A dozen years have passed since the term “impact investing” was coined at a meeting of investors, entrepreneurs and philanthropists at the Rockefeller Foundation’s retreat center in the Italian seaside town of Bellagio.

Antony Bugg-Levine, who was then managing director at the Rockefeller Foundation, recalled that the new term helped create a way for profit-oriented businesses to justify investments to address social problems such as poverty or inequality. Businesses began to understand how they stand to gain from a fairer society, he said. Bugg-Levine is currently CEO of the Nonprofit Finance Fund in New York, which provides loan financing, access to capital and direct advisory services to nonprofits.

Since then, the impact investing movement has overcome many challenges. However, more obstacles lie ahead even as there is untapped potential for growth, said Durreen Shahnaz, founder and CEO of the Impact Investment Exchange (IIX) in Singapore, a social stock exchange and the world’s largest impact investment private placement platform. As it happens, Bugg-Levine had encouraged Shahnaz to set up IIX at the Bellagio meeting in 2007.

Bugg-Levine and Shahnaz tracked the accomplishments of the impact investing movement over the past decade and identified the challenges it continues to face in a recent podcast for the second season of the Knowledge@Wharton series, From Backstreet to Wall StreetThis series focuses on women, innovators and entrepreneurs who are building sustainable peace. (Listen to the podcast above; you can find the rest of the series here.)

At its core, “the simple idea of impact investing is that our for-profit investments are both an economically effective and a morally appropriate way to address a social problem,” said Bugg-Levine. As a concept, impact investing existed well before the term was coined. He noted that American founding father Benjamin Franklin had set up a fund to provide loans to small business owners “so they could buy guild licenses and start their small businesses in other countries,” and that the Rothschild family in the U.K. in the 19th century set up a revolving loan for housing.

“We have a very large financial services industry that is set up and built around an idea that is antithetical to impact investing.”–Antony Bugg-Levine

Impact investing has come a long way from those days. The current size of the global impact investing market is an estimated $502 billion, and is deployed by 1,340 organizations, according to the Global Impact Investing Network, a nonprofit seeking to remove barriers to social investments. “We have a lot to celebrate, but face a lot of questions still that we need to explore,” said Shahnaz.

Listen to the Podcast or read the rest of the article at: Knowledge@Wharton