More Than Just a Trend: the Importance of Impact Investing

Abstract

Most investors have heard of the increasingly popular term "impact investing," but they may not be fully familiar with its meaning. This article will define impact investing and some related terms, explore the history of this type of investing, discuss why it is important now, and explore how it can be implemented in portfolios for interested investors. Investing profitably and in a manner that is useful, honorable, compassionate, and ultimately makes a positive difference can express itself in the form of impact investing. Socially responsible investing has been around for centuries with the first form of ethical investing (essentially an investment process guided by moral or religious beliefs) beginning in the 1500s. Foundations have been practicing their own vision of impact investing for years via mission related investing (MRI). Foundations engaging in MRI are doing so above and beyond their program-related investing, or PRI. PRI is also designed to further a foundation's mission and is included in a foundation's 5% payout requirement.