What is Impact Investing? Impact Investing 101
There is a lot of talk these days about impact investing, but relatively few people actually know what it is or how to do it. With the help of Your Mark on the World Center sponsor Gate Global Impact’s CEO Vince Molinari, we’ll explain impact investing basics.
Vince offers answers to the following three basic questions:
1. What is impact investing?
Impact investing is a progressive new investment philosophy whereby an investor proactively seeks to place capital in businesses that generate financial returns from organizations committed
to societal, sustainable and/or environmental goals. The growth of IMPACT INVESTING is borne out by global trends in macro/micro socioeconomics, Next-Gen behavioral finance, and ubiquitous social media that continues to drive participants and awareness to this movement.
2. What financial returns can investors expect from an impact investment?
One of the most common questions about impact investing is what sorts of returns investors can expect. Vince answers, “Profit is not a dirty word, profit creates sustainability, and sustainability creates systemic change. Impact investing returns vary widely. Some investors are willing to give up part of their standard return expectations for the sake of high societal impact. Others are focusing on opportunities to earn market returns, recognizing that not only does solving societal problems create the potential for market returns, the very act of solving the problem may reduce the risk of the investment. Investors can earn high returns while creating impact.”
3. How does an impact investment actually create societal good?
Impact investing creates social good in much the same way that philanthropy does. The money is spent to fund a project that has a social benefit attached. Rather than donate the money, however, the investor asks for the money back. For instance, an investor could fund the construction of a school and ask for the money to be paid back over time in the form of a mortgage. The market for impact investments runs from large scale infrastructure projects to small investments in social enterprises that are serving social needs and providing employment in the developing world.
Vince recently authored “Africa Is the New Frontier of Impact Investing” for Ventureburn, where you can learn more about Vince’s take on impact investing.
On Thursday, October 29, 2015 at noon Eastern, Vince will join me for a discussion about impact investing. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.
You can download an audio podcast here or subscribe via iTunes.
More about Constellation Fin Tech:
Constellation Fin Tech is an innovative and disruptive financial technology software platform company with focus platform launches on impact investing and family offices.
Vincent Molinari is the co-founder and CEO of GATE Global Impact, a leading electronic marketplace platform that’s helping the world’s leading organizations standardize and accelerate impact investing.
Vincent is an active speaker on issues related to capital markets and early-stage companies, and he regularly speaks at events around the world. He’s been invited to testify before the U.S. House Committee on Financial Services and the Subcommittee on Capital Markets and Government Sponsored Enterprises. Vincent has also testified before the Securities and Exchange Commission Advisory Committee on Small and Emerging Companies regarding secondary market liquidity. He regularly consults with members of Congress and regulatory agencies on these issues.
Vincent is a managing partner at Constellation Fin Tech and a founding board member and former co-chair of the Crowdfund Intermediary Regulatory Advocates, a self-regulating association that works with governmental and quasi-governmental entities to establish crowdfunding industry standards and best practices. Vincent is also a co-founder of the Crowdfunding Professional Association, a leading trade organization for the crowdfunding industry, and sits on the board of CF50, a global think tank of 50 of the leading minds from academia, policy, and industry.
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