Giving Compass' Take:

• Purpose and people are two paramount components when working on providing capital for communities in need. While there is still an ongoing debate about the flaws of impact investing, more investors are trying to center work around communities and their missions. 

• How is community development related to mission-investing? Why is it an essential element for investors to consider? 

• Check out the Giving Compass Magazine on Impact Investing to learn more. 

Impact Investing is a relatively young field. Having been conceptualized within the last decade — and having broken into the mainstream even more recently — there’s much about the practice that’s still up for discussion. Objections and the need for clarity are par for the course, even around the more theoretical elements of impact investing, to say nothing of its concrete application (a process still in its early years).

Needless to say, among practitioners and detractors alike, there’s plenty of room for a lively discussion. Assertions have been made that impact investing as a field is bad business, bad philanthropy, and even a bad mix of both. These are all complaints that, while certainly not toothless, can each be addressed in their own way with some simple clarifications. Impact investing needs improvement, but it certainly isn’t bunk altogether. What’s missing from most discussion of impact investing, especially of its pitfalls, is the how and why of incorporating affected communities into the business and the work.

It’s crucial to understand that while the market for impact investments generally could definitely be seen as oversaturated, the current landscape of firms doing mission-driven work is hardly a reflection of all communities in need of greater investment. Region by region, a deeper, more robust connection between communities and capital can lead to the right kind of investments being made, and it behooves foundations to become a part of such an ecosystem of virtue.

In all of those instances, we find the answer lies in two things: purpose and people. This very necessary work has to be rooted in the communities it aims to serve, not the whims of disconnected do-gooding mega-rich or the ploys to stay marketable from the unconcerned.

Read the full article about impact investing at Medium.