Faith and finance: the original impact investors

This is article 7 of 14 in the Impact Capital series. Here is article 6.

General characteristics

Faith-based organisations (FBOs) have been active investors in emerging markets and developing economies long before impact investing became an established asset class. Rooted in religious traditions that emphasise stewardship, social justice and care for vulnerable populations, these organisations include churches, religious pension funds, religious orders, and affiliated foundations. Their investment activities typically combine fiduciary responsibility with explicit ethical and developmental objectives.

Globally, FBOs control several hundred billion US dollars in assets, largely through pension schemes, endowments and charitable foundations. Only a modest share of this capital is allocated to impact funds, yet FBOs are disproportionately influential in specific segments of the market, particularly financial inclusion, agriculture, SME finance and community-level development. Their capital often acts as patient or catalytic funding, especially in funds targeting underserved regions or populations.

Compared to commercial investors, FBOs typically accept longer time horizons and are more open to moderate or below-market returns where social outcomes are compelling. Governance structures are often conservative, but once mandates are approved, allocations tend to be stable and long-term. Many faith-based investors also place strong emphasis on values alignment, environmental and social safeguards, and transparency, which has influenced standards across the impact fund industry.

Faith-based organisations rarely manage impact funds themselves. Instead, they invest through independent specialist asset managers with strong development credentials, local presence and established impact measurement systems. This model allows faith-based capital to reach complex EMDE contexts while maintaining institutional governance and professional risk management.

Concrete investment cases

The following case studies illustrate how FBOs deploy capital into impact funds managed by independent asset managers. Across these examples, faith-based investors typically act as early or anchor investors, often alongside DFIs and foundations, and focus on sectors aligned with ethical priorities such as financial inclusion, agriculture, livelihoods and inclusive growth.

An example is Catholic Relief Services (CRS) as a founding sponsor and catalytic participant in Azure Source Capital, a blended finance facility managed by Total Impact Capital. Azure Source Capital was created by CRS together with IDB Lab to expand affordable debt financing for small-scale water and sanitation service providers in Latin America, and it combines investment capital with technical assistance to improve utility performance and bankability. The facility was launched in 2018 at the Vatican Impact Investment Conference and has since mobilised more than USD 7.5 million in private capital for 22 water service providers across Honduras and El Salvador, impacting nearly 100,000 people in predominantly rural communities. Azure operates through an integrated structure that includes both the capital facility (managed by Total Impact Capital) and comprehensive technical assistance delivered by CRS country teams and local partners including Azure SA in El Salvador and Agua Para el Pueblo in Honduras. The technical assistance addresses engineering capacity, project management, and financial planning to de-risk loans and ensure sustainable utility operations. Additional investors in Azure include the U.S. International Development Finance Corporation, Calvert Impact Capital, Mercy Investment Services, and several family foundations, demonstrating how CRS's catalytic first-loss capital has successfully attracted diverse impact capital to an underserved market segment. This case illustrates how faith-based organisations can serve as founding sponsors and technical assistance providers while partnering with specialised impact fund managers to structure commercially viable blended finance facilities addressing critical SDG priorities.

A second example is Church Pension Group, the pension and benefits arm of the Episcopal Church in the United States, as an investor in the SIMA Off-Grid Solar & Financial Access Senior Debt Fund I, managed by Social Investment Managers and Advisors (SIMA). The Church Pension Fund invested USD 17 million in the USD 75 million fund, which provides senior debt financing to microfinance institutions, distribution companies, and manufacturers in the off-grid solar sector across sub-Saharan Africa and South Asia. Since its inception in October 2017, the SIMA Fund has facilitated more than 7 million off-grid solar connections that provide lighting, mobile device charging, and power for productive use equipment to households without access to grid electricity. The fund has lent to 26 companies operating in more than 15 developing countries and has supported the creation of approximately 14,000 full-time jobs plus income opportunities for an additional 24,000 commission-based workers. Church Pension Group's investment aligned with its long-standing socially responsible investing programme and represented the organisation's second investment focused specifically on the off-grid solar sector, reflecting institutional conviction in the commercial viability and development impact of renewable energy access. The fund benefits from credit enhancements including guarantees from the African Guarantee Fund and technical assistance funding from USAID, creating a blended finance structure that attracts over 30 investors including DFIs, institutional investors, faith-based pension funds, foundations, and family offices. This example demonstrates how faith-based pension capital can participate in professionally managed impact debt funds with robust credit protection, measurable climate and development outcomes, and market-rate return expectations appropriate for fiduciary institutional investors.

A third example is the Presbyterian Foundation as a longstanding investor in Oikocredit, an international social investment cooperative originally established by churches in 1975 to provide financing for economic development in underserved communities. Oikocredit channels investment capital from faith-based organisations, support associations, and individual investors into microfinance institutions, agricultural cooperatives, small and medium enterprises, and renewable energy projects across Africa, Asia, and Latin America. The Presbyterian Foundation's participation in Oikocredit reflects the denomination's commitment to transformational investment as an expression of mission, providing working capital to organisations serving populations excluded from conventional financial systems while generating modest financial returns that prioritise social impact over profit maximisation. Oikocredit operates as a cooperative with member-ownership including faith-based organisations from multiple denominations and operates with approximately $1 billion in outstanding investments supporting over 500 partner organisations in more than 60 countries. The cooperative's investment approach combines debt and equity financing with capacity-building support for partner institutions, focusing on strengthening governance, risk management, and client protection practices alongside capital provision. The Presbyterian Foundation's involvement demonstrates how mainline Protestant denominations utilise long-established church-based investment cooperatives to align endowment assets with theological commitments to economic justice and solidarity with marginalised communities. Oikocredit's structure enables smaller religious institutions to participate in professionally managed impact portfolios through modest minimum investments while maintaining governance representation through the cooperative's member-based decision-making processes.

A fourth example is multiple Catholic religious congregations, including Sisters of Mary Reparatrix, investing through GAWA Capital, a Madrid-based impact fund manager specialising in financial inclusion, agriculture, and climate finance in emerging markets. Sisters of Mary Reparatrix, an international community of Catholic women religious, explicitly identified GAWA Capital as one of their international impact investment partners in their Catholic Impact Investing Pledge commitment, investing in GAWA-managed funds that target social enterprises addressing market failures leading to poverty, food insecurity, and climate vulnerability. GAWA Capital, founded in 2009 and recognised as Spain's pioneering impact investment fund manager, has deployed over €195 million across four funds with total assets under management exceeding €150 million, completing 87 investments in 40 institutions across 20 countries in Latin America (Peru, Colombia, Ecuador, Bolivia), Asia (India, Philippines, Myanmar, Mongolia), and Africa (Ghana, Senegal, Azerbaijan). The firm manages the GAWA Microfinance Fund and Global Financial Inclusion Fund investing debt and equity in microfinance institutions, NBFC-MFIs, agricultural finance companies, and specialised financial service providers serving low-income populations, with portfolio companies including institutions like Pahal (India), Fusion Microfinance (India), Kinara Capital (India), ASA India, Pro Mujer Bolivia, CAURIE (Senegal), Banco Solidario Ecuador, and Sinapi Aba Savings & Loans (Ghana). GAWA's investment model emphasises transformational impact through rigorous social performance measurement using CERISE-ALINUS audit tools, mandatory social covenants in transaction documentation requiring investees to improve client protection and expand outreach to vulnerable populations, performance fees linked to independently verified social impact achievement upon investment exit, and technical assistance facilities providing capacity building to strengthen investees' operations and develop products serving smallholder farmers and climate adaptation.

A fifth example is the Religious Communities Impact Fund as an investor, through Calvert Impact Capital, in international microfinance organisations including Oikocredit, ECLOF International, Fonkoze, Friendship Bridge, One Acre Fund, and Opportunity International operating across EMDEs. The Religious Communities Impact Fund (RCIF), established in 2008 and celebrating its 15th anniversary in 2023, is a collaborative investment fund comprising 17 congregations of Catholic women religious in the United States who pool capital to provide below-market-rate loans to mission-aligned financial intermediaries and social enterprises serving underserved communities domestically and internationally. RCIF partners with Calvert Impact Capital (formerly Calvert Social Investment Foundation), one of the United States' pioneering impact investing platforms founded in 1988 and officially launching its Community Investment Note in 1995, which has mobilised over USD 2 billion in investor capital to more than 195 organisations across all 50 U.S. states and two dozen countries.

Taken together, these cases show that faith-based organisations play a distinctive and durable role in the EMDE impact fund ecosystem. By investing through independent impact asset managers, faith-based investors combine ethical conviction with professional execution, enabling capital to reach underserved communities while maintaining institutional standards. Their willingness to invest patiently, anchor early fundraises and prioritise social outcomes continues to make them critical contributors to impact fund formation and sustainability in emerging and developing economies.

Current trends

Looking ahead, faith-based organisations are expected to remain stable but selective participants in impact investing in emerging markets and developing economies. Unlike commercial investors, their allocation decisions are less sensitive to short-term market cycles, but they are increasingly shaped by governance requirements, reputational considerations and internal capacity constraints. As a result, growth in faith-based capital is likely to be gradual rather than exponential, with a continued emphasis on depth of impact rather than volume of deployment.

One clear trend is increasing professionalisation. Many faith-based organisations have strengthened internal investment committees, adopted formal impact frameworks and aligned their portfolios with international standards such as the UN Sustainable Development Goals. This has led to more rigorous due diligence of impact funds, greater scrutiny of fund governance and a preference for managers with established track records, robust environmental and social safeguards and transparent reporting. First-time funds and experimental strategies face higher barriers to entry than in earlier phases of faith-based impact investing.

A second trend is the gradual integration of grants and investments into coherent capital strategies. Faith-based organisations increasingly combine grant funding, guarantees and impact fund investments to pursue specific development objectives such as financial inclusion, rural livelihoods or SME growth. In this model, impact funds serve as scaling vehicles, while grants are used to support technical assistance, ecosystem development and capacity building at investee and market level.

A third trend is a sustained focus on financial inclusion and livelihoods, even as climate-related themes gain prominence. Faith-based investors continue to prioritise sectors with direct social outcomes, including microfinance, agriculture and small enterprise finance, where impact pathways are well understood and aligned with ethical and social justice principles. Climate and environmental investments are increasingly pursued where they intersect with poverty alleviation, resilience and community-level benefits rather than through large-scale infrastructure alone.

At the same time, faith-based organisations face structural constraints. Limited internal resources, conservative governance processes and sensitivity to reputational risk constrain rapid scaling or exposure to fragile and conflict-affected contexts. As a result, faith-based capital is likely to remain concentrated in a relatively small number of trusted fund managers and repeat fund relationships.

Despite these limitations, faith-based organisations continue to play a critical role in the impact investing ecosystem. Their long-term orientation, ethical commitment and willingness to act as early or patient investors provide stability and credibility to impact funds operating in challenging markets. As public and concessional capital becomes more constrained, the ability of faith-based organisations to combine values-driven intent with disciplined investment practice will remain an important anchor for impact investing in emerging and developing economies.

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