Impact investing has been growing in popularity in recent years as more investors look to make a positive social or environmental impact alongside financial returns. However, the impact investing industry is still developing, and compensation levels can vary significantly across firms and roles. In this article, we’ll examine the key factors that determine impact investing associate salaries, including firm type, location, experience level, and bonus structure. With impact capital projected to reach $500 billion by 2025, impact investing offers exciting career opportunities. Understanding compensation norms can help those exploring roles better evaluate options.
Base salaries range from $65K to $120K based on firm and experience
According to publicly available salary data, base compensation for impact investing associates in the US typically ranges from around $65,000 to $120,000. The lower end of this range is often seen at newer, smaller impact ventures that may have limited budgets. Base salaries at the upper end are more common at established impact investing firms or groups within larger financial institutions. Geographic location also plays a role, with New York City and San Francisco commanding higher base pay compared to other US cities. Years of relevant experience is another key factor, with those just starting out earning less than associates with 3-5 years investing experience who can command higher pay. However, there is significant variability across firms.
Bonuses average 10-20% but vary based on fund performance
In addition to base salaries, impact investing associates often receive annual bonuses. These typically range from 10-20% of base pay. However, unlike more traditional finance roles where bonuses are largely fixed, impact investing bonuses are more directly tied to investment performance and profits. Bonuses at successful, top-tier firms can reach up to 50% of base salaries in extremely good years, but associates may receive minimal or no bonuses in weaker years. The bonus structure reflects impact investing’s closer alignment to venture capital and private equity. Associates willing to tie compensation to performance can benefit in strong markets but see greater fluctuation year-to-year.
Carried interest participation is rare for junior roles
While common for senior leadership, lower-level associates do not typically receive carried interest, which is a share of investment profits. Some impact investing firms allow associates to make personal investments or co-invest along senior staff, providing junior team members upside. However, standard carried interest compensation models with no upfront investment required are uncommon for those just starting out. Significant carried interest distributions or deal fees generally accrue to Principals, Managing Directors, and Partners instead of more junior associates. As associates gain experience and move into these senior positions, carried interest participation can become a valuable part of compensation.
In summary, impact investing associate base salaries range from $65K-$120K based on factors like firm, location, and years of experience. Bonuses average 10-20% but vary based on fund performance. Carried interest participation is less common for junior roles. As the impact investing industry matures, compensation standards will likely continue to evolve.