Impact investing: A ‘positive’ return on investment

By @chelean on
dollars
A U.S. dollar note (bottom) is pictured alongside other currencies including (L-R) the Australian Dollar, Singapore Dollar, Korean Won and China's Yuan in this picture illustration taken in Washington, October 14, 2010. Reuters/Jason Reed

Impact investing intends to both drive financial returns and create social impact. A business can achieve both, but sometimes one succeeds more than the other. This type of investment can be done in several forms — through products, sustainability, communities and more.

Why impact investing?

Doing great in business is not just enough nowadays. A company should now also be socially responsible, and it has been observed that a company’s social performance is connected to its financial performance.

A more responsible company does not just attract more investors, it also attracts consumers that immediately trust its brand. Several governments across the globe also consider incentivising businesses with great corporate social responsibility portfolio. If this investment would not drive profit, it could still attract incentives or event exemptions — either way, the company wins, so is its cause.

How can you do it?

There are a lot of ways to invest in positive impact. One way is to get involved in companies that have already direct ties with nongovernmental organisations or NGOs. Some companies specifically offer this to merchants.

For instance, Exponential, Inc. (XPO2), a tech marketing company with a crowdfunding and impact investing platform focusing on smaller NGOs, is looking to partner with retailers for its cashless contribution offer. Its model is centred on the concept of net social impact wherein the goal is to make sure that all contributions go to the actual cause and make the maximum impact possible. The company is founded by Dom Einhorn, a French-American entrepreneur and activist.

The cashless contributions work like this: when a consumer uses XPO2’s Cashless Contributions browser extension and purchases any commodity from one of its participating merchants, a percentage of what he or she paid goes to a qualified NGO supported by XPO2. The sale is not just a transaction but a way for consumers and partner merchants to help  XPO2 vetted causes.

Moreover, according to a study, Americans are willing to support or boycott companies depending on their corporate values. By actively and publicly supporting certain causes through impact investing platforms l ike XPO2, your company immediately provides transparency toward your existing and potential consumers.

NGOs also on the winning side

The global e-commerce market is expected to reach US$4 trillion (AU$5.47 trillion) by 2020. Almost everyone shops online nowadays, and being able to combine crowdfunding with the e-commerce industry would really help NGOs, especially the smaller ones, to continue the causes they believe in.

NGOs would also find XPO2’s crowdfunding platform the best option for their campaigns because of the participating merchants from around the world. It means that the awareness of certain campaigns could reach worldwide. With a far-reaching network like that, there are unlimited possibilities for these worthy causes.

The idea of impact investing may come off as using social matters for the benefit of your business. The world is not that black and white. This idea is more of a mutual benefit, and that’s how we achieve success. We can create a more evident (and positive) impact together than doing them individually.

Opinions and advice here are not endorsed by International Business Times Australia. The article is based on press releases sent for consideration.