Impact investors rejoice: Wharton Social Impact Initiative’s new report brings good news about financial return. The study also shows that social mission is well-preserved once investors exit. But this is still a new, relatively unexplored space, and social entrepreneurs should be wary.

The study analyzed 52 fund exits solely within private equity investments — a very specific segment of the wide-ranging impact investing industry largely dominated by venture capitalists — and yielded two major findings:

• Market rate-seeking funds (funds that self-identified as going for the highest returns possible) can achieve returns comparable to what they might get in the public market index.
• These fund managers are reporting that the mission of their portfolio companies have largely persisted after exiting.

Thirty-five of 52 funds reported their realization agreement did not include a statement to pursue the social impact objective of the underlying company, yet 40 of 53 reported that the social impact persisted after the company exited the fund. (Graph courtesy of Wharton Social Impact Initiative)

Still, there are some caveats.

Impact investing is a new concept. The average life cycle of investments like these range from five to seven years. Considering the upsurge in capital in the impact investing space in the early 2010s, the majority of the exits in this study are fresh. In many ways, this report is the pioneering surveyor sketching uncharted terrain.

Given the impact investing tent is still very large, this study analyzed a small sect of the field — foundations that have been edging into the impact investment space were not included in the data sample. Nick Ashburn, director of Emerging Market Strategies at Wharton, said this report should be seen as “a stake in the ground” to serve as a benchmark of sorts for ongoing research.

“I think the critical piece is that right now in our data analysis, our assessment of impact or mission preservation was reported by fund managers to say it was more or less so baked in to the value proposition of the company,” Ashburn said. “It persisted even though it was acquired.”

Again — these are freshly acquired companies, and Ashburn said unless mission is contractually preserved in a legally binding document, social entrepreneurs should not expect their mission to persist.

Supporting this, Jacob Gray, senior director at WSII, told Forbes last month that founders should not assume their mission will always be “baked into [their] company’s DNA” upon acquisition. Grey used the example of West Philly’s White Dog Cafe: During its acquisition, the owner required in the contract that certain business practices be preserved.

“Our thought on that is the mission oftentimes is largely relying on the culture of the acquirer,” said Wharton impact investing researcher Harry Douglas. “For social entrepreneurs, it is an important consideration to make if you’re looking to lock in the long-term mission.”

What are some of those considerations? One mechanism, Ashburn said, is to incorporate as a benefit corporation in Delaware — better tax benefits — instead of just an LLC. There are steps social entrepreneurs can take to make sure their mission persists through acquisition.

What does this mean for the future of private equity impact investing and outliers raring to get involved?

“A hypothesis would be that potentially, if these market-rate seeking funds are achieving good returns, then we could potentially attract more capital into the impact investing space,” Ashburn said. According to Ashburn and Douglas, the report will be ongoing as the sample size increases.