Examining the Text
The Greek text gives a fairly clear clue as to what is being referred to (its just one's theology that tends to get in the way of seeing it). There is a textual variant here, but it is not relevant to the discussion. The variant is found in the majority text and will be noted here by asterisks, like so: τῆς. Since the article follows a preposition, the addition of the article is rather insignificant (as a word used with a preposition can be and often is deemed definite even without the article).1
Note I've use the old English "ye" to reflect the 2nd person plural nominative form, and "you" as the objective form of the plural (like the KJV, which modern English has lost distinction of with the "you" being both singular and plural).
8 τῇ γὰρ χάριτί ἐστε σεσῳσμένοι διὰ *τῆς* πίστεως, καὶ τοῦτο - οὐκ ἐξ ὑμῶν·
- for by grace ye have been saved through *the* faith, and this [is] not of you.
θεοῦ - τὸ δῶρον· 9 οὐκ ἐξ ἔργων, ἵνα μή τις καυχήσηται.
Of God [is] the gift: not of works, in order that not anyone may boast.
There are some verbless clauses here, represented by the inclusion of "[is]" in the above translation. It is the second of these verbless clauses that is translated "it is" in the ESV translation you give (neither the "it" nor the "is" are in the text). But verbless clauses are very common in Hebrew,2 and since Paul thinks in Hebrew, he (and the other NT writers) do such in Greek as well.3 English uses them too, and can reflect this here, a bit awkwardly, like so:
For by grace ye have been saved through faith, and this not of you—the gift of God! Not of works, that no one can boast.
Three Keys to Unlock the Answer
Three key things help determine what the gift from God is:
- χάριτί (grace) has a grammatical gender of feminine in Greek.
- πίστεως (faith) has a grammatical gender of feminine in Greek.
- τοῦτο (this) has a grammatical gender of neuter in Greek.
Greek syntax matches gender of pronouns to the antecedent it refers to.4 So if "this" referred to either grace or faith individually, it should be in the feminine gender—and there is no reason it would not have been had such been the intention. Such a form would be ambiguous, since it could refer to either grace or faith, but likely be referring to the nearest referent, and thus faith.
However, the neuter gender is used for the pronoun. This is the common gender used when a phrase or clause is the antecedent.5 So "this" refers to the whole previous clause, "By grace ye have been saved through faith."6
So this fact expressed by the clause, that only by grace through faith have any who are saved entered into that state of salvation, is a fact that is not something that comes about from oneself, not "of you." Rather, this is an "of God" thing, it is "the gift" of God that such is the way of salvation, by grace through faith.
So the "it" your question refers to is the English added subject of the verbless clause in Greek, which subject is pointing back to the "this" preceding it. Which "this" refers to the entire clause preceding it.
And it is the gift of God in order that it is "not of works" (because none would achieve salvation then, for no sinful person can be as righteous as God, Rom 3:10), and it was so done in order that no person might boast of saving himself or herself through good works. Indeed, good works is what a person is obligated and designed to do anyway, and why God saves anyone at all, so that His will for such to be done is done (v.10).
Theological views make this passage ripe for eisegesis instead of exegesis. But the answer is that God gave a way of salvation that does not include works, as this way is by grace through faith. There are then two direct implications from that:
- Having faith is not a work (else the contrast would be meaningless).
- Whether faith is itself given by God or simply is the humble, passive acceptance of truth by man is simply not addressed in the passage—either could fit the language (neither can be boasted of, because either way, faith is not a work), so other evidence from Scripture needs to be advanced to resolve that well known theological debate.7
1 Daniel B. Wallace, Greek Grammar Beyond the Basics: An Exegetical Syntax of the New Testament (Grand Rapids, MI: Zondervan, 1996), 247.
2 Ronald J. Williams, Williams' Hebrew Syntax, 3rd ed. (Toronto: University of Toronto Press, 2007), 206-207.
3 Some examples in Wallace, 54-55, 269-270.
4 Wallace states, "The basic rule for the Greek pronoun is that it agrees with its antecedent in gender and number, but its case is determined by the pronoun’s function in its own clause. This concord principle, however, has many exceptions" (316). For some of those exceptions for demonstrative pronouns (325), such as used here, see 329-335—which do not match the characteristics of the passage here. The argument for shifting of neuter gender to try and refer to faith (feminine) is that "the τοῦτο has been attracted to the gender of δῶρον (dṓron) [which is neuter], the predicate nominative," which Wallace states is unlikely because "δῶρον is not the predicate nom. of τοῦτο, but of the implied 'it' in the following clause" (334).
5 Wallace, 333.
6 For discussion of this passage by Wallace, see 334-335. He states of this passage that the issue "cannot be solved by grammar alone" (as I have advocated here; mainly because there is a slight possibility of seeing it otherwise). He does conclude, however, that while possible, "it is doubtful [emphasis added] that either 'faith' or 'grace' is the antecedent of τοῦτο," and rather far more likely it refers to "the concept of a grace-by-faith salvation" (as I argue above) since "τοῦτο regularly takes a conceptual antecedent" (335). He does give a fourth adverbial view, where it could mean "and especially" (335). As a final footnote to his discussion, he gives this info (emphasis added):
An examination of all 22 instances of καὶ τοῦτο in the NT (not
including Eph 2:8) yielded the following results: 14 or 15 had a
conceptual referent (e.g., Luke 3:20; 5:6; John 11:28; 18:38; John
20:20; Acts 7:60; 1 Cor 7:37; Phil 1:9; Heb 6:3 [Phil 1:28 was
probable]); four were adverbial (Rom 13:11; 1 Cor 6:6, 8; 3 John 5
[Heb 11:12 is listed by BAGD as adverbial, but the plural is used (καὶ
ταῦτα), following more closely the Attic idiom]); three involved the
same gender (Luke 2:12; 13:8; 1 John 4:3); no clear examples involved
different genders (though Phil 1:28 was possible)
7 Wallace also concludes "Whether faith is seen as a gift here or anywhere else in the NT is not addressed by this [passage in Eph 2:8]."