Investing with Intention: The Rise of Impact in a Philanthropic World

The Oxford English Dictionary describes philanthropy as “the desire to promote the welfare of others, especially by the generous donation of money to good causes.” While charitable giving through traditional channels has been declining, most Canadians can still be considered philanthropic, with 54% making at least one charitable donation a year, according to Imagine Canada¹.

Increasingly, however, individuals and families are expanding their definition of doing good beyond giving money away, by proactively investing in ways that generate positive social and environmental outcomes. This growing field, known as impact investing, is not yet in the Oxford dictionary but is becoming an important part of the conversation in the family office world.

What is Impact Investing, really?

The Global Impact Investing Network (GIIN), the leading global authority, defines impact investing as:

Investments made with the intention to generate positive, measurable social and environmental impact, alongside a financial return.

That definition is important. It does not mean sacrificing returns, and it does not mean charity. It means aligning capital with values, guided by both intention and accountability.

For context, the global impact investing market is estimated at $1.57 trillion USD (GIIN, 2024)² and is growing rapidly. In Canada, SVX, a nonprofit financial services firm, estimates the domestic impact market at ~$15 billion CAD, primarily in private markets³.

ESG ≠ Impact

ESG was first popularized in 2004 and has since become a part of some institutional investing approaches. But like anything in 2025, it hasn’t escaped political polarization, particularly in the U.S. ESG is simultaneously accused of not going far enough and of going too far. Some call it “woke capitalism.” Others call it meaningless box-checking.

That is partly because ESG and impact are often mistaken for one another, yet they are not the same:

• ESG is primarily about managing risks. It asks whether a company is exposed to climate risk, social disruption, or potential governance failure.
• Impact investing is about generating outcomes. It asks whether the investment helps solve a problem.

The difference matters. Consider Silicon Valley Bank, once praised as a model of ESG leadership for its board diversity, sustainability policies, and support for startups. It appeared in multiple ESG ETFs, yet collapsed quickly, exposing serious governance and risk management failures. The lesson is clear: a high ESG score is no substitute for sound judgment or genuine impact.

Mapping the Landscape: From Financial to Philanthropic Capital

At Northwood Family Office, we often use a spectrum to help families understand the landscape, ranging from traditional financial investing at one end to full-scale philanthropy at the other, with ESG and impact investing occupying the middle ground.

Types of Impact Investments

Not all impact investments are created equal. Here are a few examples from across the spectrum:

For-Profit, Market-Rate Impact Funds

Impact funds take many forms, from broad-based, multi-theme vehicles to highly targeted, niche strategies. What they share is a clear commitment to generating measurable social or environmental outcomes alongside market-rate financial returns.

Examples include:

• Litigation Finance Fund: Invests in legal cases that advance environmental justice, Indigenous rights, and human rights, with returns generated through successful legal settlements.
• Women’s Empowerment Fund: Supports women-led enterprises and applies a gender lens across sectors such as financial inclusion, healthcare, and housing.
• Climate Innovation Fund: Backs early-stage technologies and ventures focused on decarbonizing the global economy.

Government-Backed or Outcome-Based Impact Investment

Beyond investing in impact-driven companies, there is a category of investments in which governments act as the outcomes payer. In these models, private capital funds a program or intervention upfront, and the government repays investors only if specific social outcomes are achieved.

• Social Impact Bonds (SIBs):

In a SIB, investors provide upfront capital to fund programs, often in areas such as housing, education, or health. Repayment is contingent on achieving agreed-upon results. If the targeted outcomes are met, such as fewer youth suspensions, reduced emergency room visits, or increased job placements, the government repays investors with a financial return.

• Outcomes Funds / Pay-for-Success Models:

Similar in structure to SIBs but often deployed at larger scale, these involve pooled capital invested across multiple projects. Governments or public agencies commit to paying for successful outcomes, aligning impact with accountability. The return profile is typically modest and tied to verified social or environmental performance.

These structures appeal to investors seeking measurable impact with low correlation to traditional markets. They are often supported by philanthropic or institutional capital that is willing to take on early-stage risk to help attract and secure government repayment.

How Have Impact Investments Performed?

While long-term data are still emerging, both global and Canadian reports show encouraging results. According to the GIIN and the 2025 SVX Impact Investment Trends Report, most impact investors report meeting or exceeding their financial expectations, with Canadian returns typically in the 2 to 8 percent range³. As the market matures, more families and institutions are recognizing that impact and performance can go hand in hand, although some impact-first strategies may accept lower returns in exchange for deeper, systemic change.

How Families Are Approaching It

There is no single strategy that works for every family. Some continue to focus primarily on traditional investing, with philanthropy as a separate stream. Others are shifting portions of their portfolio toward broad-based impact funds, while some prefer a closer alignment between their impact investments and their philanthropic goals, such as youth mental health, climate action, or Indigenous reconciliation.

It is important to acknowledge that impact investing is still a challenging space. The market is not yet scalable, much of it remains in private markets, and the pool of high-quality opportunities is still relatively small. This makes thoughtful strategy, careful due diligence, and trusted partnerships even more critical.

Looking Ahead

In a world shaped by urgent and visible challenges, from climate change to inequality to mental health, many families feel a growing responsibility to act. The constant flow of information through social media and news cycles makes these issues more immediate and personal. As a result, more families are seeking to align their capital with their values.

Impact investing is increasingly viewed as more than a passing trend and, for many, it is becoming an expectation, particularly among the next generation. It is reshaping how families think about stewardship, legacy, and what it means to invest well.

At its core, impact investing is about more than meeting a checklist of criteria. It is a movement grounded in the belief that capital can be a force for good, and that how we invest matters just as much as how we give.