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From organizing donation drives, making regular contributions to charitable organizations, and volunteering your time, there are many ways everyone can make a difference when it comes to supporting worthwhile causes and your own communities. While investing is often solely associated with the pursuit of profit, impact investing shifts the narrative to one that is both financially and socially beneficial.

What Is Impact Investing?

Put simply, impact investing entails making financial contributions to organizations and businesses that uphold certain values and work toward improving the world while simultaneously providing an opportunity for fiscal growth. Many investors find value in this practice because such investments can help diversify and grow their portfolios while also making a difference by supporting causes such as sustainability, equality, and more.

Range of Return Expectations

With impact investing, investors may have a wide range of expectations when it comes to financial returns. These expectations may range from below-market investments, including grants and subordinated loans, or above-market investments, which can include private and public equity. Investors who participate in impact investing tend to understand that their goals are two-fold, but the range of their expectations can influence where and how they choose to invest in such companies.

Measuring the Impact

Naturally, investors want to see that their contributions are being appropriately utilized, both in terms of generating monetary returns on their investments and in terms of actualizing change in accordance with the company’s values and goals. Businesses that promote social or environmental causes as a driving factor should be able to establish clear goals, identify actionable steps to achieve them, and implement metrics to track and monitor the success of their initiatives. By providing this information to interested parties, businesses will be able to attract and maintain investors while also granting themselves an effective plan for financial success as well as a positive change.

The impact investing market is estimated to have a value of more than 700 billion dollars as of June 2020. It attracts investors from various industries and organizations with its prospects of social and environmental change as well as financial returns, making it a mutually-beneficial investing practice.