Emerson (2003) described impact investments as those designed to deliver social, environmental, and financial benefits. These investments require a return of principal and may take the form of equity, debt, or a combination of both. Impact investing, aimed at achieving both financial returns and positive social or environmental outcomes, is commonly associated with sectors such as education, healthcare, and renewable energy.
Impact investments integrate social and environmental impact with economic goals. They provide a way to transition the funding model in sport-for-development from grant-based financing to direct investments in outcomes. Instead of paying for services upfront, governments and other investors can minimize their risk by entering contracts that tie payment to the achievement and verification of specific outcomes.
This type of investment, called ‘Social Outcomes Contracting’ (SOC), ensures payment is only made when predefined outcomes are met. SOC improves the efficiency and effectiveness of program implementation, particularly in development settings where social returns are often higher (UNESCO, 2023). It allows for collaboration between local governments, development partners, private investors, and sport-for-development providers to define the desired outcomes of a program and establish accountability for measuring its impact.
However, there is growing potential for applying the principles of impact investing in motorsport, an industry known for its technological innovation, global reach, and influence. The motorsport industry can benefit from impact investments concepts and practices that focus on sustainability, inclusivity, and community development while generating financial returns.
Focus on sustainable development goals
To elevate sport as a key enabler of sustainable development, it must also be recognized as a viable investment option and a measurable driver of sustainable outcomes. Sport generates significant, cross-sectoral impacts in areas such as health and well-being (SDG 3), quality education (SDG 4), gender equality (SDG 5), decent work and economic growth (SDG 8), reduced inequality (SDG 10), environmental sustainability (SDGs 12 & 13), safeguarding athletes from abuse (SDGs 5 & 16), and building accountable institutions (SDG 16).
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The growing use of robust cost-benefit analyses has translated these impacts into tangible financial savings, making them relevant to the budgets and priorities of sport and non-sport ministries, development banks, social investors, and philanthropists. However, while this data serves as an advocacy tool and a means of evaluating programs after implementation, it must be made ‘operational’ to attract new funding partners and expand the sport-for-development market. In other words, the sports sector is learning to communicate in terms that resonate with investors.
In motorsport, impact investing can drive transformation by emphasizing sustainability. Traditionally associated with high carbon emissions and environmental degradation, the industry is evolving to meet global sustainability demands. Investments in electric vehicle (EV) racing, such as Formula E, are at the forefront of this shift, showcasing how motorsport can adopt greener technologies and contribute to a more sustainable future. By directing capital toward sustainability-focused motorsport projects, impact investors can help the industry innovate in ways that reduce its environmental footprint. This includes investing in research and development of eco-friendly fuel alternatives, electric or hybrid vehicles, and carbon offset initiatives within racing circuits.
Technological Innovation with Broader Applications
Motorsport has long been a proving ground for cutting-edge automotive technology, much of which eventually finds its way into consumer vehicles. Innovations such as advanced safety features, fuel efficiency improvements, and performance enhancements developed in motorsport often have broader societal applications. Recently, new players have entered the field, challenging the dominance of traditional tech-focused automotive companies.
Racers who may not follow business trends might be surprised to learn that a quiet financial shift is underway in the motorsports industry. Many iconic brands that racers grew up with—often founded in modest garages and still carrying the founder’s name—have been acquired by private equity firms, which frequently consolidate them into “super brands” controlling large portions of the market.
This shift presents growing potential for impact investors to accelerate the development of new technologies by funding motorsport projects with positive external benefits. Particularly in Africa, where financing for Research and Development (R&D) is often limited, impact investors can play a key role. By supporting teams or initiatives focused on tech transfer, investors can help ensure that innovations in motorsport benefit broader society.
Motorsport could also catalyze Africa’s local automotive manufacturing sector. By focusing on the local production of race car components, such as parts for rally cars or electric vehicle technology, the motorsport industry could contribute significantly to Africa’s industrialization. Impact investors could fund startups or established companies involved in local motorsport manufacturing, which could lead to the development of homegrown rally cars, EV components, and other motorsport equipment. Collaborating with local engineering institutions could foster innovation, create jobs, and position Africa as a hub for motorsport-related manufacturing, driving industrial growth across the continent.
Promoting Diversity and Inclusivity
The trend of sports teams entering the impact investment space in the US is becoming increasingly common, though motivations can vary. For instance, the NBA’s Oklahoma City Thunder partnered with the StitchCrew accelerator in 2018 to support marginalized entrepreneurs, particularly women and people of color, by providing access to networks and capital. Instead of offering financial investment in exchange for equity, the Thunder provides free space at its venue and mentorship opportunities without requiring entrepreneurs to relinquish ownership in their businesses. Since its inception, the Oklahoma City Thunder Launchpad has supported 61 start-ups over six cohorts, with a seventh cohort set to launch soon.
Erika Lucas, co-founder and CEO of StitchCrew, highlights the Thunder’s value as a partner for entrepreneurs, pointing to the team’s resilience in making an NBA franchise thrive in a smaller, non-traditional basketball market. According to Lucas, the Thunder’s commitment reflects a broader vision of inclusive capitalism—one that works for more people, not just the privileged few. She notes that while capitalism has been a powerful economic system, it must evolve to be more inclusive, a principle that resonates with the Thunder’s organizational values.
Lucas, who gave a TEDx Talk in 2019 titled “America’s Trillion Dollar Blindspot,” argues that female and non-white entrepreneurs often face unconscious bias from investors, many of whom are male and white. This mirrors the motorsport industry’s own struggles with diversity and inclusion, especially in terms of gender and racial representation. However, initiatives like Formula 1’s “We Race As One” campaign and efforts to promote women and minority drivers are steps toward addressing these disparities.
In the context of motorsport, impact investing can play a vital role in promoting diversity and inclusion. By funding programs that offer training, mentorship, and opportunities for underrepresented groups, investors can help create a more equitable industry. Investors can also back teams and organizations with clear goals for diversity and inclusion as part of their broader social impact agenda.
Former Sportvision executive Craig Jonas sees impact investing as a growth area, particularly in light of global challenges like Covid-19, climate change, and social injustice. He believes professional sports can be a key player in advancing this movement. In 2018, Jonas founded CoPeace, an impact investment holding company and certified B Corp, to help investors grow their wealth while contributing to social good in a more sustainable manner than traditional philanthropy. CoPeace also launched its CoSpo arm, which helps athletes, coaches, and sports organizations invest in funds that deliver social and environmental benefits alongside economic returns.
Jonas believes that applying the principles of impact investing to sports offers tremendous opportunities. He argues that sports have a responsibility to make the world a better place due to their significant influence on society.
Balancing Economic Growth, Community Engagement, and Sustainability
Motorsport events can have a significant economic impact on local communities through tourism, job creation, and infrastructure development. Hosting a rally often stimulates local business activity and brings global attention to the region. However, these benefits are not always evenly distributed, and some communities may face negative consequences such as noise pollution or environmental damage. To ensure that the economic benefits are shared more equitably, impact investing in motorsport should prioritize community engagement. This could include investing in local motorsport academies, supporting local supply chains, or ensuring that infrastructure improvements like roads and transportation systems benefit the broader population. Additionally, community-focused motorsport events that promote local culture or education can align with broader social impact goals.
Engaging youth and supporting grassroots motorsport participation is crucial to growing the sport. Though motorsport has a dedicated fanbase, it remains a niche interest compared to other global sports. To broaden its appeal, it’s important to foster interest among young people and provide pathways for grassroots participation. Impact investments can be directed towards youth development initiatives, local racing clubs, karting leagues, or motorsport education programs that engage diverse young talent. Additionally, investments in e-sports and motorsport simulation platforms can attract younger generations, bridging the gap between digital experiences and real-world racing.
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Sponsors are also essential in funding motorsport teams and events, and impact investing offers an opportunity for brands to align their investments with social responsibility goals. Brands that prioritize sustainability, diversity, and inclusion in their motorsport projects can enhance their reputation while contributing to positive social change. For sponsors and corporate investors, aligning their motorsport investments with environmental and social goals strengthens both brand equity and societal good. This ensures that motorsport serves not only as a platform for brand visibility but also as a driver for sustainability, inclusivity, and innovation.
In conclusion, impact investing in motorsport has the potential to transform the industry by aligning financial returns with social and environmental outcomes. Focusing on sustainability, innovation, inclusivity, and community engagement, impact investors can help motorsport evolve into a force for positive change. The lessons from integrating impact investing into motorsport could serve as a model for other industries seeking to balance profitability with purpose. As global attention on sustainability and social responsibility grows, motorsport has a unique opportunity to lead by example, demonstrating how innovation in racing can drive both economic success and societal progress.
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