As traditional research-and-development funding and early-stage investing have shifted, so has philanthropy’s role in solving some of society’s biggest problems. Philanthropy and private equity used to be separate worlds; now impact investing, or the notion of favoring social good over pure economic gain, is quickly becoming a buzzword, partly due to declining federal research dollars and traditional investors shifting away from “seed” investments.

This global paradigm shift is also a result of donors’ growing demand for more impact from their charitable dollars. Companies are leading this growing trend of market-based approaches to philanthropy: Goldman Sachs created its $250 million social impact fund; Morgan Stanley plans to raise $10 billion over the next five years for what it calls its “investing with impact platform”; and JPMorgan Chase has teamed with the Bill and Melinda Gates Foundation for a $94 million investment fund to finance late-stage drugs, vaccines, and tools to fight diseases like malaria, tuberculosis, and HIV/AIDS.

Meanwhile, foundations are using their considerable resources to make private-equity investments in companies that demonstrate high risk and social good, filling critical gaps in the funding ecosystem.