In theory, impact investments are investments made into organizations, companies, or funds to contribute to measurable positive social or environmental change while also yielding a return. Still, many impact-curious family office investors question whether achieving a measurable positive impact goes hand-in-hand with returns or if they’ll have to sacrifice these earnings for the greater good.

The answer is complex and multi-faceted. According to impact investment researcher and advisor Rachael Browning, “It is stuck in both the old way of perceiving ‘returns’ and the hope for doing things better in future, in a world that desperately needs ambitious impact-driven capital.” Drawing a conclusion thus requires an in-depth understanding of the various facets of impact investment.

This is the first article in a four-part series. It examines how the definition of impact investment has evolved, how assessing impact-based returns differs from traditional risk-return models and how investment theory doesn’t always reconcile with reality.

By the end of the series, the hope is that family offices will have a comprehensive view of the impact investment universe as well as the ability to identify where their priorities lie within this space.

The “space between”

For many in the family office and financial space, the concept of impact investing falls somewhere between philanthropy and classic investing. A notion from which the understanding of impact investments has evolved.

Of course, this understanding always necessitates a comparison between philanthropy and investing. After all, it seems almost obligatory that the “space between” these two disciplines must involve some degree of return sacrifice to achieve a meaningful degree of impact. This reasoning stems from traditional risk and return models.

Read the rest of Francois Botha‘s article here at Forbes