The Business of Good summary

What do you know about the concept of social entrepreneurship?

You might question whether such a concept is even possible, as it certainly costs plenty of money to tackle issues such as climate change or poverty.

Social entrepreneurs seek out investors who are interested in making both a social impact and seeing a return on their investment. Such investments are called impact investments.

An impact investment differs from a regular investment because the intent behind the investment is rooted in the desire for social change. In other words, the goal of an impact investment is to create a beneficial social impact.

To measure success, it’s necessary to account for profits, as well as the amount of social good inspired by the investment.

A survey by the Global Impact Investing Network (GIIN) and JPMorgan Chase found that in 2014, some 146 impact investors invested a total of $10.6 billion in projects.

According to the report, 91 percent of impact investors experienced returns that met or exceeded expectations and a whopping 98 percent said the social impact of the investment was in line with or exceeded what they expected.

So from an investor’s perspective, impact investments are effective. When it comes to companies, however, it’s also possible to turn a profit while changing the world for the better.

Just like an impact investor, a business can make a social impact, too.

While many companies already have sustainability departments or donate to charity, social entrepreneurship works differently by making the social impact of charity as central to the business as profits.

The author’s real estate agency, for example, had a social mission. For every deal it closed, a portion of proceeds went to a charity that builds wells in communities without access to clean water.

Focusing on this social good gave the young company a competitive advantage, and helped it attract new clients. This example proves that it’s possible to make money while addressing social issues.