Impact investing has emerged in the last 10 years as a major, fast-growing and world-changing trend. This way of investing subverts the old paradigm that you invest to make money for yourself to then give money to nonprofits to do good for others — nonprofits that might be solving problems created by the businesses you invested in.
Impact investors invest in for-profit businesses created to solve big problems, such as the lack of access to electricity in the developing world or the racial wealth gap in the United States. Instead of investing only for yourself, it is investing for us all.
Making positive impact
Impact investing is not an asset class; it is a lens, a way of looking at your money. There are hundreds of impact investing venture funds, many focused on the developing world, often investing in technology for good. For example, Off Grid Electric is a social venture based in Tanzania that installs solar panels to displace kerosene, a fuel that currently kills up to one million people per year through indoor air pollution. The affordable clean energy sold by Off Grid Electric cuts the fuel costs of a family in a village hut by 40 percent; giving another dollar a day to a family that only makes $4 a day.
In the United States, investors can put money into ventures that are developing innovative mobile health apps that can save lives while reducing the costs of health care. One such mobile health app, Ginger.io helps people better manage costly behavior related diseases like Type 2 diabetes, which saves hospitals huge amounts of money by reducing the number of costly emergency-room trips each year while simultaneously keeping the poorest patients healthier.
There is increasing demand from the customers of big Wall Street banks for ways to get in on impact investing, which is one of the most encouraging signs of this cross between a movement and the next way of investing.
If we succeed, it will be possible for the average person to invest locally and globally in businesses and funds pro-actively doing good in their city or across the globe.
Kevin Jones, Co-Founder, SOCAP, [email protected]