Impact Allocator Perspectives: Opportunities And Risks In Evolving Private Markets

We are grateful for the opportunity to collaborate with ICM on this inaugural LP Survey and value the insights gained from the survey's participants.

This survey offers fund managers a timely and actionable window into the evolving landscape of impact investing. By capturing the perspectives of leading allocators across a diverse array of institutions, this survey distills critical insights on asset class preferences, emerging impact themes, and the key risks and barriers shaping capital deployment in the current market. The findings illuminate not only where capital has been flowing—such as the continued dominance of impact funds flowing to private equity and venture capital, and the rising interest in real assets and private credit—but also the nuanced concerns around liquidity, regulatory uncertainty, and the increasing need for robust impact measurement and management tools. For fund managers, these insights provide a strategic roadmap to assist in the refinement of fundraising approaches, create alignment with allocator priorities, and anticipate the shifting dynamics that will define the next phase of growth in the impact sector.

Beyond mapping current trends, the survey surfaces the "deal-killer" traits that can halt fundraising efforts, such as insufficient track record, weak impact theses, and governance concerns. By understanding these red flags and the areas of under-allocation—particularly in climate, healthcare, and affordable housing—fund managers are better equipped to position their strategies to align with allocator preferences, strengthen operational infrastructure to alleviate allocator concerns, and create appropriate reporting to demonstrate to investors both financial and impact performance. The survey's forward-looking analysis of allocator priorities for 2025 further empowers managers to identify emerging opportunities and address persistent gaps, ensuring their offerings remain relevant and compelling in a competitive environment.

Foley Hoag's Impact Investing group, known for its deep sector commitment and creative, practical solutions for those seeking to maximize both return on investment and mission-driven impact, has experience working with allocators and fund managers in addressing the legal concerns faced by impact-focused allocators, investors, and fund managers. Having a deep understanding of our clients' goals and the challenges and barriers they face (including those identified in the report) allows our impact-minded team to better develop legal solutions for those looking to structure impact investments, form investment funds, create new financing structures, and navigate the evolving regulatory landscape.

Read the full report here.

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