Great Expectations: Mission Preservation and Financial Performance in Impact Investing

32 Pages Posted: 26 Jan 2016

See all articles by Jacob Gray

Jacob Gray

University of Pennsylvania - The Wharton School

Nick Ashburn

University of Pennsylvania - The Wharton School

Harry Douglas

University of Pennsylvania - The Wharton School

Jessica Jeffers

University of Chicago - Booth School of Business

David K. Musto

University of Pennsylvania - Finance Department

Christopher Geczy

University of Pennsylvania - The Wharton School, Finance Department

Date Written: October 7, 2015

Abstract

Over the past decade, limited partners have increased capital allocations to socially driven private equity funds with the goal to generate long-term impact alongside financial returns. To understand funds' abilities to meet these goals, we gather detailed mission and financial data from 53 impact investing private equity funds, representing 557 individual investments. In our sample we find that while fund managers are overwhelmingly optimistic about mission preservation, few exits have any contractual statements about preserving mission. Regarding financial performance, our set of market-rate-seeking funds achieved gross results comparable to non-impact investment options along a broad range of measures, suggesting it is possible to generate market returns as an impact fund.

Keywords: impact investing, private equity, venture capital, social impact, financial performance, mission preservation, gross performance, transactions, exits

JEL Classification: G12, G24, M14

Suggested Citation

Gray, Jacob and Ashburn, Nick and Douglas, Harry and Jeffers, Jessica and Musto, David K. and Geczy, Christopher Charles, Great Expectations: Mission Preservation and Financial Performance in Impact Investing (October 7, 2015). Available at SSRN: https://ssrn.com/abstract=2694620 or http://dx.doi.org/10.2139/ssrn.2694620

Jacob Gray (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Nick Ashburn

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Harry Douglas

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Jessica Jeffers

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

David K. Musto

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

Christopher Charles Geczy

University of Pennsylvania - The Wharton School, Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
(215) 898-1698 (Phone)
(215) 898-6200 (Fax)

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