How impact investing funds invest in social-purpose organizations: A cross-country comparison

Impact investing funds (IIFs) are a type of investment fund that aims to achieve both financial and social goals, and they have become a valuable resource for social purpose organizations (SPOs) seeking capital. Our research evaluates the investment process by comparing approaches in two countries, Italy and Australia. We conducted semi-structured interviews with 9 IIFs and 12 SPOs and used the Gioia Methodology to conduct the data analysis. We found both similar features and divergences. The investing process by IIFs in Australia is conservative, more risk averse and more profit-oriented with a predominant “finance-first” strategy. By contrast, in Italy there is a clear preference for “impact-led” investment. We argue this illustrates a fundamental difference in investment philosophy and that IIFs in the two countries navigate, interpret, and understand the field of impact investment in contrasting ways. Finally, we contribute to the growing literature on impact investing by putting forward an “ideal” impact investment process that respects the integrity and peculiarities of the Social Impact Investment approach.