Impact-linked finance: what do we know about it so far?

Investing for Good has published a new report on impact-linked finance, exploring the practice of linking financial incentives to the creation of impact.

The report (A review of impact-linked finance: does incentivising impact work?) by Investing for Good, and commissioned by Esmée, provides a global review of impact-linked finance and explores the potential for adaptability for the UK social and impact investment market.

What is impact-linked finance?

Key market-builder Roots of Impact define impact-linked finance as "the linking of financial rewards for market-based organisations to the achievements of positive social outcomes."

Findings from the review demonstrates that impact-linked finance can be a powerful tool in the construction of investor / investee alignment, which enables the creation of long-term sustainable impact delivery. Whilst this study has an investor focus, the next step is to develop more understanding of the demand from investees for this tool.

The study was launched in June 2021 with an event which welcomed over 200 registered participants from across the globe, a further demonstration of the level of interest in the topic.

Learn more

We have been trialling impact-linked finance as part of our impact-first approach to social investment. You can learn more about our impact-first approach in a blog for Social Enterprise UK.

SASC housing fund - P3 charity

Social Investment

We believe that social investment is a powerful and financially sustainable tool we use, alongside grants and our own actions, to achieve our impact goals. Learn more about our approach to social investment.

  • FairforYou_2.jpg

    How our impact-first approach led us to our first Perpetual Bond

    We share our learning from our social investment into Fair for You and our first Perpetual Bond along with how it could open up finance options for social purpose organisations looking for equity-like investment.

    Read more
  • Social-Change-Home-Page-Highlight_560x560px.jpg

    Insights in Brief: Social Investment and COVID-19

    A new report sharing what we've learned from our social investments in light of Coronavirus, and how we could use this to inform the stages of rescue, recovery and revival.

    Read more
  • Insights from 10 years of social investment

    Evolution not revolution, 10 years of social investment

    To mark the 10th anniversary of our Social Investment Fund, we’ve written a report reflecting on the achievements, insights and lessons learned to date.

    Read more
Latest

You might be interested in

  • JustRight Scotland-Roots of Refuge community event (June 2023)

    Pre-application Q&A webinar: 13 May 2024

    Watch a pre-application Q&A webinar we held on 13 May for organisations interested in applying to Esmée for support who have questions about our application process and guidance.

    Read more
  • Sunset on a reservoir as viewed through reeds.

    Increasing Funding Plus support for wellbeing

    We are committed to targeting more Funding Plus support towards preventing burnout and improving wellbeing for the people we fund.

    Read more
  • SharpFutures Content Creatives group at The Sharp Project - copyright SharpFutures

    Esmée’s allocation to social investment increased to £60m

    We are delighted to announce that Esmée Fairbairn Foundation is increasing our allocation to social investment to £60m.

    Read more