It reaches across sectors and across geographies, linking small-business loans in Detroit with community development financing in Delhi. It has animated a generation of entrepreneurs and captured the imagination of world leaders. It links the social consciousness of philanthropy with the market principles of business. It’s about how the power of markets can help to scale solutions to some of our most urgent problems.

The movement is called impact investing. It brings together entrepreneurs, investors, foundations, public-sector leaders, nonprofits, and intermediaries to use private capital for public good. Simply put, impact investing generates measurable, beneficial social or environmental impacts alongside financial returns. It’s a simple idea with profound implications.

For all the media coverage impact investing has earned recently, it is not a new concept. It has deep historical roots. Impact investing was built in partnership among investors, foundations, and the US government over the course of decades. Today, impact investors finance undertakings from early childhood education to global economic development, from preventive health care services to village-based solar microgrids.

We are at an inflection point in the impact investing movement. New energy has enlivened the space. A recent report from J.P. Morgan and the Global Impact Investing Network (GIIN) of 125 major fund managers, foundations, and development finance institutions found $46 billion in impact investments under management, a nearly 20 percent increase from the prior year.¹ But impressive as that progress sounds, impact investments still represent only 0.02 percent of the $210 trillion in global financial markets.² For all its promise, the movement is not yet living up to its potential—which many believe to be 10 or even 20 times its current size.³ For impact investing to reach massive scale—bringing private capital to bear on our greatest problems—it will require a more intentional and proactive partnership between government and the private sector.

This report highlights strategies for how the government can partner with impact investors to unleash new capital, talent, and energy for social, economic, and environmental good. Members of the National Advisory Board, who produced this report along with input from many others, are part of a growing group of skilled investors, entrepreneurs, and intermediaries who believe that capital can be used more reliably and effectively as a tool for long-term progress. Together, we explored a range of government policies to advance impact investing. The policies we recommend build on the historical successes of the field. Many policies do not require any additional government spending; those that do often repay their costs over time. This report is the product of months of discussion, extensive consultation, and deliberation. While each of the members of the NAB brings different priorities and perspectives to this effort, all agree that we are at an inflection point where smart policy can scale smart capital for social benefit.

Policy matters greatly to scale effective solutions. Strong and purposeful partnerships among governments, investors, entrepreneurs, and philanthropists are essential to tackle the increasingly complex and difficult public concerns we face. Government plays a vital role. It can modernize rules, improve key programs, and promote areas of mutual benefit. Ultimately, it can help mobilize the talent and capital to tackle core social and environmental challenges at scale.

In light of what we face as a nation, there is no excuse for leaving willing talent and capital sitting on the sidelines.