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Millennial investors looking to invest with social purpose are poised to push impact investing into the mainstream for good
A generational shift happening, and it means only good things for those of us who are working to solve global problems. More individuals, many of them millennials, bring a strong sense of purpose to how they make their money, how they spend it, and how they invest it.
Increasingly, they want options to make both money and a difference. They are pursuing more of a “conscious coupling” (to borrow a phrase from pop culture) between turning a profit and making progress against pressing problems.
In the next 40 years, generation X and the millennials could inherit up to $41 trillion from baby boomers. But many are not waiting until they are older – and their wealth has been made or inherited– to start impact investing.
For example, more than 3,000 people have invested over $5 million in community solar projects throughout the United States through a platform called Mosaic. With as little as $25, people can finance solar projects that save money for schools, homeowners, or other community-based institutions while reducing carbon emissions through clean energy generation.
One such project is a solar installation that powers the Pinnacle Charter School, one of the largest public charter schools in Colorado, with more than 2,000 students. The project could save the school up to $1.6 million in electricity costs over the project’s lifetime while enabling thousands of students to learn about clean energy.
In a survey by Deloitte of 5,000 millennials in 18 countries, 71 percent of respondents saw the desire to “improve society” as the top priority of business. That perspective is leading young people to start the kinds of social enterprises that develop market-based solutions and create jobs, while still being profitable.
Chid Liberty returned to his home country of Liberia at the age of 30 to set up a social purpose enterprise in Monrovia. He raised more than $3 million in funding from private investors and foundations to launch Liberty & Justice, a company producing fairtrade-certified clothing and accessories for export to U.S. retailers.
The company provides work and education for local Liberian women, as well as clean and safe workspaces. What’s more, most of the product value remains in the country, and gives employees a tremendous sense of pride.
Impact investing is at a tipping point, and millennial investors who are looking to invest with purpose are poised to push it into the mainstream for good.
With effective measuring systems and standards in place, and a growing number of social enterprises like Liberty & Justice ready to absorb new capital, investors no longer must keep their investments separate from their values, to the benefit of people all over the world.
Judith Rodin, president of the Rockefeller Foundation, and Margot Brandenburg, fellow at the Nathan Cummings Foundation, are the co-authors of The Power of Impact Investing: Putting Markets to Work for Profit and Global Good, published by Wharton Digital Press.