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Understanding the Investor

What will you invest and what social impacts and other returns do you expect from those investments? Investors face these two key initial decisions when planning their social investments. By thinking carefully about these issues at the beginning of the impact creation cycle, you can maximize the range and depth of your investments and the returns those investments can generate.

A number of organizations recognize the importance of returns to investors and have developed ways to deliver them. For example, some organizations working on behalf of the poor in remote regions show investors firsthand how the resources they provide can change lives. Investors are invited to visit project areas and talk with the people who have directly benefited from their investments. When Sinapi Aba Trust of Ghana began making loans to increase capacity in schools for the poor, the organization invited donors, consultants, volunteers, and office staff to visit the field and see how the investments were working. For many of these visitors, the experience changed their lives. Seeing bright, engaged children in their safe new classrooms gave visible evidence that their investments were indeed making a real difference in the lives of these children. The trip thus gave them an unforgettable personal and emotional experience that forever changed their perceptions of the good that can be done with very small investments.

An often overlooked but critical factor in navigating your social impact investment journey is an understanding of your motivations for investing. This is the first step in making sure that the outcomes you achieve match your intentions. Who are you? What do you care about? What would it take to consider your investment a success? And what will you invest?

This chapter lays the groundwork for answering those questions. Before deciding on a specific cause, project, or partner in which to invest or reinvest, it is essential to recognize your motivational drivers so that your investment outcomes will truly reflect your investment goals. Taking stock of your goals prepares you to make smart, impactful investments that are consistent with your own particular values and interests. Understanding your investment profile also provides stability and continuity to your activities because they are anchored in the essence of your identity as an individual and an investor.

If you’re investing on behalf of an institution, reviewing motives will help you ensure that your organization’s social impact investments will be consistent with your organization’s charter and culture. You’ll also run into fewer surprises in outcomes and be less likely to have to backtrack on your investment choices.

You can start the investment process with your own investor preference profile to clarify your vision. Rather than investing out of habit or under the influence of others, begin by identifying what social impact investing means to you. If you are working with an organization, a mission statement will help define the direction of your impact investing and the expected bottom line of your investments.

A clear definition of purpose helps to prioritize potential outcomes that a particular investment might achieve for you or your organization and helps to identify opportunities where you can use your particular skills and interests to make the most impact. Understanding why you invest will help you determine the types of resources you are willing to offer, which can include much more than just money. Experience, advice, or hands-on project-level involvement can all create impacts.

What Motivates Social Investment?

In 2011, Wal-Mart made cash donations to social causes totaling $342 million—more than 4 percent of pretax profits. The company gave more than twice that amount, $617 million, as in-kind donations, and Wal-Mart and the Wal-Mart Foundation gave more than $1 billion in 2012. Other companies also made huge contributions to social causes in 2011: Goldman Sachs gave $337 million, and Exxon, Wells Fargo, Chevron, Bank of America, and JPMorgan Chase all gave more than $200 million. Whether they invest directly in impact or not, companies are increasingly attuned to the social and environmental impacts they create through their normal operating activities. Ninety-five percent of the world’s largest 250 corporations now track and report publicly on the social impacts they create—a reflection of the growth in impact-related investment and a willingness to make impacts more transparent.

Individual gifts in recent years have been equally spectacular. The Giving Pledge has enlisted more than one hundred of the world’s most wealthy and influential individuals. On the list, you’ll find multibillionaire and Microsoft cofounder Bill Gates, Facebook founder Mark Zuckerberg, hedge fund chairman and American business magnate T. Boone Pickens, and founder, chairman, and chief director of Lucasfilm George Lucas. What is The Giving Pledge? It’s a commitment made by the world’s wealthiest and most influential to donate a majority of their wealth to philanthropic causes. These individuals’ donations are huge, as are the donations of their foundations. Since 1994, the Bill & Melinda Gates Foundation has awarded over $26 billion in grant money toward causes including fighting infectious diseases such as malaria and tuberculosis and funding education programs across the United States.

Smaller investors are also generous in their giving. In the United States, more than two-thirds of the money contributed to charitable causes comes from individuals or households. In total, donations added up to nearly $300 billion in 2011 nationally, of which 82 percent were from individuals. In addition, an estimated 10.7 million people are employed in the social sector, and about 64 million Americans volunteered their time to social causes in 2012. Governmental agencies (13.2 percent of the total US economy according to the US Bureau of Economic Analysis) invest vast resources in pursuit of social causes.

Are your investments creating valuable social impacts? It’s impossible to tell without a clear understanding of what you’re trying to accomplish. Considering your reasons for investing is a good place to start.

Values Drive Investment

What motivates organizations and individuals to be so generous? Why do people crack open their wallets to give their hard-earned money to someone else? When an individual contributes money to a social cause, he or she is making a statement—either public or private—about what is important and valued. In this sense, all social investment is value-driven: giving is a manifestation of one’s beliefs. Investors’ values drive their social investments regardless of the form or scale of those investments, and whether they are acting alone or as agents of an organization. For investors who have shifted their focus from the act of giving or investing to the outcomes and impacts of those investments, values are perhaps even more important.

What do individuals and organizations hope to achieve through their investments of money, time, and other resources? And what do they expect in return? The answers to these questions are as varied as the people who invest. In most cases, the investor has multiple goals in mind: social impact is the goal that unifies them. Interest and investment in social impact have gained momentum, and contributing to positive social change is at the top of the agenda for an increasing number of individuals and organizations.

Throughout this book, we broaden the use of the term “investment” beyond traditional monetary investments by expanding the range of returns that investors seek and the resources they invest. The social impact investors for whom this book is written seek social returns on their investments, which may complement or totally supplant monetary returns. They expect some kind of social or environmental change to result from their investments. Additional returns that flow from engaging in social investment include personal returns, such as pride in giving or enjoyment of the process of investing.

Goals of Social Investments

Social impact is rarely the only motivation driving investor involvement, and it is useful to both investors and recipients to explore these goals and make them explicit so that investments can best deliver on these goals. A foundation pursuing a social change mission in public health, for example, might make investments in research on aging, caretaker training, and services for the elderly. But that same organization might also invest in local arts organizations in the city where it is headquartered. Thinking about a full range of returns helps make sense of this commonplace practice.

We can think of investment returns as falling into four loose categories: identity returns, process returns, financial returns, and social impact. Figure 3 lists examples of the kinds of returns that characterize each category. There are natural overlaps and interactions among the items we list here, but investors will find that some of these outcomes are more important than others for a particular investment decision.

Each investor is unique, and more than likely, you’ll discover that several motivation factors are at work, but the priorities you give them form the driving characteristic. For example, you have agreed to join a university advisory board because you want to help the university improve its impact. But upon reflection, you might recognize that the more important reason is that you wish to give your time to the university because you received so much during your student years. Alternatively, your primary interest in serving might be the opportunity to work alongside other high-profile members of the community with whom you would like to develop relationships. Thinking through these goals before deciding where and how to invest and reinvest can help ensure that your investments deliver the results they are intended to deliver.

In addition to financial returns, which are well understood and carefully managed by individuals and organizations of all types, and social impact, which is the focus of this book, we as investors have personal and emotional reasons to invest that are not effectively captured in terms of financial or social returns. Identity returns are a direct and often personal reflection on the identity of the individual or organization making the investment. These returns surround our raw desire to give and the emotional benefits that motivate and result from the pursuit of social change. Institutionally, they can include financial return substitutes such as marketing benefits like “branding” (Nike’s “Just Do It” campaign, for example) or aligning products with a cause, such is the case with Coca-Cola’s alliance with World Wildlife Fund, which is designed to preserve freshwater resources and increase Coca-Cola’s water usage efficiency.

Process returns reflect the relationships the investor has with the investee and the transactional and relational gains that accrue to each as a consequence of their relationship. They reflect collaboration and benefits to the organizations involved rather than direct impacts on the final beneficiaries of these investments. Financial returns represent increases in cash flows and asset values over time, and social impacts represent the social and environmental changes the investor wishes to pursue.

Identity Returns

Identity returns include the personal or emotional returns that accrue as a result of the investment. Many investments are made as a result of an urge to give or may flow from a desire or felt obligation to “give back” in gratitude for the benefits or advantages that have been received. The investment or gift may be motivated by altruistic impulses that are integral to the investor’s identity or personal happiness. Reputation among peers and community members can also be a personal return that results from the investor’s generosity. For an organization, attaching its name to a social investment can improve the reputation or brand value of the organization. Identity returns fall mainly into three categories:

• Reciprocity. The sense of an obligation to repay the community for one’s good fortune, or a specific organization for benefits received.

• Satisfaction. The emotional benefits associated with the act of making the investment.

• Reputation. Community recognition and branding resulting from alignment with certain social investments.

Reciprocity. For many, giving to social causes is akin to settling an obligation or following through on a responsibility to repay for one’s good fortune or benefits received from society. Family members and friends of loved ones who have been stricken by disease may support further efforts toward helping others suffering from that disease in gratitude for the support they received. Graduates may express thanks to a university for the education they received. Some expatriates give most to affiliated communities—their home country or the country from which they emigrated, or to institutions in immigrant communities. In some cultures, it is customary to donate a portion of income earned. In several, there is an expectation that a portion of one’s time will be spent in service to others. In others, the act of giving contains a spiritual element and is a means through which to express and strengthen spiritual connections and obligations. For example, some Indians give significantly to temples, and nearly half of large individual donations in Asia go to religious institutions. Thus in addition to the direct social benefits to beneficiaries, the investor receives the benefit of feeling that a debt has been repaid or paid forward for the benefit of an organization and the community affected by it.

Satisfaction. From the satisfaction of writing a check to the joy of opening an email and learning about a social impact partner’s success to the awe experienced when seeing firsthand the impact of the investment, emotional benefits provide a payoff for the hard work and generosity underlying an investment. Sometimes referred to as a “warm glow,” emotional satisfaction can be a result of either the investment itself or the payoff from that investment. While social impact is the goal, satisfaction can be a direct benefit from the act of giving, or it can be a second-order effect that results from the perceived social impact.

Reputation. The people responsible for making investment decisions are social, emotional beings. Thus, the personal outcomes associated with a social investment may also have value for the investor. Participation in fundraising, for example, is an activity that investors may feel portrays them as people worthy of respect within the community. Businesses believe in the substantial benefits of “branded” social involvement. A business may gain brand recognition or be perceived more favorably when it is associated with a social cause. High-profile individuals or organizations may invest strategically to enhance their own reputations by associating themselves with a well-regarded organization. Naming a building or receiving public recognition for a donation, for example, can result in reputational outcomes that can benefit both investor and investee through many avenues.

Thinking ahead about the emotions attached to various aspects of the impact journey can help both in designing interactions and in assigning value to the range of outcomes that may result from the investment.

Process Returns

Process returns are those benefits that flow from the process of engagement in a project. Some investors value the learning opportunities offered through involvement in an investment, such as the acquisition of new knowledge about how a particular operation works on the ground. Others gain from the investing experience itself, as they engage in activities that contribute to the creation of impact or as they interact with beneficiaries. Social investing may also translate into new relationships and networking opportunities. there are three broad categories of process returns:

• Knowledge. The information and learning acquired by investing in or working with an organization.

• Experience. The skills and understanding gained as a result of the investment.

• Relationships. The personal or business relationships formed or strengthened by the collaboration with the target investment.

Knowledge. To the extent that investors are actively engaged in participating in or following the activities of investees, they can enhance their learning and knowledge in a variety of cause- and sector-related areas. Lessons from one set of circumstances can often be applied in another, and innovations can result when learning crosses conceptual or contextual boundaries. The culture of engagement and passion found among many organizations involved in the pursuit of social causes can also be an important source of insights for investees. Because social purpose organizations frequently work in extremely resource-constrained or high-risk, dynamic environments, they often develop the capacity for rapid learning, innovation, and transformation that can be enlightening and useful to investors operating in other environments.

Experience. This can be a strong draw for many investors, since the lessons learned are often transferable to other life situations. They enjoy learning new things or experiencing the differences between theoretical solutions and real results on the ground. Some may be in it for the challenge of evaluating a problem and implementing the solution while learning from experts who instruct them along the way. For both individual and organizations, gaining experience in a particular field can be a major purpose of an investment. It may, for example, be a pilot process where the investor is interested in acquiring the specific workable skills in order to better understand the social impact of the experience, which could be helpful in future projects.

Relationships. Many investments have strengthening relationships as an objective. Religious giving or giving to causes supported by friends or colleagues can build relationships, as can serving on the board or staff of a social purpose organization. The relationships can result in a broad range of benefits for both the investor and the investee. For the investee, these relationships can enhance performance of the board or staff or can provide access to a broader network of investors and resources. Thinking through how investments are likely to affect relationships for both investor and investee can support more effective allocations of resources and effort. From a “deal-making” point of view, an investor may receive tremendous benefits from board appointments, high-powered relationships and networking opportunities, and the like. For example, a senior executive may make a substantial investment in a project and in return be named to the target organization’s board of directors, where he or she can form collegial relationships with other corporate leaders and improve his or her social and commercial standing. Supporting a cause promoted by an associate can strengthen relationships with that associate that can result in benefits for the investor and for the investees they support.

Financial Returns

Corporations, impact investing funds, and even foundations and nonprofits seek two bottom lines at once: financial performance and social performance. Financial performance can come from cost management alone, or can be generated through revenues or increases in the values of assets in which investments have been made. The line in Figure 4 shows the range of financial returns typical for various types of investments.

The line shows a continuum from donations that have no expected returns of capital all the way to “financial first” investments, which yield commercial rates of return on the investment. Many donations and grants are simply gifts and yield no financial returns to the investor. Charitable organizations have become increasingly entrepreneurial, however, and their own operations often have revenue-generating components. Although revenue may not cover all of the organization’s expenses, this model places them on the part of the continuum in which a portion of the capital invested is returned in the form of financial gains, reducing the demand for ongoing grants or donations.

“Social first” investments hold the middle ground. Investors expect all or most of their capital to be returned, but are willing to accept a rate of return lower than the commercial rate that would be expected based on the riskiness of the investment and general economic conditions. Investors at this level are often referred to as impact investors, and the capital they invest is sometimes referred to as “patient capital” when it is recognized that the investment may yield a return, but only in the distant future. Many impact investors are willing to sacrifice financial returns because they value the social impact the investment creates. Social enterprises similarly fall into this space. They intentionally seek a combined bottom line in which financial concerns are not the only priority. Social and environmental returns are considered to be among the organization’s key priorities, and may be built into the organization’s charter or mission. Impact investors and social entrepreneurs may pursue this middle-ground strategy primarily because they wish to maintain capital for future investment, but most social-first investors believe that a quasi-market model is the optimal way to take the first step toward providing long-run solutions to some social problems.

Investments with returns that are equal to or higher than the market rate of return on investment can be thought of as traditional commercial investments. However, use of the term “financial first” investments suggests that financial considerations do not stand alone, and that social concerns also represent significant investment objectives. For example, microfinance has promised investors favorable rates of return, but most investors are also concerned with the impacts of microfinance services on impoverished communities. While financial-first investments may have access to traditional capital markets, they have prioritized social impact as a positive goal to be sought rather than a potential risk area to be managed.

For example, SpringHill Equity Partners is a US financial-first investment manager that is committed to maximizing financial returns while achieving measurable and lasting social impact for its partners. SpringHill searches for small businesses in Africa that serve the poor. For each of its investments, SpringHill targets an annualized return of 10 to 20 percent and generation of a social benefit worth six to twelve times the money it invested.

Traditional corporations and their investors have various motives for valuing social impact. They may be financial-first investors, seeking social returns as a valuable goal independent of financial returns. Or they may be “financial-only” investors who prioritize social impacts because they recognize its increasing importance to stakeholder groups that have the power to influence them financially.

Financial returns may come from a variety of sources that are related to social impacts—reduced energy, materials, or logistics costs, increased brand reputation and customer loyalty, or even reduced cost of capital as investment funds screen out corporations that are seen to be particularly damaging to society or the environment. In contrast, Mulago Foundation funds high-performance social enterprises. The foundation’s investment strategy focuses solely on maximizing social impact, so 95 percent of its social impact portfolio is philanthropic, with the remainder being loans.

Social Returns

Throughout this book, we describe methods for defining, measuring, and increasing social returns. We assume that since you’ve selected this book, you already consider social impact to be a primary investment consideration. Since the remainder of this book is about social returns, we won’t go into depth here. But we will discuss trade-offs between social and financial returns. To do that, we’ll need some kind of social metric. Here, we’ll use a simple rating system to demonstrate how a rating of this type can be useful for evaluating investment opportunities.

Imagine a rating system in which each project is evaluated according to the degree to which it satisfies the investors’ social objectives. Our imaginary investor has these potential projects to evaluate:

• Project 1: Fund loans to build for-profit healthcare clinics in Zambia.

• Project 2: Make a grant to support a Nepalese girls’ school.

• Project 3: Fund water distribution projects in Tunisia.

To help compare the alternatives, the investor rates them on their social objectives and then plots the resulting social returns score against the expected financial return of each investment. Table 3 shows how this investor has rated each of the three projects on its social and financial returns. On the criterion of whether the three options would benefit difficult-to-serve clients, the investor gives the first two projects scores of 6, and the third a score of 5. All three projects are capable of reaching difficult-to-serve clients. On the second, which asks whether the intervention had been proven, the investor rated the school project quite a bit lower than the others. That suggests that there was more evidence that the intervention would lead to success for the clinics and the water projects. Finally, on the third, about whether the project could be sustained beyond the investment period, the clinics scored high, the school scored very low, and the water project was in the middle. Overall, the clinics project achieved the highest social impact score, and the water project was second.

Next, estimated financial returns were calculated, and the water project scored higher than the clinics project. Because no single project was highest on both financial and social performance estimates, the investor must now decide which project is superior—the clinics project with a social impact score of 20 and an estimated return of 20 percent, or the water project, with an impact score of 17 and an estimated return of 30 percent. As with all decisions involving social impacts, there is no objective way to determine which project is best—that will depend on the investor’s values and interests, and on the specific goals for this project.

Once the expected social performance of each investment has been evaluated, the investments can be plotted on a graph to help the investor see which investment provides the better combination of social and financial returns. Figure 5 shows how the plot might look for this investor.

It is useful to note here that the expected financial returns are an objective estimate that could be made by a financial analyst. This estimate would remain the same regardless of which investor funds the project. Social returns, however, are value based and will vary from investor to investor. Each investor determines his or her own unique set of impact factors that will be used to rate the investments.

Another investor might have completely different criteria for rating the social impacts of these investments, such as which investment empowers girls and women the most or which project best promotes health. This investor might rate the water project highest on social impact, on the basis that access to clean water will reduce disease and free girls from the lengthy daily walk to carry water for the family. No two investors will have identical values, so each must think through his or her own values and preferences in determining social impact priorities. This is an important point, and one we’ll revisit.

What Will You Invest?

At first glance, this is an easy question to answer. When we think about investing in social impact, we think primarily about investing time and money. The size and influence of the social sector is often characterized by the number of people working in social organizations and the amount of money given to or spent by these organizations.

But thinking about investment only in terms of time and money can paint a picture that is far too narrow, leaving out resources that can be uniquely valuable in creating impact and restricting the amount of impact you are able to create. For example, you may have medical knowledge that can be used in a crisis, you may have access to a building that can be used as a meeting place, you may have a group of colleagues whom you can invite to support a cause, or you may have the business expertise necessary to advise the investee.

Here we’ll ask you to take stock of your resources. You’ll identify everything that you or your organization has available that might be useful in creating impact. We’ll also ask you to think about resources you have that are uniquely valuable, either because they are rare and hard to find, or because they match the needs of a particular recipient.

For example, imagine that you’re a dentist with time that you’re willing to devote to create impact. You could package food at a local food bank, donate your services to be auctioned off for a church fundraiser, or train dental assistants to provide basic, low-cost care to impoverished people with no access to dental care. These three options might require the same investment of time on your part, but they can have very different impact profiles. None of these options is objectively superior to the others, and your choice will depend on your beliefs and interests as well as the returns you hope to create.

Thinking through your investment options can increase both the resources you’re able to invest and the value your investments can generate. With a clearer understanding of what you have to offer and the unique value you can provide, you’ll have more leverage. You’ll be able to put resources to better use in maximizing the social impact your investments create. When your desire for impact is combined with other goals, understanding the power of your resources can help you increase those returns as well.

Investors must first decide what resources are available for investing. For some, this is simply a matter of deciding how much cash they have available. But you may have a variety of other resources that can be useful in creating social impact. Figure 6 describes some of these resources.

Reputation

Reputation is a powerful resource that is often underappreciated. It’s difficult to put a monetary value on reputation, but that doesn’t mean that this resource isn’t valuable. In fact, sometimes an investor’s reputation is the only thing a recipient needs to create impact. An endorsement by a well-respected individual or organization can change everything for a particular organization or even for an entire cause. Betty Ford, wife of US president Gerald Ford, received a great deal of publicity when her struggle with chemical dependency became known in the 1970s. By using her reputation, she was able to gain support for building a clinic and helped reduce the stigma of seeking treatment for dependency problems.

You don’t have to be internationally known to have an impact. Your willingness to support a cause can be influential to people who know you—business associates, community members, family, and friends. When kindergarten teacher Joni Huntley donated her hair to Locks of Love, a charity that provides hairpieces for children undergoing medical treatment, many children and parents decided to donate their own hair. In turn, some of their friends and acquaintances donated as well. Many social-purpose organizations don’t do extensive advertising, so gifts that lead to increased publicity or a more valuable brand name can be very valuable.

Organizations often have well-known brands that are linked with their reputations for good work. Attaching their name to a project or cause often adds a level of acceptance and legitimacy. Some foundations have been asked to invest a single dollar in an organization, just so that organization could include the foundation on its list of supporters and thereby enhance its credibility.

An investor’s network of relationships carries great value. Helping an investee make connections with individuals or organizations in the investor’s network can open up a pool of contacts who can provide needed information, assistance, or support. The relationships and networks an investor has formed are sometimes referred to as “social capital,” which is arguably more important than financial capital in many situations.

Time

Working in the social sector is perhaps the most significant investment an advocate of social change can make. Employees making careers in social sector organizations invest their most valuable assets into driving social change—their time, energy, intellect, and emotions. Volunteers also invest time to drive change. They are called to fill a number of positions and responsibilities that either can’t be afforded or can’t be completed without their help.

Along with time generally comes expertise. While little previous experience is needed for some activities, such as piling up sandbags to protect a village from flooding, most investments of time are made much more valuable because of the knowledge that is invested along with the time. Employees, of course, build expertise and institutional knowledge, which makes their investment of time especially valuable. Volunteers often fill in gaps by providing knowledge, perspectives, and work products that can greatly complement, expand, and diversify the body of resources available for creating impact.

Knowledge developed through investments of time can be stored, shared, and used over again. This knowledge can take the form of policies, procedures, techniques, decision-making tools, and the like. These resources can also be exceptionally valuable to organizations that lack direct access to organizational expertise. Toyota, for example, recently donated its production expertise to The Food Bank for New York City, the largest antihunger charity in the US. Toyota’s efforts drastically shortened wait times for meals and improved many processes at the charity.

Research briefs, white papers, position papers, case studies, and other kinds of codified knowledge also represent valuable investments. These investments are often time- and organization-independent, so they have the potential to contribute to social impact in a broad range of circumstances.

Formal intellectual property (IP) can also be invested. An example of the vast impact of IP investments is the GreenXchange program, initially devised by Creative Commons in conjunction with Nike and Best Buy. The program provides a way for companies that have developed sustainability-related patents to share their intellectual property freely without extensive negotiations and legal contracts. Participants in the program can make their patents available for use by organizations, especially in relationship to their research and development functions, in order to enable widespread creation and use of green technologies and models.

Assets

Money, of course, is needed by all individuals and organizations seeking to make a social change. Even if money isn’t required to directly produce impacts, it is needed to publicize the program to potential beneficiaries. Obviously, money can provide impacts in many different ways. Later, we’ll explore the implications of how monetary investments can be structured—through loans that must be repaid, for example, or donations that do not.

Some investors are able to provide large lump sums of money that can be used for one-time capital projects or large investments that would otherwise be out of reach. Large investments can also be more efficient than many smaller ones, because organizations typically incur fewer costs in securing and managing the investment.

But the timing of monetary investments can also affect their value. Money that is provided in a stream over time can enable the investee to make long-term commitments that wouldn’t be possible under more volatile budgetary conditions. Sometimes an infusion of cash that comes right at the beginning of a project can be valuable in getting the project off the ground and making it acceptable to more risk-averse donors. The first investment in a project on the website Kickstarter, for example, can open the gates to further exploration and support by other investors. The final investment needed to launch a project can also be valuable. Money provided at that point can help avoid delays and stress, and can change the emotional climate surrounding a project.

Other assets can be converted to cash as needed by the investee or as specified by the investor. They can also enable the recipient to avoid cash outflows. Gifts of stock, equipment, vehicles, artwork, and the like are common. But assets can also be invested in the form of long-term loans. Rights to use property such as land can be granted in circumstances where the investor wants to retain rights but also wants to use the asset to generate impact.

Communications and technology companies have offered their assets to create impact in times of need. In the event of natural disasters, many technology companies help by enabling people to better manage aid logistics and support communication. For example, AT&T and other wireless services providers agreed to use their phone lines and processing equipment to enable their customers to make donations to Japanese tsunami and Hurricane Sandy victims.

Even assets that might otherwise be discarded can create an impact in the hands of the right recipient. The Society of St. Andrew is a US nonprofit that gleaned (gathered and gave away) over 30 million pounds of food in 2012. In the United States, one-half of all food purchased is wasted. The organization trains restaurant employees on food storage so that their food waste can be stored properly and then picked up by the Society of St. Andrew and given to poor people. Taking a full inventory of investable resources and identifying where those resources are likely to be useful can help investors maximize the impact they are able to create.

Investors who wish to maximize their returns need to spend time thinking about what returns they’d like to see and what they can invest to achieve those returns. By building an investment strategy firmly grounded in both a clear understanding of the range of returns desired and a complete inventory of resources available to invest, you’ll be well positioned to achieve your personal goals and maximize the social benefits of your investments.