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I am an Investor - but why should I allocate my funds to Impact Investing?!

Several investors ask themselves why they should allocate funds to entrepreneurs that are engaging in solving social and environmental issues and why they should forego additional return - such as discussed recently.

The answer to the question why normal investors may finance promising entrepreneurs that generate a social or environmental impact only seems to be easy on first sight, especially as investors are aware of the possibility of generating a financial return that is below the market return.

To answer the question, one has to put Impact Investing into context. Admittedly, investors engaging in Impact Investing are likely to achieve a financial return below market return. However, Impact Investing is more than just the financial return, as the social and environmental impact has to be regarded in the long-term. Society, especially in Europe, is becoming aware of the relevance of doing business in a sustainble way. Companies and investors are therefore willing to support this visionary perspective, not only because it may be in line with corporate values.

Impact Investing furthermore has to be differentiated from Philantropy. Philantropy, the improvement and enhancement of the quality of life for human beings, primarily implies the donation of money especially by investors and HNWI with an entrepreneurial background. These investors are aware of the importance of the entrepreunerial sprit and therefore foster it.

However, exactly these investors realised the advantages of allocating funds to Impact Investing, such as supporting a social and environmental visionary mindset and to combine it with the market principle of generating a financial return.

Therefore, Impact Investing is especially recognized and appreciated by investors with an entrepreneurial background and a visionary mindset - but everyone may participate in Impact Investing.