Investing for Impact

62 Pages Posted: 16 May 2014 Last revised: 30 Dec 2017

See all articles by Bhagwan Chowdhry

Bhagwan Chowdhry

UCLA Anderson; Indian School of Business

Shaun Davies

University of Colorado at Boulder - Leeds School of Business

Brian Waters

University of Colorado, Boulder

Date Written: December 27, 2017


We study joint financing between profit-motivated and socially-motivated (impact) investors and derive conditions under which impact investments improve social outcomes. When project owners cannot commit to social objectives, impact investors hold financial claims to counterbalance owners' profit motives. Impact investors' ownership stakes are increasing in their value of social output, and pure nonprofit status may be optimal for the highest valued social projects. We provide guidance into the design of contingent social contracts such as social impact bonds and social impact guarantees.

Keywords: Impact Investing, Social Impact Bonds, Social Impact Guarantees, SRI, Sustainable Finance

JEL Classification: M14, O35, D86

Suggested Citation

Chowdhry, Bhagwan and Davies, Shaun and Waters, Brian, Investing for Impact (December 27, 2017). Available at SSRN: or

Bhagwan Chowdhry

UCLA Anderson ( email )

Los Angeles, CA 90095-1481
United States
310-825-5883 (Phone)
310-206-5455 (Fax)


Indian School of Business ( email )

Hyderabad, Gachibowli 500 032


Shaun Davies (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Brian Waters

University of Colorado, Boulder ( email )

1070 Edinboro Drive
Boulder, CO 80309
United States
3034921703 (Phone)

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