Abstract
Impact investing, which originated in the philanthropic sector, is a critical source of funding for social entrepreneurs. Despite enthusiasm, impact investing has seldomly been adopted by U.S. foundations. This lack of adoption indicates the need to explore the specific factors influencing foundation decisions. Using a novel dataset of 208 U.S. private foundations, we theorize why organizations belonging to the same sector differentially adopt the practice of impact investing by examining how an organization's collective set of identities influences such practices. We find that identities related to an organization's attributes (i.e., their entrepreneurial and traditional identities) are largely overlooked in comparison to identities related to an organization's categorical associations, such as their financial and charitable identities. This insight explains why organizations in the same category differentially adopt new practices. Our findings contribute to growing work that examines the influence of identity on socially beneficial practices and helps organizations seeking capital from philanthropic foundations to be more efficient when approaching funding sources, a critical consideration for social entrepreneurs.