Impact investing may sound like a novel fad these days, but the idea of contributing to social and environmental causes has existed almost as long as the issues themselves. However, impact investing takes philanthropy to a new level by harnessing the power of compound interest to yield greater good across the globe. This burgeoning niche market has grown beyond the confines of the wealthy, opening the way for everyday investors to enhance their world along with their portfolios.
Impact investing makes it easier and profitable for institutional or individual investors to place their money where their hearts are – into the causes that support the values and ideals they hold. The impact investment market channels capital toward organizations that are tackling global challenges such as conservation, poverty, food security, sustainable agriculture, healthcare, housing, and education. Impact investing pays in so many ways. Here are a few:
Becoming Part of the Solution
Global dilemmas such as abject poverty, climate change, and education access cannot be fully addressed by governments. Private capital is critically needed to solve these problems. Through impact investing, the average person does not have to shake his head in despair; he can actively participate in taking down these challenges.
Reaping Returns on Doing Good
Global issues are potential gold mines. Those who successfully handle today’s problems will reap abundantly in the future. The Global Impact Investing Network indicates that most of the $15 billion impact investment market yields returns on par with the market. A recent Morgan Stanley study found that social impact funds were less volatile than similar non-impact funds over the last seven years.
Bringing Funds and Ideas Together
Impact investing marries values with wealth and provides a way to increase the reach of both. One can make a consistent commitment to favorite causes without sacrificing returns. Impact investing is an effective means to be socially responsible and achieve a market-level ROI instead of donating with no opportunity for returns.
Becoming the Change
Investment strategies are often focused on obtaining the highest possible returns on portfolios and securing one’s own financial security and freedom. Impact investing shifts the focus toward opportunities to promote effective changes in issues that affect the world. We all have the ability, resources, and responsibility to make a positive difference for our global neighbors and the generations to come.