Social impact investing is a new and evolving industry, but one thing is clear – It’s impossible to clearly define “social impact”.
There are some definitions that provide a little clarity:
From the Global Impact Investing Network (GIIN):
Impact investing aims to solve social or environmental challenges while generating financial profit. Impact investing includes investments that range from producing a return of principal capital (capital preservation) to offering market-rate or even market-beating financial returns. Impact investors actively seek to place capital in businesses and funds that can harness the positive power of enterprise.
The problem is, there are a ton of companies that could fit that description. Even a company that exists solely to turn a profit could argue that their economic impact is solving a social challenge and is “harnessing the positive power of enterprise”.
So how does the Impact Angel Group determine whether an investment is an impact investment?
It’s not a perfect science. We apply our investment criteria, try to make sure the company really intends and is passionate about creating an impact and……We Vote. If enough of our voting members agree it’s an impact investment, we consider it as such. Is this the best approach? Maybe not, but we’ve decided we could either spend 20 years arguing about what is or isn’t an impact investment or we could just try to make an impact.
What’s your definition of social impact investing? Leave a comment to weigh in.