Bigger Scale

“Families and foundations are now putting capital behind it at a scale that matters,” said Adam Wolfensohn, managing director at New York-based Wolfensohn Fund Management and son of a former president of the World Bank, James Wolfensohn.

Adam Wolfensohn manages his family office’s impact-investment strategies, and his firm also runs a $250 million impact-oriented fund for investors. It’s invested in renewable energy and companies such as Ujjivan Financial Services, which lends to poor women in India.

Investing for both social and financial returns has been around for decades. The first U.S.-based socially responsible mutual fund started in 1952, according to researcher Morningstar Inc. The funds number 181 today and hold about $81 billion, Morningstar data show. Their returns have trailed the Standard & Poor’s 500 Index over the past 10 years through August, gaining 6.6 percent on average, compared with the S&P 500’s 8.4 percent annualized return.

‘Marketing Hype’

The phrase “impact investing” was coined in 2007, according to the Rockefeller Foundation. Proponents say it differs from socially responsible investing because people seek companies they think will make them money and improve society, rather than shun certain ones. The causes that impact investors have backed range from a water project in Africa to a venture capital fund with stakes in companies such as electric carmaker Tesla Motors Inc.

Many venture capitalists and money managers have invested for decades in startups or companies that aim to solve world problems but without the label, said Katherine Lintz, chief executive officer of Matter Family Office.

“Our concern is this marketing hype of everyone wanting impact in the name of their funds,” said Lintz, whose firm manages $2.7 billion for families. “The social impact should be looked at after the investment hits on all cylinders.”

Among the wealthy, investors include billionaires Omidyar, founder of online marketplace EBay Inc., and EBay’s first president Jeff Skoll. J.B. Pritzker announced last year that the J.B. and M.K. Pritzker Family Foundation was investing with Goldman Sachs Group Inc. to provide preschool education to children through loans.