What if your donations could start giving back a return? What if your urge to contribute to a social and environmental cause could be met by investing money which will still remain yours?
Have you heard of impact investing? Impact investing is one of the forms of socially responsible investing which are made to companies, funds and organisations in order to bring out a beneficial social and environmental impact while simultaneously being able to provide a financial return on the investment (should all go according to plan). These investments are connected to the solution of social and environmental issues by deploying the investors’ capital in the form of venture capital, private equity or fixed incomes for non-profits, funds and businesses which have the potential to harness and deal with these issues.
An article by Mr. Lloyd Nimetz in the Stanford Social Innovation Review titled, “Donate for Return vs. Invest for Impact: Where Do You Stand?” outlines how an increasing number of people want to manage their money to maximise financial return and social impact but on the other hand also mentions about how people are still much more attracted to a fully paid-back donation than a high-risk, low return social investment. He further states, “We are much closer to a tipping point in getting people to allocate their philanthropic monies towards high social impact initiatives that have a high probability to repay in full.”
Despite the recent economic crisis and decrease in the investments, the impact investment industry has still seen remarkable growth due to the range of entrepreneurial activities and innovation in various parts of the world ranging from education, housing for the poor, healthcare, sustainable agriculture and various other social causes.
Even though impact investing has a few bottlenecks like benchmarking and measuring performances, lack of team work and clarity between investors, organisations like The Global Impact Investing Network (GIIN) are working on a programmatic agenda to root the challenges faced by investors, and serve as a forum for identifying and addressing the systemic barriers that hinder the impact investing industry's efficiency and effectiveness.
So instead of donating for the holidays this year, hy not check out impact investing? Head over to GIIN's website for more information.