Showing your value to the wealthiest people in the world may mean showing your values. And one way to do that is through impact investing.
This blog will be devoted to providing you with the tools, tidbits, insights, and information you'll need to capitalize on the burgeoning field of impact investing, which is now being deemed so hot it is its own asset class.
Refresher: Impact investing aims to solve social or environmental challenges while generating financial profit. It differs from philanthropy because that is, bluntly, charity. And it differs from socially responsible investing because that is, bluntly, more passive; SRI typically uses screens and filters to adhere to investor preferences (winnowing out, for example, sin stocks). Impact investing is more akin to private equity investing: more risky but more rewarding--in ways that go beyond mere moolah.
Impact investments are estimated to be some $50 billion to date and projected to grow tenfold over the next few years. Yet--and here is the point of this particular blog entry--there is a disconnect between companies seeking capital and investors, as well as those in between. Hammer over the head: those in between are you, dear financial advisors.
Companies looking to effect social change--whether by selling solar powered lamps in Africa or lending small amounts of money to farmers in rural India, or by any one of the thousands of other ways people have thunk up ways to change the world--aren't all that adept in getting their message out. Investors looking to put their money to work aren't all that adept in taking the right investment steps necessary to ensure their money is being put to use in the most efficacious way, as well as in a way that Ben Franklin would be most proud: "Better a return of my money than on my money." Enter you, professional financial advisor, to step in and show your value.
To be sure, there are those already in the middle of the impact investment between dollars and sense.
The Global Impact Investor Network provides terrific resources as well as investment standards. Soon it's launching a database where targeted investments can be sought.
Mission Markets provides an impact investing platform where investors, investment advisors, and third-party service providers can "communicate, evaluate, and invest."
Investors Circle is a network of angel investors who seek financial, social, and environmental returns on their investments.
And launching today (February 1, 2011) is www.33needs.com, a matching service between companies looking to create social change and investors.