What Is Impact Investing?

 


 

Impact investing focuses on making investments into organizations, nonprofits, or companies with the intention of generating measurable social or environmental impact in addition to a financial return. There are several different types of investors; we’ve outlined a few of them below for your benefit.

 

The Minneapolis Foundation

Foundation

One of the first community foundations in the world, The Minneapolis Foundation brings together people, ideas, and resources to improve the lives of all people. It’s a 100-year-old tradition — and we have big plans for the future.

 Types of Investors

 

 

INDIVIDUAL IMPACT INVESTORS

Individual impact investors have realized that making investments can’t just be about making money. All too often money changing hands hurts people or the environment, and that there are hidden costs to many transactions. They make the conscious decision to make investments in organizations that have measurable positive impacts on the world. Most are SEC accredited, though recent changes in legislation mean that non-accredited persons, from many different income brackets, may make investments in small businesses and nonprofits as well.

ORGANIZATIONAL IMPACT INVESTORS

Companies can invest, too! Impact investing is especially attractive for triple-bottom-line companies, who want to make sure they’re making a difference when they’re making a profit, and for companies that want to make sure that their money is going to a good cause with proven results aligned with their mission.

 


 

FOUNDATIONS

Foundations can use impact investing as a way to expand their reach in their communities and develop financially. They could also be both an investor and a customer. For example, a foundation could invest in data management software and receive returns on that investment, while simultaneously benefiting from using that same software and better taking ownership of their donor data.

LARGE INDIVIDUAL NONPROFITS

Nonprofits are typically known for spending a lot of time providing direct services to the communities they work with, though they can also make impact investments to both grow their organization and make an impact. Organizations like United Way leverage the funds they receive through grants and donor gifts to invest in meaningful, measurable projects that help them grow their endowments in the long-term.