I love it when people write (read scorn) to inform me that my definition of "impact investing" is erroneous. I had no idea that Webster had so many siblings (yes, that is meant to be glib).

So over the last month I embarked upon a secret mission. I asked every one that I interviewed or spoke with in the impact investing space what their definition of the term is. For the record, I speak with a ridiculous amount of people on a regular basis: chief executives, portfolio managers, NGO fieldworkers, government officials, people at the United Nations, and whatnot. And as the old joke goes, put 100 of them in a room and you'd get 100 different definitions of what impact investing is.

For the purposes of this blog and the associated writing/work I do in this space, it's worth laying out exactly how I see the various terms of "do-good" investing. 

Micro-investing. In my mind this is for the newbie, individual investor with a social conscience.  He or she may want to do good with money, but not give it away. Organizations such as Kiva.org or Microplace.com are great intros to the world of impact investing. 

SRI (Socially responsible investing). This is for the investor who has certain biases. It could be a religious investor whose principles run afoul of some healthcare companies. It could be a vegan who doesn't want to invest in a meat producer. Or this could be a peacenik opposed to defense stocks. Largely, SRI is confined to negative filtering and screening companies to abide by investor preferences.
ESG. This stands for environment, social and corporate governance issues-technically. However, ESG has come to mean, for me, a way of seeking out alpha (positive returns) via stocks that embrace these positive virtues. In other words, ESG puts financial returns first and then screens for social impact. 

Mission. This takes ESG investing a step further by tilting portfolios toward a particular sector. (There is some blur here with private equity, which I will get to below). Want to put your dollars toward education in sub-Saharan Africa, or to community development in the United States, or healthcare in the Middle East? Whatever the mission, the "tilt" of the portfolio is meant to address these issues.
True impact investing. This is not for the faint of heart. This is pure private equity investing, largely in the developing world. The investment dollars are big, and the capital supports private business and programs with very specific missions and goals (see above). 

Philanthropy (endowments of causes). After stepping up the ladder and getting to the point where you have enough dough to support an entire, say, private school in South Africa, or some such place (think Oprah), the logical next step is to keep that school going long after you are dead ... ad infinitum. Here is where endowments fit into the impact investing ethos. 

From small investments to large ones, impact investing works. How to define it is up to you. Don't let anyone tell you any different.  It's all good.