NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, November 3, 2016

For more than four years, I’ve been covering impact investing as a regular Forbes contributor and have written hundreds of pieces about the space. Here’s the thing: most impact investments are only open to wealthy people. This is a guide to impact investing for everyone else, the 98 percent of the population who don’t meet the criteria for investing with the wealthy.

Shall we pause for just a moment to define impact investing?

The term impact investing, I’ve realized, is new enough that even professional investors aren’t yet familiar with it, let alone the typical investor. Impact investing refers to the idea of investing in businesses that will cause a social benefit. Most liken it to philanthropy but with the added benefit of a financial return.

An easy example is to consider my 2013 article about Vital Capital, which invested in a community Agribusiness, moderate income housing and a medical center in Angola. Charities also engage in providing food, housing and health care in Angola, but Vital Capital invests in those activities—earning high returns along the way.