Tuesday, May 24, 2022
Last week, I had the great honor of serving as the keynote speaker for the Pennsylvania Bar Institute’s Nonprofit Conference. My presentation addressed the rise of impact investing or what is commonly referred to as the third-sector. In 2015, I published an article on impact investing in the University of Pennsylvania Journal of Business Law, and I have remained deeply interested in the area, largely because of its potential to address many of the world’s global problems, such as economic inequality and extreme poverty, racial injustice, human trafficking, and other crises.
A recent article in the Stanford Social Innovation Review addresses the likely trajectory of impact investing over the next 30 years. Interestingly, the authors note that a little over 10 years ago, JPMorgan, the Rockefeller Foundation, and the Global Impact Investing Network (GIIN) released a report estimating that impact investing would “reach between $400 billion and $1 trillion in assets under management by 2020,” which was viewed as doubtful. However, in 2020, the impact investing market reached $715 billion. With such an unexpected rise in only ten years, the authors decided to address how far the market might climb from 2020 to 2030. I was pleased to see they focused on the UN Sustainable Development Goals (SDGs) in their analysis. In my own work, I have emphasized the need to ensure philanthropic funds are directed towards those charities that are making the best measurable strides in terms of SDGs. The authors point out that there is a $2.5 trillion annual gap in funds necessary to achieve the SDGs by 2030. Clearly, traditional avenues and methods of charitable giving are unlikely to work. The authors go on to discuss how the COVID-19 pandemic has made it even more difficult to achieve the SDGs because governments were forced to shift resources and accumulate new debt in order to confront attendant challenges, including greater inequalities.
Hoffman Fuller Associate Professor of Tax Law
Tulane Law School