March 19, 2018

Impact Investing Under the Uniform Prudent Investor Act

Casey C. Clark and Andy Kirkpatrick

Impact investing is a process designed to align environmental, social, governance, and faith-based goals with an investment portfolio. Most impact investing is done by endowments and foundations, whose dual mind-set (financial returns and social values) is part of their mission-related cultures. Families and trust beneficiaries, however, are increasingly interested in being more thoughtful with their investment capital, and three converging trends are making it easier for investors to implement impact investment programs that deliver competitive returns: an increase in data available to support investors, a shift from negative to positive screening, and the proliferation of investment options across asset classes and international borders. Impact investing in the United States now represents $8.72 trillion, or one-fifth of all investments under professional management. Impact Investing, Entering the Golden Age, Glenmede Annual Review (2016), citing SIF Foundation, Report on Sustainable, Responsible and Impact Investing Trends. The authors expect this trend to accelerate.

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