Booth Partners with Wharton, HBS on Impact Investing Data

At Chicago Booth, the Rustandy is the destination for faculty, students, alumni, and leaders everywhere committed to tackling complex social and environmental problems. A central component of the Rustandy Center’s work is to catalyze social innovation, which includes social entrepreneurial ventures and the entities that fund them. The IFRC complements the center’s well-established impact investing programming, which comprises a suite of experiential learning opportunities for students. The Steven Tarrson Impact Investment Fund—one of the largest student-managed impact investing funds in the country—supports direct private investments in early-stage social impact companies and allows MBA students to network and gain real-world experience. Students can also participate in national impact investing competitions, pursue summer internships, and seek out programming or mentoring led by the Rustandy Center’s impact investor in residence Priya Parrish, ’09, an adjunct assistant professor of strategy at Booth and managing partner of private equity at Impact Engine. Last month, the Rustandy Center also published its first impact investing case study, examining a decade of place-based investment in Chicago’s historic Pullman neighborhood, as a valuable teaching tool for faculty and students interested in the field.

The IFRC data collection collaboration comes as impact investing is becoming an increasingly important part of the investment landscape, with individual and institutional investors seeking to combine private sector financing with the promise of achieving broader social and environmental aims.

“Investors around the globe are embracing impact investing as a way to leverage capital for social good, and with that shift comes interest in richer understanding of the field, which academic research can provide,” said Caroline Grossman, ’03, Rustandy Center executive director and adjunct assistant professor of strategy at Booth. “Booth’s Rustandy Center is happy to help bridge that gap in knowledge for faculty, students, investors, and anyone else interested in doing work that’s grounded in data, backed by research, and focused on maximizing social impact.”

The upswell in impact investing is evident from allocations of large institutions, foundations, development finance institutions, and family offices, as well as the increase in funds focusing on private and publicly held securities that seek to achieve both financial and social returns.

At the same time, many questions remain. For example, many impact investors assert that social and environmental benefits can be achieved without sacrificing financial performance, but there is little independent research to support or refute this claim. In addition, the way impact investments are structured to maximize efficacy is an important but open issue.

The IFRC is actively contacting impact investing firms, with hopes of building a large and representative sample of the sector within six months.

“The field of impact investing is developing, and the accelerating growth of impact funds makes now the perfect time to collect data on the industry,” said Jessica Jeffers, assistant professor of finance at Chicago Booth. “This partnership [with Harvard and Wharton] has the potential to provide access to fund-level goals and other quantitative metrics. And with access to more data, we hope, will come new evidence-based practices to guide the future of impact investing.” 

Jeffers has been instrumental in developing the database and has already leveraged data from the consortium. The research paper by Jeffers and co-authors, Contracts with (Social) Benefits: The Implementation of Impact Investing, sheds light on how impact gets incorporated into contracts and how it differs from traditional investments.