2 Benefits of Impact Investing for Social Entrepreneurs

Look after the pennies and the pounds will look after themselves
Creative Commons License photo credit: Mukumbura

Impact investing involves placing some of your money into investments that can make a positive impact in the world.

Impact Investing Through Positively Screened Mutual Funds

There are some mutual funds for instance that positively screen the companies in its portfolio. Therefore, if you were to invest in such mutual funds, you would not only grow your money, but you would also be investing in sustainable companies that exist to make a profit while contributing a beneficial social or environmental impact.

How Social Entrepreneurship is Linked to Impact Investing

Social entrepreneurship involves using business acumen to create a social benefit. Social enterprises make a profit but they are different from conventional businesses because the profits are strategically used to help expand the social impact of the business.

Impact Investing Can Multiply the Impact of Social Entrepreneurs

Social entrepreneurs usually focus their energies and strengths into one or a few social enterprises in which they specialize and have a competitive advantage. It’s true that social entrenpreneurs can’t address every single social or environmental concern in the world. However, social entrepreneurs can invest in other social entrepreneurs and their positive impact businesses.

1. Passive Income and Passive Social Impact

That’s where I think impact investing comes in. The great thing about the majority of investments is the fact that it can be a passive activity. With running a social enterprise, you will have to usually be heavily involved in it. However, for an impact investment, you provide capital to a social enterprise that is run by someone else.

2. Impact Investing & the Power of Compound Interest

Another fantastic aspect of impact investing is the fact that you can grow your impact exponentially over time. By ensuring that your impact investments provide a financial return on investment, you will be able to use the power of compound interest in your favor. If you reinvest your returns ongoingly, the power of compound interest will continue to grow your impact investment.

Learn More About Impact Investing

As a social entrepreneur, I would recommend that you look into impact investments and add them into your portfolio, so that you can passively grow your wealth while supporting companies that are making a positive contribution to the world.”