Key Terms in Impact Investing

Key Terms in Impact Investing

June 10, 2022 by investor

Key Terms in Impact Investing

There are key terms used in the impact investing world.  

Here is a list of the ones to know:

1. Below market rate — an impact investment made with the expectation that the financial return will be less than the market rate of a startup’s investment.
2. Charitable purpose — the investment’s purpose has a charitable contribution that aligns with the foundation’s purpose.
3. Mission-related investments — an investment for social or environmental reasons with a financial return.
4. Program-related investments — a specific type of investment made by the foundation that aligns with its mission.
5. Divest/invest movement — investors using their investments to achieve social goals.
6. Due diligence — an in-depth evaluation of an investment.
7. Environmental, social, and governance — incorporates environmental, social, and corporate governance criteria into an investment analysis.
8. Market rate — the standard financial return an investor expects.
9. Socially responsible investing — an investment strategy that seeks investments that are considered socially responsible based on the business.

It’s important to know the difference between impact investing and non-impact investing. 

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