Right now, interest in impact investing is experiencing explosive growth as the concept continues to capture the attention of mainstream investors the world over. In fact, The Global Impact Investing Network (GIIN) estimates the current size of the global impact investing market to be around $502 billion.

While many are fully invested in making an impact, there’s still a great deal of confusion among investors and startups concerning impact investment as a financial instrument and how it forms part of a greater portfolio alongside philanthropy.

The reason for the confusion is multi-causal. Some believe it stems from the notion that there is a binary decision between investing for-profit and donating funds to social causes. According to Sapna Shah of the Global Impact Investing Network (GIIN), “The binary between investing and philanthropy is a false one.” Philanthropists who embrace impact investing believe that while traditional grant-making may assist in overcoming market-based failures, impact investing has the potential to leverage the power of the markets to bring about lasting change. Still, impact investing requires far more from the companies that an investor is involved in than philanthropy does.

Other proponents believe that a lack of clarity in practice is to blame for the confusion. In the experience of Gareth Ackerman, chairman of South African, family-owned retail giant Pick n Pay, many ventures that investors or organizations label “impact investing” are purely philanthropic with different expectations tacked onto them. This disconnect means that often impact startups that have no real chance of yielding the expected returns receive funding only to have it pulled later.

Read the rest of Francois Botha’s article at Forbes