Impact investing is not charity

Making an impact and doing charity is not the same thing – and you should do both. In general, business angels a lot of capability and resources and are therefore responsible to work for making the world a better place.

Making an impact and doing charity is not the same thing – and you should do both. In general, business angels a lot of capability and resources and are therefore responsible to work for making the world a better place.

A growing international trend is “impact investing” which means aiming for results on top of – or besides – the profit. One can of course argue that all businesses, in fact all decisions we make, have an impact. But impact investing is about evaluating the results in proportion to competitors in the same branch as well as considering both negative and positive effects and the big picture. Impact investing is not solving old problems by creating new ones. Nor is it about transferring market shares from one actor to another without improving anything.

The insight that many things have to change if we want to save planet earth is spreading. I’m glad that business angels in growing numbers are opening their eyes for the impacts that can be done. It also goes well together with one of the common reasons to become a business angel – namely to give back to society. Business angels are also savvy in this regard, they have realized that investing where there’s an impact is profitable. A growing numbers of buyers and consumers want to buy responsibly, therefore often choosing the moral winner over the cheaper alternative.

Impact investing is however not – and should not be mixed up with – charity. Charity is also needed, there will never be any business sense in all the important actions we need to do for the future of our planet and humankind. We should all do charity. And those who have more have a certain duty to do more. FiBAN is as an organization on a small scale supporting for example WWF’s initiative for a cleaner Baltic Sea and a better environment.

Jan D. Oker-Blom
Managing Director, FiBAN
jan(a)fiban .org