Bringing together philanthropic objectives and financial decision-making, impact investors explicitly aim to generate impact while also yielding a financial return. Yet, the values, norms, and motives associated with philanthropy may be at odds with those of financial investing. Consequently, the question arises whether individuals deem it inappropriate—or even unethical—to invest in social problem-solving. This article aims to shed light on this question. Using an experimental set-up, we study the effect of funding scale (small or large funding requests) and funding scheme (donation or impact investment) on the funding decision of 872 individuals. Our findings indicate that a substantial share of the general population could embrace impact investing opportunities in real settings. In particular, small-scale, interest-free impact investments may be a promising way to elicit funding for social problem-solving. However, when larger amounts of money are at stake, individuals appear to exhibit self-interested behavior and require a positive financial return.
Bringing together philanthropic objectives and financial decision-making, impact investors explicitly aim to generate impact while also yielding a financial return. Yet, the values, norms, and motives associated with philanthropy may be at odds with those of financial investing. Consequently, the question arises whether individuals deem it inappropriate—or even unethical—to invest in social problem-solving. This article aims to shed light on this question. Using an experimental set-up, we study the effect of funding scale (small or large funding requests) and funding scheme (donation or impact investment) on the funding decision of 872 individuals. Our findings indicate that a substantial share of the general population could embrace impact investing opportunities in real settings. In particular, small-scale, interest-free impact investments may be a promising way to elicit funding for social problem-solving. However, when larger amounts of money are at stake, individuals appear to exhibit self-interested behavior and require a positive financial return.