Impact investing is disrupting Wall Street, as investors are being more proactive about where they will put their money and the subsequent impact on society. If you are looking for ways to invest that can have a positive impact, you will be happy to know that many companies are working to improve lives while making money. This means that their business decisions will go further than a donation would, because the company sustains itself through profits from investing in impact efforts.

(See also: Impact Investing: Making a Difference and a Profit.)

Here are four areas to look at if you want to get started in impact investing.

1. Impact Mutual Funds

Perhaps the easiest way to start impact investing is to buy shares of a mutual fund. You can find mutual funds that promote social and environmental responsibility. Companies such as EarthFolio will help you find these funds.

Once you buy shares, you make money from dividends or capital growth, just like you would with other mutual funds. The difference is that the fund only engages in impact investing. These funds typically don’t focus on one sector like energy or agriculture. Instead, they search across all sectors to find social and environmentally responsible companies to invest in.

2. Energy Efficiency

Investing in energy doesn’t have to mean buying stock in a large oil company. If you want to keep things simple, you can buy shares of an exchange-traded fund (ETF) in the alternative energy space. Examples include TAN, a Guggenheim fund which buys shares of companies in the MAC Global Solar Energy Index. Another example is PBW, the PowerShares WilderHill Clean Energy Fund. It buys stocks of companies that are involved in producing clean energy.



Some organizations help you find energy projects that are renewable and responsible and are looking for investment capital or to issue bonds. You get a return on your investment while helping companies produce clean energy. As an example, a company called Mosaic Inc. will connect you to a solar project. You actually buy a part of a solar enterprise. Mosaic checks out the company thoroughly to make sure it is a viable firm. You won’t get filthy rich at the 4.5% to 6% interest rates the loans earn, but you will make money while supporting solar energy.

You can go bigger by purchasing bonds from Warren Buffett. His MidAmerican Energy company has bonds that earn 5.375% interest. The purpose of the bonds is to pay for some of the cost of the Topaz Solar Farm in San Luis Obispo, California.


3. Sustainable Agriculture

Impact investing in agriculture is focused on finding local growers who sell directly to customers without over-processing the food. Local growers need money from time-to-time to purchase equipment, land and materials, and they seek loans.

You can invest in sustainable agriculture through organizations like Investor’s Circle. In this model, you join a national network of investors that support sustainable projects. Similar companies, such as Working Farms Capital, use investors’ money to support local farms.

There are companies such as ImpactAssets that help small growers. You can invest by buying bonds and notes that ImpactAssets issues. This is for higher-end investing. The minimum investment is $25,000.

4. Microfinance

You can help the working poor by making very small loans. These loans could be $25 to a few hundred dollars. The money goes to people in underdeveloped countries to help them start companies that do things like raising poultry, sewing, and selling fruits and vegetables.

Your money helps those who are trying to find a way to survive in countries where survival is far from a guarantee. Their seemingly small enterprises could feed their family in areas where jobs are scarce and opportunities are limited.

You don’t have to find the individuals to loan your money to. There are organizations that do that for you. Some are large and some are small, but all are dedicated to helping micro-businesses get off the ground. For example, the organization Accion works as a gateway to loans you can make to small entrepreneurs. These are true loans, so they are an investment that provides a return.

The Bottom Line

Traditional investing has a “profits at all costs” reputation, where it doesn’t matter what you invest in, as long as it makes money. Impact investing seeks to satisfy the desire to help the planet and humanity while also making money. You don’t have to search far for opportunities to invest like this. (See also: What a Career in Impact Investing Could Look Like.)

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