What is “Impact Investing”?

Impact Investing is a relatively new term used to describe philanthropy and charitable giving, but it implies that these projects require a return on the investment, although return requirements are much more lenient than what a typical financial investor would demand.  Here’ s a good New York Times article that delves into the topic at length:

More often, impact investing is described by what it is not. It does not work in the same way as socially responsible investing, which excludes areas a person does not want to invest in — like tobacco or guns — through a simple screening process. Impact investing focuses more on bringing about change — helping the working poor in India buy a home, for instance.

While most of the money is going into areas like helping to reduce poverty and improving the climate, it is not philanthropy. Investors expect at least a return of their capital with an adjustment for inflation and, in many cases, a lot more than that.

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2 thoughts on “What is “Impact Investing”?”

  1. I came across your blog’s link posted by a friend of mine on Facebook. Thanks for putting useful information on the net. It’s tough to find this stuff these days.

  2. At the MMI 2011 annual conference, they had an interesting session dedicated to SRI.

    The moderator was Thomas Kostigen, Editorial Contributor, Dow Jones Market Watch and the panelists were Stuart J. Boesky, CEO, The Pembrook Group, John M. Buley, Jr., Managing Director, J.P. Morgan and Sean Greene, Associate Administrator for Investment, U.S. Small Business Administration (SBA).

    I wrote a summary of the session and posted it here: http://wp.me/pPor1-6R

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