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

Wednesday, April 22, 2015

There’s been a big movement lately among foundations, high-net-worth individuals and family offices toward “impact investing” — investments made with a specific environmental or social benefit intent.

This is great to see, and I’ve really enjoyed getting to interact (and even co-invest) with a bunch of impact investors, and to see even more teams entering the market with this strategy in mind. There’s an ongoing debate, however, around how much return such investors should be willing to sacrifice in order to make that impact.

My answer? None. While I’m fine if anyone wants to sacrifice returns as part of their philanthropic efforts, I believe that targeting returns on par with broader market benchmarks is not only okay, but potentially an important part of an impactful strategy.