Chicago Booth’s Rustandy Center for Social Sector Innovation, the Harvard Business School Impact Collaboratory, and the Wharton Social Impact Initiative of the University of Pennsylvania’s Wharton School announced today the launch of the Impact Finance Research Consortium (IFRC), a joint effort to collect comprehensive data on impact investing funds. The IFRC’s key initiative is to build a database on the financial performance, due diligence practices, investor relations, legal governance, strategy, and management of impact investing funds across the world. The resulting Impact Finance Database (IFD) will catalyze groundbreaking research on this young but rapidly expanding field.
This effort comes as impact investing is becoming an increasingly important part of the investment landscape, with individual and institutional investors seeking to combine private sector financing with the promise of achieving broader social and environmental aims. The upswell in impact investing is evident from allocations of large institutions, foundations, development finance institutions, and family offices, as well as the increase in funds focusing on private and publicly held securities that seek to achieve both financial and social returns.
At the same time, many questions remain. For example, many impact investors assert that social and environmental benefits can be achieved without sacrificing financial performance, but there is little independent research to support or refute this claim. In addition, the way impact investments are structured to maximize efficacy is an important but open issue.
The Impact Finance Database builds on the Wharton Impact Research and Evaluation Database (WIRED), which was originally launched in 2014 by the Wharton Social Impact Initiative under the guidance of Professor David Musto and Vice Dean Katherine Klein.
Harvard Business School finance professor Shawn Cole said, “We are pleased to collaborate with Wharton and Chicago Booth on this effort. Both schools bring considerable resources and talent to this project. Quality data and rigorous research — on both financial and social returns — will not only dramatically advance conceptual understanding but aid actual practice in this space.”
The IFRC is actively contacting impact investing firms, with hopes of building a large and representative sample of the sector within six months.