As someone whose day to day job is to engage with investors and explain what social investment is, I think it is hugely important for us, and our intermediaries to define what makes social investment unique within the impact investment universe, because of course, social investing is a subset of impact investment.

A small group of us have embarked on a project to re-vision and re-position social investment and we believe what might differentiates social from impact is:

  • Intention to deliver high or deep impact, not only scalable investments
  • Willingness to consider really tough and entrenched social issues
  • A long term commitment to impact
  • Willingness to invest where there is persistent market failure or to a desire to break market failure if possible
  • “Investing for impact” rather than “investing with impact”

One of the most hotly debated topics in any impact investing conference is always around financial returns. Can you get risk adjusted returns and impact? Do you have to trade off financial return or something else (duration/liquidity) for impact? These are important and extremely valid questions for any investors but what you don’t often hear is what kind of impact is investors hoping to achieve? What problem might they want to solve? Who do they want their investment to impact? As impact investors, surely the type of impact is as pertinent as the financial returns we are trying to achieve. Positioning social within impact might help us focus more on the impact side of the equation.

Read the full article about defining social components within impact investing by Evita Zanuso at Big Society Capital.