Key Terms in Impact Investing
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are key terms used in the impact investing world.
Here is a list of the ones to know:
- 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.
- Charitable purpose -- the investment’s purpose has a charitable contribution that aligns with the foundation's purpose.
- Mission-related investments -- an investment for social or environmental reasons with a financial return.
- Program-related investments -- a specific type of investment made by the foundation that aligns with its mission.
- Divest/invest movement -- investors using their investments to achieve social goals.
- Due diligence -- an in-depth evaluation of an investment.
- Environmental, social, and governance -- incorporates environmental, social, and corporate governance criteria into an investment analysis.
- Market rate -- the standard financial return an investor expects.
- 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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