Impact investing in the US: trends and outlooks

October 2025  |  FEATURE | FINANCE & INVESTMENT

Financier Worldwide Magazine

October 2025 Issue

A growing desire among investors to contribute to measurable social and environmental benefits is driving the global rise of impact investing – a strategy that combines financial returns with positive societal outcomes.

This dual-purpose approach has gained traction among individuals, businesses and global leaders, transforming impact investing from a niche practice into a mainstream movement. According to Market US, the global impact investing market is projected to grow from approximately $377bn in 2024 to over $1.131 trillion by 2034, reflecting a compound annual growth rate (CAGR) of 11.6 percent over the forecast period.

In the US, the market is substantial. It was valued at around $136bn in 2024 and is expected to reach approximately $343.2bn by 2034, driven by a CAGR of 9.7 percent. Institutional investors dominate the sector, accounting for 63 percent of capital flow. This growth indicates a broader shift in investor priorities, where long-term sustainability and ethical considerations are increasingly influencing portfolio decisions.

“Philanthropy has long been at the forefront of impact investing – from pioneering early investments to shaping the broader field as it has expanded,” says Matt Onek, president and chief executive of Mission Investors Exchange. “We continue to see foundations and other mission-driven asset owners driving the evolution of the field, scaling their commitments, innovating across sectors and pushing the boundaries of what is possible.”

Mr Onek cites several foundations that are moving toward full mission-aligned investing. These include The California Endowment, which recently committed to aligning 100 percent of its $4bn in assets with its mission, alongside early pioneers such as the Heron Foundation, Mary Reynolds Babcock Foundation and The Nathan Cummings Foundation.

“Impact investing has the power to help create a more sustainable, equitable economy for all,” suggests Fran Seegull, president of the US Impact Investing Alliance. “The impact investing ecosystem is vast, encompassing a wide range of investor types, asset classes, impact themes, geographies and risk-return profiles. In the last two decades alone, it has evolved from a niche practice to a mainstream movement.”

Navigating risk and complexity

Despite its growth, impact investing faces notable challenges in regulation, impact measurement and risk management. The Rockefeller Philanthropy Advisors’ roadmap, ‘Impact Investing: An Introduction’, outlines several areas that can present difficulties for investors.

As with traditional investments, impact investments carry varying levels and types of risk. Pursuing dual objectives – financial return and social impact – adds complexity. Investors may also struggle with a limited supply of opportunities that offer both scale and meaningful impact, leading to frustration in deal sourcing and exit strategies.

Expertise gaps persist. Financial advisers often lack knowledge of social impact, while philanthropic advisers may be unfamiliar with financial instruments. This makes it difficult to assemble teams with the necessary cross-disciplinary skills. Bridging these gaps requires targeted education, collaborative training programmes and the development of hybrid advisory models that integrate both financial and social expertise.

Measurement remains a significant hurdle. Historically, financial and social impact operated in separate spheres, with distinct approaches and funding sources. Integrating these domains requires breaking down entrenched barriers and developing investor-specific assessment frameworks.

“One of the key challenges and opportunities in the impact investing field today is establishing clear, consistent and credible approaches to impact measurement and management (IMM),” concurs Mr Onek. “To that end, a growing number of organisations in our network are formalising their IMM practices to ensure transparency, accountability and learning.

“Foundations are working to aggregate meaningful data across diverse portfolios while still honouring the nuance of what success looks like in individual investments and communities,” he continues. “Ultimately, strong IMM is about continuous learning and improvement, enabling investors to refine their strategies and deepen the positive change their capital is intended to create.”

Delivering real-world outcomes

Ensuring the continued integrity and growth of the impact investing market – both in the US and globally – depends on clearly communicating the real-world outcomes that capital can achieve.

“From housing and renewable energy to community wealth building and technologies like artificial intelligence, investors are deploying capital in ways that address systemic challenges and catalyse broader transformation,” affirms Mr Onek. “Moreover, impact investing is poised to become even more multi-sectoral as foundations and other mission-driven asset owners, institutional investors and governments join forces to address urgent societal and environmental challenges.

“Through cross-sector partnerships, we can broaden access to investment capital, particularly for communities that historically have had fewer opportunities to participate in traditional financial systems. By creating more on-ramps for locally led solutions and mission-driven entrepreneurs, philanthropy can help strengthen community resilience and long-term success,” he adds.

Impact investing in the US is evolving rapidly, driven by institutional capital, philanthropic leadership and a growing commitment to measurable outcomes. As the market expands, addressing challenges in measurement, expertise and deal flow will be essential to ensuring that capital continues to generate meaningful and lasting social and environmental change.

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Fraser Tennant