Confluence Philanthropy defines "mission-related investing" (MRIs) as the practice of harmonizing a charitable organization’s mission to generate social or environmental impact with the management and investment of assets, while sustaining long-term financial return.

While the concept of "mission" investing makes a great deal of sense for philanthropic and non-profit institutions carrying a legal social change mandate, for individual investors and institutions without a primarily charitable intent, the concept of "impact" can feel like a better fit.

While the term "impact investing" has been adopted by many progressive investors, the trouble is that all investments have an impact. After nearly a decade, impact investors still can’t agree upon what creates true impact, what is the appropriate rate of return for an impact investment, and whether or not we can really achieve impact across all asset classes. Thus, "impact investing" has become a confusing term that may refer to all kinds of investment practices.

Attitudinal research demonstrates that racially diverse managers shy away from the impact moniker claiming that it connotes lower rates of return and a higher risk among too many investors. Already faced by bias, labeling an impact brand to the chest can hurt more than help. Although faced with other kinds of bias, innovative sustainability focused asset managers feel the same challenges. And yet, ironically, research demonstrates again and again that diverse managers and sustainability funds often outperform conventional managers and their practices.

For all these reasons, and more, Confluence has decided to step back from the use of the terms "mission-related investing" and "impact investing". Instead we describe our style of investing, so to speak, as values-aligned investing. Values don’t need to be explained nor measured by rates of return. They speak for themselves in the decisions we make about where we place our money.

The interchange of the terms in mission-related investing and impact investing can be confusing. Our advice? Don’t worry that much about it. Just manage your investments as responsibly as you can, and seek to make impact through your investment decisions in the way most meaningful for yourself and your institution.

The Confluence motto: Know What You Own and Own What You Own.

Examples of values-aligned investing practices:

• Holding cash deposits at community-owned banks and lending institutions;
• Leveraging ownership in the market through proxy-voting and shareholder engagement;
• Offering employees socially-responsible or green retirement plan options;
• Equity investments in screened public and privately held companies that seek to maximize market rates of return with clear, measurable sustainability or social outcomes;
• Structuring angel or venture capital investments in early stage companies promising social/environmental as well as financial return.
• For philanthropies:  
  • Structuring program-related investments (PRIs) that provide loans with primarily charitable intent to non-profits and for-profit institutions;
  • Providing guarantees to grantees and for-profit institutions.

For a more comprehensive list of helpful terms, click here.