Social Impact Investing: An Effective Way of Investment

Since the last century, many charitable organizations and governments around the world have invested tremendous efforts to address various social problems like poverty, disease, lack of education etc. They are continually trying hard to fund their social commitments to eliminate these problems. Though social impact investing has come under the radar lately, it holds great potential for expediting global development by utilizing private capital to attain social improvements.

Social entrepreneurs are often stultified by conventional financing institutions and the grants and donations they receive aren’t necessarily enough for their growth. Here, the biggest question comes in: why some investors don’t want to put their money into social impact investing? That’s because sometimes, impact investing generates lower financial returns compared to conventional financial investing. Interestingly, when it comes to impact investment, the cardinal idea lies in ‘impact first, returns later’. Here, the investors expect the organization to prioritize impact over profit and that sometimes leads to inconsistent financial returns.

If we look at the greater picture, social impact investing has the potential to go a long way. But to start with, more investors need to be encouraged to participate and help the sector to develop. This sector can only flourish when comprehensive approaches are taken to inform and educate the investors about the all-round benefits of a human-centered and more pensive approach to investing.

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