Contracts with (Social) Benefits: The Implementation of Impact Investing

Contracts with (Social) Benefits: The Implementation of Impact Investing

Christopher Geczy, Jessica Jeffers, David Musto, Anne M. Tucker

Series number :

Serial Number: 

Date posted :

May 07 2020

Last revised :

May 07 2020
SSRN Share


  • impact investing • 
  • venture capital • 
  • private equity • 
  • socially responsible investment • 
  • sustainable investing • 
  • Corporate Social Responsibility • 
  • contracts

We draw on new data and theory to examine how private market contracts adapt to serve multiple goals, particularly the social-benefit goals that impact funds add to their financial goals. Counter to the intuition from multitasking models (Holmstrom and Milgrom, 1991), few impact funds tie compensation directly to impact, and most retain traditional financial incentives.

However, funds contract
directly on impact in other ways and adjust aspects of the contracts like governance. In the cross-section of impact funds, those with higher profit goals contract more tightly around both goals. We propose an explanatory framework in which this feature results from hidden differences between agents’ preferences over impact.


Real name:
Christopher Geczy
Real name:
Jessica Jeffers
Real name:
Anne M. Tucker
Real name:
David Musto