What are the steps to developing a philanthropic impact investment strategy?

1 Define your impact thesis

Your impact thesis is a clear statement of what you want to achieve with your impact investments, why, and how. It should reflect your vision, values, and priorities as a philanthropist, as well as your financial objectives and constraints. Your impact thesis will help you identify the sectors, geographies, and themes that you want to focus on, as well as the impact metrics and indicators that you will use to measure your success.

2 Assess your portfolio and resources

Before you start making impact investments, you need to understand your current portfolio and resources, and how they align with your impact thesis. You can conduct a portfolio analysis to evaluate the financial performance, risk profile, liquidity, and diversification of your existing assets. You can also assess your non-financial resources, such as your network, expertise, influence, and time, and how they can support your impact investing strategy.

3 Select your impact investing approach

There are different ways to approach impact investing, depending on your level of involvement, risk tolerance, and expected returns. You can choose to invest directly in impact enterprises or funds, or indirectly through intermediaries or platforms. You can also decide whether you want to make impact-first or finance-first investments, or a combination of both. Impact-first investments prioritize social or environmental impact over financial returns, while finance-first investments seek market-rate or above-market returns with some impact.

4 Build your impact portfolio

Once you have selected your impact investing approach, you can start building your impact portfolio by sourcing, screening, and selecting potential investments that match your criteria. You can use various tools and frameworks to help you evaluate the impact potential and performance of different opportunities, such as the Impact Management Project, the GIIN's IRIS+ system, or the B Impact Assessment. You can also leverage your network and partners to find and access quality deals and co-investors.

5 Monitor and report your impact

After you have made your impact investments, you need to monitor and report your impact regularly to track your progress and learn from your experience. You can use the same tools and frameworks that you used for screening and selecting investments, as well as the impact metrics and indicators that you defined in your impact thesis. You can also collect feedback and stories from your investees and beneficiaries to capture the qualitative aspects of your impact. You should communicate your impact results and challenges to your stakeholders and peers, and use them to inform your future decisions.