We want impact bonds to work.
For the organizations raising capital. For the investors providing it. And for the communities and causes that capital is meant to serve.
Impact and community finance can give ordinary people an opportunity to invest directly in organizations and projects they want to support. That accessibility is a strength. An investor may help finance affordable housing nearby, renewable energy in their province or an organization they have supported for years.
Traditional private-market investing often assumes participants in less-liquid or higher-risk securities have professional experience or meet prescribed financial thresholds. Community investors may instead know the organization, its people or the project. As securities reach a broader audience, investors may have no comparable relationship with the issuer and limited experience assessing private debt, collateral, refinancing risk or financial statements.
Greater reach can help important projects raise capital. The information available to investors needs to grow with it.
Independent credit information should grow with the market.
We assess credit, not impact.
An issuer’s mission can be a powerful reason to invest. A good mission does not eliminate financial risk. ImpactBonds does not judge whether an organization's mission deserves support or attempt to rate its social or environmental value. A credit classification is no judgment about an issuer's intentions or honesty. Nor do we assume a nonprofit, co-operative or social enterprise is risky simply because it operates differently from a conventional corporation.
Our role is narrower: we assess the repayment evidence for a particular security.
Does the available evidence support a reasonable expectation that investors will receive their contractual interest and principal as promised?
There is more than one way to pay investors back.
Impact organizations operate in different ways. We do not expect every issuer to demonstrate creditworthiness through the same business model.
We look for an identifiable, evidence-supported pathway appropriate to the security's terms. It may draw on several resources together. What matters is whether those resources are identifiable, supported by evidence and aligned with the security’s maturity and payment obligations:
- Operating cash flow
- Contracted revenues
- Collateral and assets
- Guarantees and third-party support
- Liquidity and reserves
- Refinancing capacity
These are illustrative sources of repayment, not a checklist or scoring system.
Our objective is not to keep capital away from impact organizations.
Strong impact organizations need capital. Investors need enough information to understand the risks they take. Those goals can reinforce each other.
Independent analysis can help credible securities earn investor confidence. Transparent credit standards can also show where stronger security, reserves, disclosure or financial performance may improve an offering. It can also help distinguish capital supported by a repayment pathway from capital whose financial risk is closer to philanthropy.
Read our methodology →Philanthropic Grade is not a judgment on the mission.
It means the available evidence for that particular security does not meet our standard supporting a reasonable expectation of repayment of contractual interest and principal according to its terms.
It does not mean the organization has failed, its work lacks value or people should not support it. Where evidence does support a reasonable expectation of repayment, a security may qualify as Impact Investment Grade. Some investors may choose to provide capital because they believe in the mission; they should understand the financial risk when they do.
How our classifications work →Issuers don't pay us to rate their bonds.
ImpactBonds research is produced for investors. Issuers do not purchase classifications or approve our conclusions before publication.
We may work with issuers to clarify information, correct factual errors and obtain additional evidence. That engagement helps make analysis fair and accurate; it does not give an issuer control over the result. Our analysis follows the evidence.
Support the mission. Understand the risk.
Impact finance works best when investors can support organizations they believe in while understanding what they are being asked to invest in. ImpactBonds.org exists to make credit information easier to find, understand and independently assess.