“What we invest in today will determine the world we live in tomorrow.” ~GIIN
We developed the GreenAngels Platform in recognition and support of the non-profit organizations and impactful businesses that rely on donations and/or investments to continue doing good work for the planet and its people.
What is impact investing?
Impact investing is a relatively new term, first coined in 2007 by Antony Bugg-Levine, author of Impact Investing: Transforming How We Make Money While Making a Difference (see our Resource page). The Global Impact Investing Network (GIIN), a nonprofit organization dedicated to increasing the scale and effectiveness of impact investing around the world, defines impact investments as:
“Investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”
Impact investment provides capital to address some of the world’s most pressing challenges, like climate change, sustainable agriculture, renewable energy, conservation and basic human rights. Impact investing goes beyond the belief that social and environmental issues should be addressed only by philanthropic donations and that market investments should focus exclusively on achieving financial returns—impact investors actively seek out the positive social and/or environmental objectives they wish to see.
In comparison, socially responsible investing (SRI), which has been recognized and practiced for decades, is generally defined by the avoidance of investments in specific companies or activities that produce negative social or environmental effects. SRI allows individuals and organizations to feel good about what they invest in and avoid potential negative social consequences of business activities. For example, they will not invest in tobacco companies, companies that violate human rights, make use of child labour, or harm the environment.
The key word in the quote above is: “measurable”.
Prior to impact investing, approaches such as pollution prevention, corporate social responsibility, and "triple bottom line” (people, planet, profit) were the only measurements of non-financial impact. With impact investing came a commitment to measuring social and environmental performance, with the same rigour as that applied to financial performance.
Impact investing goes beyond passive avoidance and actively seeks to invest in companies or projects that have the potential to induce positive economic, social and/or environmental change. It is about funding change directly. Where SRI fund managers adopt a “do no harm” approach, impact investing funds not only seek to create positive impact, but measure and report their impact in a transparent way.
Today, when the state of our planet requires unprecedented, massive, immediate change, SRI, with its “do no harm” philosophy, is no longer enough—real change requires action and accountability. A number of measuring resources for impact investing are available, including the GIIN’s IRIS and the Harvard Business School: How Impact Investors Actually Measure Impact.
With leading impact investing funds and investors utilizing common metrics to track and report their social and environmental results, investors will increasingly be able to compare and benchmark non-financial performance across managers and strategies.
Impact investing supports the idea that one can “do well while doing good”, or as the GreenAngels’ tagline puts it: “Making a Difference while Making a Dollar”. With impact investing, grant funds and donations to non-governmental organizations (NGOs) and nonprofits can be combined with investment capital in order to support larger or higher-risk projects that may not otherwise be financially viable.
Examples of impact investing
Good Nature Agro is a social business that provides quality seeds to small scale farmers, as well as access to information and markets. Read more about their impact: http://www.goodnatureagro.com/impact
International NGO, Global Partnerships, (https://youtu.be/2GjcsvPInmo) uses grant capital to explore how new types of products and services can make a difference in the lives of people living in poverty and investment capital to sustain and expand proven solutions focused on rural livelihoods, health services, green energy, and economic resilience.
“Global Partnerships lends money to organizations that are making a difference at the household level — by selling things like inexpensive solar-powered lamps to families that normally burn kerosene. The result is better lighting for less money and no smoke. So investors make a return, while family health, finances and the environment benefit. This is at least a 'triple bottom line'.”
~ Impact Investing: The Triple Bottom Line, Laird Norton Wealth Management
For many NGOs, impact investing leverages the way they carry out and finance their work. Oxfam is an international confederation of 19 NGOs, with partnerships in over 90 countries. Their mission is to build lasting solutions to poverty and injustice with a focus on women's rights. With capital from impact investments, Oxfam started the Women in Small Enterprise fund, to help women-owned small businesses get the capital they need to grow beyond a microenterprise. The fund provides partial loan guarantees to limit risks and encourage existing financial institutions to start lending more money to more women-owned businesses.
Echoing Green is a nonprofit organization that identifies tomorrow’s transformational leaders and social entrepreneurs. Through its innovative leadership initiatives, Echoing Green invests deeply in their success in order to accelerate impact and change the world for the better. In their article 3 Reasons Why Impact Investors Should Prioritize Purpose, they explain that in order for mission-focused, social impact startups to thrive, they require supporters to back them, provide startup funding and make social impact investments that are both good for business and good for the world.
Today's young entrepreneurs are learning that social responsibility is fast becoming an imperative factor to business success.
Echoing Green, and other, smaller organizations are acting on the rapid rise of socially responsible business. Socially responsible business, fast becoming an imperative factor to maintain success in a competitive free-market, is focused on using business methods and practices that achieve positive social and/or environmental change. Described by some as “enlightened capitalism,” the social objectives and goals (e.g., alleviation of poverty) are as important as their financial goals.
Einstein Rising, for example, is a newly formed business accelerator for Africa’s “triple bottom line” social entrepreneurs—those who develop or create businesses that improve peoples’ lives, protect the planet and make a profit. They provide business development services, coaching, mentorship and networking, outreach and investment capital.
Invest your money to change the world! That’s the idea behind impact investing, which is the new frontier for people who want to invest with a conscience. If it is not enough to just “boycott polluters and other “bad” actors” (~ Impact Investing: The Triple Bottom Line, LNWM) then you might consider private funds whose investments aim to bring about economic, social and/or environmental change.
We can help you find your cause and simplify your search for those organizations and business that are making the difference you want to see in the world.
For more information check out our resources page.