Carbondale, Illinois, USA)

Social Responsibility Journal

ISSN: 1747-1117

Article publication date: 7 August 2017




The growing prevalence of social entrepreneurship has been coupled with an increasing number of so-called “impact investors”. However, much remains to be learned about this nascent class of investors. To address the dearth of scholarly attention to impact investing, this study seeks to answer four questions that are central to understanding the phenomenon. What are the defining characteristics of impact investing? Do impact investors differ from traditional classes of investors and, if so, how? What are the motivations that drive impact investment? And, what criteria do impact investors use when evaluating potential investments?


A partially inductive study based on semi-structured interviews with 31 investors and ethnographic observation was conducted to explore how impact investors differ from other classes of investors in their motivations and unique criteria used to evaluate ventures seeking investment.


This study reveals that impact investors represent a unique class of investors that differs from socially responsible investing, from other types of for-profit investors, such as venture capitalists and angel investors, and from traditional philanthropists. The varied motivations of impact investors and the criteria they use to evaluate investments are identified.


Despite the growing practitioner and media attention to impact investing, several foundational issues remain unaddressed. This study takes the first steps toward shedding light on this new realm of early-stage venture investing and clarifying its role in larger efforts of social responsibility.



Roundy, P., Holzhauer, H. and Dai, Y. (2017), "Finance or philanthropy? Exploring the motivations and criteria of impact investors", Social Responsibility Journal, Vol. 13 No. 3, pp. 491-512.



Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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