Impact Investing: A Guide for Families with Assets
When Values and Value Creation Go Hand in Hand
Families with significant assets are increasingly asking how their wealth can serve both legacy and the common good. Impact investing, the practice of deploying capital to generate both measurable impact and financial returns, has existed for decades but has gained significant traction in recent years. This growth is driven by rising awareness of global challenges, such as climate change and inequality, access to better data and tools, and a broader recognition that neither markets or traditional philanthropy alone can solve systemic problems.
Traditionally, families focused their investments purely on financial return, expressing their values through separate philanthropic endeavors. Today, that paradigm is shifting. Families are increasingly looking for ways to integrate mission and meaning directly into their investment portfolios—ensuring that their capital works toward long-term, measurable impact while maintaining financial discipline. The Global Impact Investing Network (GIIN) estimates that global impact investing assets under management totaled approximately USD 1.6 trillion in 2024, growing at a 21 percent compound annual rate since 2019.
This movement takes on even greater importance amid one of the largest intergenerational transfers of wealth in history. As younger generations begin to take the helm, they bring a different mindset, one that prioritizes sustainability, equity and accountability alongside profit. For many of these “Rising Gen” leaders, the purpose of their family’s capital is as important as its growth. The task now is to demonstrate how impact investing fits within a family’s portfolio and ensure that this allocation is approached with the same rigor and governance as traditional investing, so that values and value creation can go hand in hand.
Pools of Capital
One way to bring this thinking to life is to think of assets as pools of capital along a continuum, recognizing that returns can take different forms—financial, societal, or both:
- Financial Returns Only – assets invested purely for profit, without a focus on societal return
- Impact Investing | Investment First, Impact Second – competitive financial returns as the priority, with some societal benefit
- Impact Investing | Impact First, Investment Second – societal impact as the priority, with lower financial returns expected
- Philanthropy – pure giving without expectation of monetary return, but with the aim of creating societal return
This framework helps families see that they don’t need to choose between growth and giving. Instead, they can allocate across multiple approaches, aligning different assets with their financial goals and values.
Another way families act across this continuum is by deciding what NOT to fund. The Rockefeller family, whose fortune was built through Standard Oil, has taken a stand by divesting its philanthropic endowments from fossil fuels. The Rockefeller Brothers Fund began shedding coal and tar sands in 2014, and the Rockefeller Foundation has since committed to eliminating fossil fuel holdings from its USD 5 billion endowment. This step may not be “impact investing” in the narrow sense, but it is a powerful form of alignment—putting capital where values are and refusing to support industries counter to long-term social and environmental goals.
Clarifying the Landscape
Families often ask how impact investing differs from other responsible investing approaches such as ESG or SRI. While the terms are sometimes used interchangeably, they serve different purposes. ESG (Environmental, Social, and Governance) refers to a set of metrics and disclosures that help investors evaluate a company’s practices, risks, and long-term performance. It is not an impact strategy on its own, but rather a framework for assessing how responsibly a company operates. Socially Responsible Investing (SRI) aligns portfolios with an investor’s values by screening out industries or companies deemed harmful, such as tobacco or weapons. Impact investing, by contrast, goes further: it deploys capital into companies or funds whose very business models are designed to create measurable positive social or environmental change.
Impact investing can be pursued through both large established fund managers—for example, TPG’s Rise Funds—and through specialized impact firms such as LeapFrog or Social Finance. This breadth gives families flexibility: they can work with familiar global platforms or with mission-driven specialists, depending on their goals and comfort level.
Learning from the Field
The following examples illustrate how different strategies along the continuum can succeed.
LeapFrog Investments: Scale, Impact, and Returns
Founded in 2007, LeapFrog is a global private equity firm that set out to demonstrate that underserved markets could deliver both impact and financial returns. Its portfolio companies generated USD 7.1 billion in revenues in 2024, with a compound annual growth rate of 22 percent over the life of the firm. These companies collectively reach 559 million people, including 403 million low-income emerging consumers, and support 33 million jobs through 24 million MSMEs (LeapFrog Impact Results 2024–25).
What makes LeapFrog stand out is its governance. It was the first global impact investor independently verified under the Operating Principles for Impact Management by BlueMark, earning an “Advanced” rating across all eight principles. The firm also uses its FIIRM framework (Financial, Impact, Innovation, Risk Management), which integrates both financial and societal metrics into quarterly reviews and ties them to team incentives.
Where it fits: LeapFrog demonstrates the power of investment-first, impact-second strategies, delivering competitive financial returns alongside meaningful societal returns at scale.
Social Finance: A Model for Families Learning as They Invest
There’s an entrenched mindset that investing exists to maximize returns, and that philanthropy exists to give money away. However, family offices and philanthropists are increasingly incorporating impact-first investing as a complement to traditional philanthropy. Impact-first investing allows individuals and families to back entrepreneurs that are using smart business models to create lasting change, and the ability to reinvest returns creates compounding impact.
– Tracy Palandjian, CEO and Co-Founder, Social Finance
Social Finance offers something different: it combines fund management with direct investment advisory services. A nonprofit and SEC-registered investment advisor, Social Finance has mobilized over USD 500 million since 2011 to improve outcomes in education, economic mobility, health, and housing.
Its Impact First Fund, launched in 2024, provides families exposure to investments that prioritize societal outcomes while targeting stable, modest financial returns to investors. The fund has supported high impact initiatives like Blackstar Stability, which helps families trapped in predatory home-financing arrangements convert them into safe, affordable mortgages; MAD Capital, a debt fund enabling farmers to transition to regenerative agriculture; and programs expanding access to childcare and rural development. These are complex, enduring challenges that demand long-term solutions and the steady commitment of patient capital.
Headquartered in the U.S. and connected to sister organizations in the U.K., the Netherlands, and Israel, Social Finance operates as part of a broader global effort to make impact investing more accessible, rigorous, and actionable for families worldwide. And for families new to the impact investing landscape, they offer programs like their Family Office Impact Investing Learning Series to help participants build the skills needed to evaluate opportunities, design portfolios, and measure societal outcomes.
Where it fits: Social Finance exemplifies the impact-first, investment-second approach, but its advisory capabilities distinguish it: families can engage not only as investors but also as learners and partners in building customized impact strategies.
A Note of Caution: The Collapse of Abraaj
Not every impact story is a success. At its peak, The Abraaj Group managed more than USD 14 billion in assets and launched a USD 1 billion healthcare fund for emerging markets. Yet weak governance and misuse of funds led to its 2018 collapse, with regulators imposing more than USD 300 million in fines and its founder personally penalized for fraud. As SRM Insights noted, the case illustrates how poor oversight can quickly erode both financial and societal returns.
Lesson for families: Even when pursuing impact, governance and transparency are non-negotiable.
Bringing It All Together
Impact investing offers families with assets a way to align wealth with purpose. But families do not need to pick a single spot on the spectrum. Many will, and should, allocate across it, choosing different approaches for different pools of capital. What matters most is intentionality, clarity, and governance. When structured well, impact investing becomes more than a portfolio allocation. It becomes part of a family’s legacy. It is a way to steward wealth not only for the next generation, but for the world that generation will inherit.
Sidebar: Questions Families Should Ask Before Investing for Impact
- What portion of our portfolio are we willing to place in each pool?
- How will we measure both financial and societal outcomes?
- Do we have governance structures and independent verification in place?
- How long are we prepared to wait for results, and how will we monitor progress?
—–
For more content, check out all of our Wingspan Insights
