Impact investors want a financial return and a measurable social or environmental outcome, which makes them neither donors nor conventional investors. That combination is the opportunity and the difficulty: a business delivering genuine impact can access capital that would otherwise be unavailable, but it must demonstrate both sides rather than choosing one.
Understanding what they measure explains how to approach them.
Impact capital is not a grant
The money is usually a loan or an equity investment expected to be repaid or returned, sometimes at below-market rates or on longer terms than commercial funding.
That means the business model must work commercially. An organisation dependent on continued donor funding is a grant recipient, not an investee, however valuable the work.
The impact must be measurable and intrinsic
Investors want outcomes that can be counted and verified: children reached, households connected, waste diverted, jobs created for a defined group. Statements of intent do not qualify.
The strongest position is where impact is produced by the business operating rather than alongside it. A company whose product is educational science kits creates impact by selling more, which is far more fundable than one doing unrelated community work on the side.
Where the capital comes from shapes the mandate
Impact funds raise from development finance institutions, foundations and institutional investors, many carrying transformation, gender or sector mandates. Those mandates can work in your favour if you fit one.
Find funds whose stated focus matches what you do rather than approaching every impact investor. A mismatched application is declined on mandate regardless of quality.
What applicants must have ready
A registered compliant entity with current annual returns at the Companies and Intellectual Property Commission, tax compliance, financial records, and impact data collected from the start rather than reconstructed.
Measurement has to be built into operations, because an investor must report it to their own funders. Free business planning support is available through the Small Enterprise Development and Finance Agency.
Frequently asked questions
How is impact investment different from a grant?
It is usually a loan or equity expected to be repaid or returned, so the business must work commercially.
What kind of impact do investors fund?
Measurable, verifiable outcomes produced by the business operating, rather than community work done alongside it.
Why does the fund’s own mandate matter?
Because impact funds raise from investors with transformation, gender or sector requirements, and mismatched applications are declined on mandate.
What must be in place before applying?
A compliant registered entity, financial records, and impact data collected from the start rather than reconstructed later.
Can a non-profit raise impact investment?
Only where it has a revenue model. Dependence on continued donor funding makes it a grant recipient rather than an investee.
Originally published in August 2018. Updated September 2026 to explain what impact investors fund and what applicants must demonstrate.
