What Is Impact Investing?

With everyone including your financial advisor Sunshine Coast talking about how Social Entrepreneurship and Impact Investing are becoming mainstream, many people are often left wondering what trends and challenges are associated with this movement. Many people don’t really know what impact investing actually is. Where going to dive into what Social Finance is, new models, more impact as well as the different strategies.

What is Impact Investing exactly?

It’s an investment made into businesses which operate using a business model that somehow benefits a social cause. For example, TOMS Shoes is a great example of a Social Entrepreneurship model because they have a program called “One for One”. For every pair of shoes purchased, one pair of shoes is given to a person in need. When someone chooses to invest in a company like TOMS, they become an Impact Investor.

Why has Impact Investing become so popular?

One of the major reasons that people are choosing to invest in Social Entrepreneurship companies and businesses boils down to the fact that people are no longer happy with handing over money and wealth to foundations alone. Another possible reason is that there are so many social causes to support and many of us want to help, but often don’t know how so we are happy to spend money on the things we need and want while supporting meaningful causes.

How Popular Is Social Entrepreneurship and Impact Investing?

 The excitement around Social Entrepreneurship has brought in investment sizes totaling approximately US $4.5 trillion per annum. The more international investments that are made, the closer the world is to achieving Sustainable Development Goals. Due to this growth, more social finance is definitely needed, making the demand for Impact Investors even higher.

What Social Causes Does Impact Investing Help?

With the need for more Impact Investing on the rise, the more social needs there seem to be. For example, reducing poverty, feeding a growing world population, solving longstanding educational problems with education, inclusion, environment, health, and empowering women. These social issues will become more difficult to address without a strong commitment and solid platform for investing. Because the social needs we see are so apparent, consumers and investors alike are flocking to businesses and companies with a Social Entrepreneurship model.

What Are the Challenges of Social Entrepreneurship?

While there doesn’t seem to be anything too alarming about this business model, one of the concerns many people are having has to do with “impact-washing”. Meaning, as Social Entrepreneurship becomes more mainstream, will people forget what it’s really all about and stop living up to the real social mission? It’s hard to say, but some companies have been coming up with solutions to combat this ahead of time.

If you’re looking for new investment opportunities, talk to one of our financial advisors Sunshine Coast to help you get started.