As larger and larger sums of capital move into sustainable and impact investing—now accounting for $1 in $3 of total assets under professional management in the US—nonprofits must adapt to a world where money from public, private, and philanthropic institutions is increasingly co-mingling to address everything from inequality to climate change.

Nonprofits should not try to turn themselves into Wall Street institutions, of course, and many nonprofits operate in areas unaffected by the growing sustainable and impact investing sector. But as a 2017 study observed, only two of the 17 Sustainable Development Goals—peace and justice and partnerships for the goals—had no prospects for private investment (and although not every subgoal within the other 15 goals lends itself to investment capital, a considerable number of subgoals ripe for investment were identified). The explosive growth of double bottom line investing not only provides many nonprofits a way to raise new money but also provides a significant opportunity to grow their influence in this new era, innovating how they raise capital and influence financial actors to keep up with changing times.

Our experience as grantmakers and investors—seeding many of the innovations that have taken shape as a result of collaborations between capital markets and the nonprofit sector—tells us that nonprofits can benefit from this new era in four ways:

  1. Capital Market Tools and Innovations Nonprofits with programs that solve environmental and social challenges can turn some of their initiatives into investable propositions.
  2. New Models for Collective Action Even if nonprofits have no assets or programs that could attract investment capital today, they can build market infrastructure and facilitate global capital flows to investments and practices with quantifiable impact on their program goals.
  3. Shaping Bankable Projects While there is increasing investment capital looking for sustainable and impact investment opportunities, the capital flows are often challenged by a lack of investment-ready projects and markets. Nonprofits can leverage their expertise and networks to help shape the design and readiness of impactful projects to meet the demand.
  4. Advocating for Impact in Capital Markets When nonprofits focus on the power of investment capital to make a positive impact on society and the environment, they can partner with investors and companies to create financial products that support advocacy for change.

Read the full article about nonprofits and impact investing by Judith Rodin and Saadia Madsbjerg at Stanford Social Innovation Review.