Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      Impact Investing: A Theory of Financing Social Entrepreneurship
      09 Mar 2020Working Paper Summaries

      Impact Investing: A Theory of Financing Social Entrepreneurship

      by Benjamin N. Roth
      The author provides a formal definition of organizational sustainability and characterizes the situations in which a social enterprise should be sustainable. The analysis then delineates when an investment in a social enterprise delivers superior impact to a grant.
      LinkedIn
      Email

      Author Abstract

      I present a model of financing social enterprises to delineate the role of impact investors relative to “pure” philanthropists. I characterize the optimal scale and structure of a social enterprise when financed by grants and when financed by investments. The analysis yields two heuristics to guide impact investors. First, investments allow a financier to discipline inefficient spending. Second, investments may enable a social enterprise to exploit new opportunities for profit and may increase the enterprise’s scale relative to when grant financed. I quantify these heuristics for the case of Husk Power, a social enterprise that has received impact investment.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: February 2020
      • HBS Working Paper Number: HBS Working Paper #20-078
      • Faculty Unit(s): Entrepreneurial Management
        Trending
          • 19 Jan 2021
          • In Practice

          Leadership Advice for Biden: Restore a Sense of Calm

          • 29 Oct 2020
          • Research & Ideas

          The COVID Gender Gap: Why Fewer Women Are Dying

          • 13 Jul 2020
          • Research & Ideas

          Merck CEO Ken Frazier Discusses a COVID Cure, Racism, and Why Leaders Need to Walk the Talk

          • 18 Jan 2021
          • Book

          How Thinking Like a Startup Helps Governments Solve More Problems

          • 25 Feb 2019
          • Research & Ideas

          How Gender Stereotypes Kill a Woman’s Self-Confidence

      Benjamin N. Roth
      Benjamin N. Roth
      Assistant Professor of Business Administration
      Contact
      Send an email
      → More Articles
      Find Related Articles
      • Social Entrepreneurship
      • Investment
      • Finance
      • Mathematical Methods
      • Institutional Investing
      • Financial Services

      Sign up for our weekly newsletter

      Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
      ǁ
      Campus Map
      Harvard Business School Working Knowledge
      Baker Library | Bloomberg Center
      Soldiers Field
      Boston, MA 02163
      Email: Editor-in-Chief
      →Map & Directions
      →More Contact Information
      • Make a Gift
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      • Digital Accessibility
      Copyright © President & Fellows of Harvard College