Impact Investing Pretty Much Just Investing

January 15, 2011 at 8:19 AM

At Wall Street Journal’s Market Watch site, Thomas Kostigen discusses “impact investing,” which “aims to solve social or environmental challenges while generating financial profit…by actively seeking to place capital in businesses and funds that produce returns and effect social change.”

Many people – including, we suspect, many working in the nonprofit sector – harbor the assumption that if one is making money, one must be injuring or stealing from others to do so. At Giving Click, we do not subscribe to this view. Nevertheless, we remain skeptical of impact investing or socially conscious investing.

Kostigen’s examples of impact investing include microloans (which he acknowledges have come under fire of late) and a program to sell “solar lamps to people in rural communities without electricity.” They would probably rather have the electricity.

Business and investing will always be about profit first, but even then a positive impact for society can result. Weigh the insane amount of wealth Gates, Jobs, Dell, Zuckerberg, and others have amassed in the personal computing revolution against the pervasive positive effect that revolution has had on practically all aspects of life in the industrialized world – good that continues to spread into the less wired parts of the world today.

Without them, this blog wouldn’t exist – which should pretty much settle the argument in their favor right there.

If you want to make money, make money. If you want to do good with your money, do philanthropy. While the kinds of products and services “impact investing” comprises may be all to the good, we don’t see a case for its elevation to some higher ethical plane.

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Entry filed under: Economic Issues.

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