Impact Investing Is Turning Mainstream, Report Finds

Impact investing is becoming more mainstream as larger, institutional asset owners drive more money into the sector, according to the nonprofit Global Impact Investing Network in New York.

In the GIIN’s State of the Market 2024 report, published late last month, researchers found that assets allocated to impact-investing strategies by repeat survey responders grew by a compound annual growth rate (CAGR) of 14% over the last five years.

These 71 responders to both the 2019 and 2024 surveys saw their total impact assets under management grow to US$249 billion this year from US$129 billion five years ago.

Medium- and large-size investors were largely responsible for the strong impact returns: Medium-size investors posted a median CAGR of 11% a year over the five-year period, and large-size investors posted a median CAGR of 14% a year.

Interestingly, the CAGR of assets held by small investors dropped by a median of 14% a year.

“When we drill down behind the compound annual growth of the assets that are being allocated to impact investing, it’s largely those larger investors that are actually driving it,” says Dean Hand, the GIIN’s chief research officer.

Overall, the GIIN surveyed 305 investors with a combined US$490 billion under management from 39 countries. Nearly three-quarters of the responders were investment managers, while 10% were foundations, and 3% were family offices. Development finance institutions, institutional asset owners, and companies represented most of the rest.

The majority of impact strategies are executed through private-equity, but public debt and equity have been the fastest-growing asset classes over the past five years, the report said. Public debt is growing at a CAGR of 32%, and public equity is growing at a CAGR of 19%. That compares to a CAGR of 17% for private equity and 7% for private debt.

According to the GIIN, the rise in public impact assets is being driven by larger investors, likely institutions.

Private equity has traditionally served as an ideal way to execute impact strategies, as it allows investors to select vehicles specifically designed to create a positive social or environmental impact by, for example, providing loans to smallholder farmers in Africa or by supporting fledging renewable energy technologies.

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But today, institutional investors are looking across their portfolios—encompassing both private and public assets—to achieve their impact goals.

“Institutional asset owners are saying, ‘In the interests of our ultimate beneficiaries, we probably need to start driving these strategies across our assets,’” Hand says. Instead of carving out a dedicated impact strategy, these investors are taking “a holistic portfolio approach.”

An institutional manager may want to address issues such as climate change, healthcare costs, and local economic growth so it can support a better quality of life for its beneficiaries.

To achieve these goals, the manager could invest across a range of private debt, private equity, and real estate.

But the public markets offer opportunities, too. Using public debt, a manager could, for example, invest in green bonds, regional bank bonds, or healthcare social bonds. In public equity, it could invest in green-power storage technologies, minority-focused real-estate trusts, and in pharmaceutical and medical-care company stocks with the aim of influencing them to lower the costs of care, according to an example the GIIN lays out in a separate report on institutional strategies.

Influencing companies to act in the best interests of society and the environment is increasingly being done through such shareholder advocacy, either directly through ownership in individual stocks or through fund vehicles.

“They’re trying to move their portfolio companies to actually solving some of the challenges that exist,” Hand says.

Although the rate of growth in public strategies for impact is brisk, among survey respondents investments in public debt totalled only 12% of assets and just 7% in public equity. Private equity, however, grabs 43% of these investors’ assets.

Within private equity, Hand also discerns more evidence of maturity in the impact sector. That’s because more impact-oriented asset owners invest in mature and growth-stage companies, which are favoured by larger asset owners that have more substantial assets to put to work.

The GIIN State of the Market report also found that impact asset owners are largely happy with both the financial performance and impact results of their holdings.

About three-quarters of those surveyed were seeking risk-adjusted, market-rate returns, although foundations were an exception as 68% sought below-market returns, the report said. Overall, 86% reported their investments were performing in line or above their expectations—even when their targets were not met—and 90% said the same for their impact returns.

Private-equity posted the strongest results, returning 17% on average, although that was less than the 19% targeted return. By contrast, public equity returned 11%, above a 10% target.

The fact some asset classes over performed and others underperformed, shows that “normal economic forces are at play in the market,” Hand says.

Although investors are satisfied with their impact performance, they are still dealing with a fragmented approach for measuring it, the report said. “Despite this, over two-thirds of investors are incorporating impact criteria into their investment governance documents, signalling a significant shift toward formalising impact considerations in decision-making processes,” it said.

Also, more investors are getting third-party verification of their results, which strengthens their accountability in the market.

“The satisfaction with performance is nice to see,” Hand says. “But we do need to see more about what’s happening in terms of investors being able to actually track both the impact performance in real terms as well as the financial performance in real terms.”

Even as the world increasingly moves toward digitised commerce, where transactions are conducted with the tap of a credit card and billions of dollars are moved electronically between banks, there is one group of people for whom hard cash is still king: collectors.

As an alternative asset class, collectible banknotes offer significant potential value to investors, and the market for these paper artefacts is thriving. Aris Maragoudakis , director of world currency auctions at Stack’s Bowers Galleries in Costa Mesa, Calif., estimates the hobby sees annual trade of well over $500 million globally.

In fiscal year 2016, the World Paper Money department at Stack’s recorded about $4 million in sales. By fiscal year 2024, this figure had risen to $14.5 million. The company reported an 18% increase in sales for world paper money (which doesn’t include U.S. paper-money numbers) in fiscal year 2023, followed by 25% growth in fiscal year 2024.

Elsewhere, the Noonans Mayfair London realised £5 million, or about $6.5 million, in world banknote sales in 2023, up from £2.5 million the previous year, a representative said.

The rise of digital technology has helped broaden the base of collectors. Online auctions, forums and databases have made it easier for collectors to connect, trade and research. Greater access to information about collectible money, as well as to collectible banknotes themselves, have transformed the hobby from a game of chance to a strategic pursuit where enthusiasts can actively search for and acquire valuable pieces.

“The advent of social media such as Instagram and WhatsApp have brought in a spate of new collectors, especially youngsters,” says Rezwan Razack , a specialist in vintage banknotes and chairman of the Indian chapter of the International Bank Notes Society, or IBNS.

While social media has made more people aware of older paper currencies and their histories, the declining use of physical banknotes has made them even more alluring and fascinating to collectors.

Where is the value?

Banknotes routinely become obsolete due to political shifts, security upgrades, monetary policies and technological advancements. The question is: Which ones are worthy possessions?

A plethora of factors underpin the desirability of collectible paper money. The major ones are:

• Condition: The condition of a piece can have a significant impact on its value. “There are bills that sell for $1,000 with a fold or two, but finding one free of any folds, stains, or tears could be worth several times that,” says Maragoudakis.

The condition of a bill is evaluated based on a 30-point scale ranging from poor to uncirculated crisp. Within each condition, a bill is given a number grade; a higher number—on a scale typically from 1 to 70—means the banknote is in better shape.

For example, a 10,000-yuan note issued in 1951 by the People’s Bank of China, graded Very Fine 20, sold for $150,000 at a Stack’s Bowers auction. Three years later at another Stack’s Bowers auction, a similar note in better condition, graded Almost Uncirculated 50, fetched $358,500.

• Serial number : Banknotes with striking serial numbers are often worth more to collectors than those without. On eBay, a rare polymer £20 bill with the serial number AA44 444444 received 16 bids and sold for more than £317.

A set of four exceptionally rare Chinese 1953 10 yuan notes from the People’s Bank of China recently sold for $432,000 because in addition to their quality, they were consecutive in serial number.

• Scarcity : The appeal and worth of banknotes, as with other collectibles, are often tied to their rarity.

For instance, high-value banknotes were often printed in limited quantities due to their significant purchasing power, says Hakim Hamdani , director at large and a collector at the Netherlands branch of the IBNS. When these high-denomination notes are discontinued, many people cash them in rather than keeping them as collectibles.

Take the 1921 10,000-shilling note from British East Africa (now Kenya and Tanzania), of which few were printed and issued. At that time, it was equivalent to about $2,000, a substantial sum in 1920s colonial Africa. When they were demonetised, most were redeemed, making the few remaining in private hands highly desirable.

Dennis Hengeveld , president of World Banknote Auctions in Sacramento, Calif., says that depending on the condition, some of these notes have fetched between $35,000 and just over $100,000 at auctions.

A rare $500 Canadian bill from 1911 brought C$528,750 (about $386,400) at a recent auction, the largest sum ever paid for a Canadian banknote. The specimen features the image of Queen Mary and is one of only four of the bills known to exist.

• Error notes : Governments often withdraw banknotes from circulation to deter counterfeiting, but also due to printing anomalies such as incorrect signatures, numerical discrepancies, misprints and typographical errors. Such deviations can elevate their value among enthusiasts.

In the U.S., double denominations—such as a front displaying a $10 bill and the reverse displaying a $20 bill—are the most prized error notes. The value of some of these pieces could top $85,000, according to Heritage Auctions.

How can I get started?

Despite the potential for a lucrative return, experts say the primary motivation for building a collection should be enjoyment and an appreciation of the history that banknotes provide. It would be best to build a collection with the idea of having fun, says Hengeveld of World Banknote Auctions, which was recently acquired by Stack’s Bowers.

Of course, it’s essential to do your due diligence to avoid fraud. Always buy notes from established dealers and confirm their authenticity with reputable grading services. Independent grading companies such as Paper Money Guaranty and Professional Coin Grading Service provide authentication and grading to ensure notes are genuine and their condition accurately assessed.

Auction houses and local dealers offer currency notes in different price ranges. Online retailers (eBay, Amazon.com, Collectibles & Currency), dealers and galleries (Certified Coin Exchange, George H. LaBarre), and numismatic shows (the MIF Paper Money Fair and World’s Fair of Money) are other useful sources.

As well, there is no shortage of stories where people discovered highly valuable collectible banknotes in attics, books, dressers and photo frames of deceased family members. In Ontario, a rare Canadian $500 bill from 1911 was discovered among the personal belongings of a deceased individual. The nearly discarded banknote, one of only three in existence, brought $322,000 at auction.

Those looking to dip their toes into collectible money may find valuable insights in trade magazines including Bank Note Reporter and the Greensheet, or books such as the U.S. Error Note Encyclopedia and Standard Guide to Small-Size U.S. Paper Money.

Additionally, Paper Money Guaranty, the Smithsonian Learning Lab and other websites can offer a wealth of information on various aspects of grading, collecting and how to properly care for banknotes.

Impact Investing Is Turning Mainstream, Report Finds

Rare banknotes can yield big bucks, if you know what to look for

Where is the value?

How can I get started?