Business and social welfare are two worlds that initially appear to have nothing in common. Inhabitants of the social welfare world might argue that business lacks compassion and seeks only to create profit, regardless of its impact on the community. Men and women in the world of business could suggest that those from the world of social welfare have no understanding of how money works and only want handouts.
These two worlds can meet in a productive space that addresses all of their needs. It’s called impact investing, an economic strategy supported by innovative leaders in the financial industry like Robbert Vorhoff, Managing Director at General Atlantic. He’s so serious about supporting businesses that do good that he currently sits on the Board of Directors of Echoing Green, a leader in the impact investment community.
Communication is an essential part of impact investing. Social entrepreneurs need to improve their understanding of how deals get made in the real world. When a social entrepreneur proposes an innovative idea, they are often successful at getting grant money to fund the startup of their enterprise. Their motivation to provide immediate solutions to communities at risk forces them to see things within a brief timeline.
The motivation to cure an illness, feed starving people, or clean up a water supply that has been poisoned is visceral. An immediate solution is required because people’s lives are in danger. Social entrepreneurs often create plans that address a single solution and are ruled by an emotional response to human suffering and injustice.
Experienced business leaders are no less human that social entrepreneurs. Their experience in the business world has given them the ability to see current crises as well as previous ones and those that might happen in the future. Their ability to consider a complete timeline empowers them to create sustainable solutions that will provide solutions that will endure for generations.
Impact investing brings unlikely groups of people into exciting partnerships focused on doing good for people and the planet while providing profits pleasing to investors. The bottom line of impact investing involves pragmatic leadership and innovative business strategy. The pursuit of profit, leveraged with progress on social and environmental issues, has made impact investing a unique strategy for venture capitalists and social activists.
Check out The Case Foundation and Echoing Green, two organizations supporting interesting and innovative work, to learn more about impact investing.