Impact Investing

In our fast-evolving world, many have argued that philanthropists have failed to address social problems, and have not made the world significantly better, safer, or healthier. Or that they are disconnected from the real problems of the poor and that they often change their opinion of what cause they deem "worthy."

Thus, many are turning to impact investing. Impact investing is not a continuation of philanthropy, nor is it a charity cause. Rather, impact investments are investments made with the intention to create and generate a social or environmental impact alongside a financial return.

Impact investing attempts to solve the world's problems by giving money to entrepreneurs who have the ability to solve social problems in a sustainable, for-profit manner. In contrast to philanthropists, many believe that entrepreneurs are better positioned to comprehend problems such as the lack of health care, adequate education, access to clean water, etc. Additionally, impact investing tends to be more sustainable because it is more based on self-interest. When a business succeeds, returns are generated which motivates the entrepreneur, and there is a secondary social or environmental impact as well.

Now, impact investing targets companies that have a core aim to create an additional impact aside from just making money. While some argue that impact investing results in lower returns than regular investing - this still remains a controversial point of contention.

Ultimately, impact investors look for both a financial and social return. They range from venture capitalists purchasing stock in a tech company that can give microloans to the poor to seasoned investors buying a bond to build infrastructure that reduces water pollution. Since the term was coined in 2007, impact investing has been and continues to be, on the rise.

https://www.investopedia.com/terms/i/impact-investing.asp
https://en.wikipedia.org/wiki/Impact_investing