Impact Investing with Georgina
Impact Investing with Georgina
On this episode of Financially Naked: Stories from The Financial Gym, our host is Georgina Muri, Level 3 Trainer. She is joined by The Gym's PR Manager, Emily Egan, to discuss all things impact investing. Georgina explains what it is, how you can get involved, and how it works.
Podcast Notes
Georgina started her career doing work with non-profits, but she had more of a financial mindset of how to structure programs versus the philanthropy aspect.
Between her career with non-profits and her corporate career, she got interested in the area of social entrepreneurship, which is entrepreneurship on a more impactful level. These companies are not only looking to provide a good or service, they also want to provide an impact.
This could include lower rates, buy one give one, or the actual product supports a person in another country. Profit is not the only thing these entrepreneurs are interested in.
Investors are interested in a return on investment but also some social or environmental return that is quantifiable in some sense.
Investors include angel investors, venture capitalists, accredited investors, institutional, etc.
The Financial Gym isn’t marketed as a social enterprise, but that is what they are doing. They are providing a service at a much lower price than you could otherwise get.
Georgina wanted to know how to invest with her own money, because she didn’t want to invest in companies she didn’t believe in.
Impact investments are those made with the intention to generate positive, measurable, social, and environmental impact alongside a financial return. These can be made in emerging and developed markets. Historically, this was only done through charity and donations.
Eighty six percent of millennials are interested in sustainable investing. Twenty or thirty years ago, this didn’t exist. Now there are hundreds of opportunities, however there is not a lot of regulation around it.
The definition of what company can be included in a fund can range pretty significantly.
For investors who are interested in impact investing you may be looking for anything in a range of below market investments (like grants or pay for success) or loans.
Loans through Kiva allow small entrepreneurs to get the startup funds needed as an interest free loan. It is a one-time donation and that money comes back to you and you can continue giving back.
Schematic/impact first investing is social impact and a profit and is usually more specific.
Market rate impact investing (socially responsible investing (SRI)/environmental, social, and governance (ESG)) are funds available through larger brokerage firms like Fidelity, Schwab, and Vanguard.
ESG: A positive screen. There are particular requirements about environmental, social, and governance standards. Each financial institution has their own standards of who is included. They are more intentional.
SRI: A negative screen. They are screening out specific companies that are specific things such as tobacco companies and ammunition companies. They are more open ended.
Outside of stocks, you can invest in green bonds, social finance bonds, social impact bonds, municipal bonds, etc. You can also buy real assets, like renewable energy.
Myth #1: I can’t get a market rate return on a social impact investments.
Myth #2: Sustainable investment products are limited, or niche.
Myth #3: I need to be a millionaire to invest sustainably.
Cons: The underlying portfolio assets might not be exactly what you want.
Cons: These platforms may close down, which could force you to sell your investments and pay more tax.
Green washing is something you need to be aware of. A company may have an amazing program, but what are all of their programs doing. Their website is going to market whatever they want.
B Corp certification and Fair Trade certification require independent evaluations.
Resources Mentioned
Websites
Impact Investing Websites
Motif (under $250 to get started)
Open Invest (under $250 to get started)
Hedgeable (under $250 to get started)
Wunder Capital ($1,000 to get started)
Earthfolio ($25,000 to get started)
Brokerage Accounts with Roboadvisors
Webinar
Podcasts
Angel Investing, with Charlie on Martinis and Your Money
@hithapalepu (angel investor)