Impact Investing

Q: What is Impact Investing?

A: This is not a subject with which NFP Resource is very familiar so we have undertaken some basic research.

Impact Investing may be defined as “Investments made into companies, organizations, and funds with the intention to generate a measurable social and environmental impact alongside a financial return.” <Source>

The UNDP website states that “Impact investment is described (and differentiated from other forms of investment) by three guiding principles:

  1. The expectation of a financial return: impact investors expect to earn a financial return on the capital invested, below the prevailing market rate, at the market rate or even above it.
  2. The intention to tackle social or environmental challenges (i.e. the impact or intentionality): in addition to a financial return, impact investors aim to achieve a positive impact on society and/or the environment.
  3. A commitment to measuring and reporting against the intended social and environmental impact: impact investors commit to measure performance using standardized metrics.”

The website goes on to provide excellent detail about Impact Investment and is recommended reading on the subject.

The Australian website PRObono’ recently ran a couple of articles on the subject:

Impact Investing Could Displace Traditional Charitable Giving 

The Frontier of Impact Investing

 

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