Impact investing.
In plain English
Impact investing puts capital into projects or companies chosen for a specific outcome, such as affordable housing units built, patients treated, or emissions avoided. What separates it from other values-driven approaches is measurement: the investor defines the intended outcome in advance and reports against it. Return expectations vary widely, from below-market concessionary capital to a full market rate. Much of the field sits in private funds and community lenders rather than in publicly traded stocks.
01Why it matters
Impact strategies often use private, illiquid structures with long lockups and eligibility rules, so the question of when you can get your money back matters as much as the stated outcome.
02The math, step by step
A fund reports $10 million deployed and 400 affordable units financed, which is $25,000 per unit. That per-unit figure is the kind of number an impact investor uses to compare one fund against another.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
A donation expects no money back. Impact investing expects a return of capital and usually a return on it, which means it carries investment risk and can lose money. The intent overlaps, but the financial mechanics belong to investing, not to philanthropy.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice