Here are 7 reasons why impact investing makes sense financially for everyone. Not only for your typical financially savvy people like venture capitalists, investment bankers, and foundations, but also for individuals. Which reasons are the most compelling to you? Leave your story in our Facebook group Impact Investing Forum and connect with likeminded people!
Reason #1. Create a Better World for Everyone
According to United Nations data, thousands of billions of Euros are needed to finance the UN’s sustainable development goals (SDGs), and we’ve seen so many charities and donations fail in solving the world’s biggest problems. Private capital is needed to fill that gap. Challenges from all over the planet can be overcome by people from all over the planet. If we just redefine what we see as value, impact investing allows us to make social impact an important part of our investment returns, and be a part of social change that makes a real difference for our planet and future generations.
Reason 2. Get Stable Returns.
Doing good by doing well is not new, but it’s becoming easier than ever before. The internet is a blessing for people who want to get into the game of funding social change. Like we wrote in a previous post, there’s a faulty perception of the risk and return of impact investments. Don’t believe the myth of low returns from social impact investing. You can certainly achieve stable market-rate returns via impact investing. A new study by Morgan Stanley even found that, on average, social impact funds had lower volatility than comparable non-impact funds. They report: “Sustainable funds had equal or higher median returns and equal or lower volatility than traditional funds for 64% of the periods examined.” Is that good news or what?
Reason 3. Build a Circle Of Progress.
Want to reach your individual or your company’s social responsibility goals? Sure, you can donate money to a project and you’ll look good, I’m definitely not saying you shouldn’t! But what happens if the project runs out of money? If you are looking for a higher ROI and a more sustainable way to help people get out of poverty, then impact investing should be on your watchlist NOW.
Invest in a new smart farming startup, a great health innovation or a promising solution to meet local or global energy challenges: you can build a circle of progress instead of giving away your money into a linear system that will continuously ask for new inputs.
Reason 4. Make Your Clients Happy.
Do you work in finance? Great, here’s a good one for you and your colleagues. Like we showed you earlier, there is a growing demand for banks and fund managers to offer impact investments, especially from the Millennial generation, but also from other segments awakening to the crucial needs of society’s underserved populations. In today’s trust-based, socially-conscious investing climate, you must offer impact investment services to stay competitive.
Reason 5. Get An Awesome Network.
That’s right. Great minds think alike, and there are some powerful and renowned activists, politicians, bankers, entrepreneurs and investors who are already involved in the game of social impact investing. They can all be part of your network! Impact investing brings together people from all kinds of backgrounds who have the same belief in the financial and social benefits and urgency of impact investing.
Reason 6. Change The Culture Of Investing.
Impact investing is on the way up, and it’s growing faster every day. The majority of social impact funds have been created in the past few years. Today, we are all in a position to take impact investing into the mainstream. If you as an investor, entrepreneur, or politician commit your skills and resources to build a new status quo, we can help create a new normal around impact investing.
Reason 7. Be a Global Citizen.
As investors, it is often all too easy to become overly focused on financial bottom lines and the sectors that dominate our portfolios, don’t you agree? Investing in social or environmental opportunities broadens our horizons and gives us an opportunity to drive positive change. You don’t want to miss out on this opportunity!
Join the movement
Our futures are interdependent. I believe that we all have this moral imperative to take on the challenges facing our planet, and the people who live on it. Through impacting investing, whether it’s via crowdfunding or small social impact bonds, we can be ambassadors of social change, while also achieving (and very often exceeding) our individual goals as investors and entrepreneurs.
Now all that’s left to ask is: are you with us?