Impact Investing: A Tool to Break Through Hypocrisy

Hobby Lobby has garnered lots of media attention for its lawsuit fighting the prescription drug requirements of the Affordable Care Act. This week, Mother Jones released an article highlighting the fact that the company-sponsored retirement plan invests in pharmaceutical companies that make the same drugs at the center of the lawsuit.

While it is easy to call the company hypocrites and move onto other parts of your day, this situation highlights two questions that are worth consideration by both businesses and individuals.

  • Do you know where your money is actually invested?
  • Do you know how to live your values and purpose by investing for impact?

My answer to the first is regrettably no, and the likelihood is high that your answer is no as well. Mutual funds are designed to take some of the complexity out of investing for the average individual, and it does require some digging to learn specifically where the money is being placed, and what products are being peddled to fund your future retirement. As Mother Jones indicates, there are negative screens and socially responsible funds that remove the complexity and offer you a guilt-free investment. While I make no judgment on Hobby Lobby’s position in this case, the company would be better served to have invested in screened funds. 

While negative screens are not new in the financial world, the growing field of Impact Investing allows individuals and companies to take their dollars one step further. Rather than focusing on what not to invest in, impact funds allow you to proactively place your money in companies that are generating a specific, positive social outcome. The body of research is growing to support the co-existence of social impact and desirable returns, with the Impact Investing 2.0 project leading the way.

If enough research is done, then it is likely that many foundations, churches, religious-based companies, and other investors would be accurately labeled hypocrites for their investment practices. The amount of capital held within foundations, specifically, dwarfs the amount of money granted to organizations every year. When more individuals and companies grasp the power of impact investing and deploy assets with a mission focus, the possibilities and the social impact that will flow is tremendous.