Dipping Your Toe into Impact Investing

Dipping Your Toe into Impact Investing

To most of us, impact investing sounds like something only the mega rich—or mega experienced—would dare take on. But thanks to the rapid development in the field in recent years, there are now a wide variety of ways those of us with lesser means, but just as much passion, can dip our toes into the world of impact investing.

What is impact investing?

Impact investments are investments made into companies, organizations and funds with the intention of generating social and environmental impact alongside financial return.

So by making an impact investment, you’re not necessarily waving goodbye to your check the way you might with an outright donation. Instead, you’re leveraging the power of your money to help grow an organization or industry whose mission you believe in. And if all goes well, you’ll get your investment—plus a decent return—back later.

How is impact investing different from Socially Responsible Investing (SRI)?

In general, while an impact investor will seek out companies whose business practices they agree with, SRI investors will intentionally avoid those companies whose practices they disagree with.

So a socially responsible investor might choose not to invest in a fund that includes companies from the firearms or fossil fuel industries, for example. SRI funds might also filter out companies with poor human rights or environmental records.

Impact investing for beginners

Here are a few options for testing the waters of impact investing:

  • AARP Age Strong. Like the idea of supporting organizations that provide services to the growing population of Americans age 50+? AARP Age Strong might be a good choice for you. Investments in the Age Strong initiative are made through Calvert Foundation’s Community Investment Note, a fixed-income investment product similar to a corporate bond. The fund grants loans to a range of organizations, from local meals on wheels programs to housing communities for older, vulnerable residents.

Investments start at $20 online or $1,000 through a direct check or your broker.

  • RSF Social Investment Fund. How about supporting nonprofits as well as small social enterprises with your investment? The RSF Social Investment Fund grants loans to nonprofits and for profit organizations working in food and agriculture, education and the arts and ecological stewardship. Loan recipients include groups like independent schools, an eco-friendly diaper manufacturer and Fair Trade USA.

The minimum investment in the RSF Social Investment Fund is $1,000.

  • The Nature Conservatory’s Conservation Note. The Nature Conservancy (TNC) is another well-regarded nonprofit with its own impact investment option. Investments in the TNC’s Conservation Note are turned into loans that the nonprofit can use to take advantage of urgent conservation issues. This might mean buying an important wildlife habitat that’s in danger of being sold to developers, for example.

The minimum investment is $25,000, and you can choose a term of 1, 3 or 5 years.

What to know more?

There are a number of accessible, informative books and articles on impact investing available. In writing this post, I found the book, The Power of Impact Investing by Judith Rodin and Margot Brandenburg, both affiliated with the Rockefeller Foundation (a pioneer in the field of impact investing), really helpful.

The established and respected nonprofit, the Global Impact Investing Network also has an extensive range of free resources on its website.

If you’d like personalized, professional help understanding which nonprofits are working on the issues you care about, I invite you to visit Thoughtful Philanthropy.

 

Posted in: Impact investing
About Me

About Me

I am passionate about helping people become informed, empowered and enthusiastic donors. After more than 10 years in the nonprofit/charity sector, I embraced my fear of spreadsheets and got an MBA so that I could help citizens like myself become more strategic givers.  Today, I use my unique experiences in both sectors to help people who care deeply about using their money to make the world a better place.

Lauren Janus