The Rise of Impact Investing and its Potential Effect on Chicago’s Anti-Violence Communities / By: Vivian Kaleta

As of 2022, the worldwide impact investing market was an estimated $1.164 trillion expected to be $6 trillion by 2031  ( GIIN, 2022 ). While environmental, social, governance (ESG) and impact investing are commonly used almost interchangeably, there is a strong distinction. ESG refers to the ethical criteria used when evaluating corporate behavior. ESG often affects investor and business decisions for the sake of generating greater returns. On the other hand, impact investing, as an umbrella term, is the practice of goal-oriented investments rather than financial returns  ( Chen, 2022 ). Impact investing takes form in various markets and asset classes. Its popularity generally lies within the private market. When used as a practice for trading equities, impact investing still aims to yield financial return, however, this is secondary, differentiating it from a philanthropic endeavor or a typical investment.   The world of impact investing can be further broken down. Place-based impact investing, a subsection of impact investing, refers to the practice of directing investment toward specific geographic areas, marginalized communities, and local non-profits ( Community Capital Management, 2021 ). These investments are non-tradable assets, such as affordable housing projects or local business initiatives, and aim for long-term impact. The specific aim of place-based impact investing is to stimulate economic growth within communities. The investor can foster partnerships between private and public sectors inducing community empowerment and engagement through initiatives such as job creation. If such projects are successful, investors may receive financial returns in the form of interest payments, dividends, capital appreciation, etc. Traditionally, institutional investors, like banks, have focused on place-based impact investing. As social impact has become a greater priority in society, individual investors have joined the game as well.   In Chicago, place-based impact investing holds a probability of great success in one of the fastest growing organization sectors in the city: anti-violence organizations.  Deasia Davis, a resident in Chicago’s South Shore neighborhood, expressed the importance of increasing non-profit investment. “While these groups [anti-violence organizations] get some help from the city, I believe they would be able to provide a lot more resources with funding from people that are really passionate about the success of these communities. Opportunity comes from those who care about our long-term well-being, not just one-time charity.” Janiya Scott, a teen residing in the same neighborhood, shared a similar sentiment. “It gives me hope to see more and more organizations form in my neighborhood but there is always the fear that they will disappear due to access to little funding.”   Interviews: Deasia Davis, South Shore Resident  Janiya Scott, South Shore Resident Stats: http://www.ccminvests.com/wp-content/uploads/2021/09/CCM-Place-Based-Impact-Investing-September-2021.pdf https://www.investopedia.com/terms/i/impact-investing.asp https://thegiin.org/impact-investing/need-to-know/