David Brooks—the highly-regarded, conservative columnist for the New York Times—recently wrote an opinion piece entitled “How to Leave a Mark.” Mr. Brooks’ commentary was about social enterprise (which he labeled “social capitalism”), impact investing, and (perhaps surprising?) career advice. As regular readers of this blog undoubtedly know, impact investing means investing for both a financial return and a positive social or environmental impact.
Mr. Brooks previously has written about social enterprise, and with respect to impact investing, Mr. Brooks summarized his views as follows:
Impact investing is not going to replace government or be a panacea, but it’s one of a number of new tools to address social problems. If you want to leave a mark on the world but are unsure of how to do it, I’d say take a look. If you’re a high-net-worth individual (a rich person), ask your adviser to get you involved. If you’re young and searching, get some finance and operational skills and then find a way to get involved in a socially useful investment proposition. If you’ve got a business mind, there are huge opportunities to build the infrastructure (creating measuring systems, connecting investors with deals).
Someday government will get unstuck, with new programs to address this new era. But there’s no prospect of that happening soon. Right now social capitalism is a more creative and dynamic place to spend a life.
I generally agree with Mr. Brooks, of course, but I also believe that in order for impact investing to flourish, more changes in the U.S. legal landscape must occur. Significant changes are taking place with respect to U.S. business law. More and more states are experimenting with new legal forms for conducting social enterprise. Nonetheless, other changes in U.S. law are necessary to facilitate impact investing as “one of a number of new tools to address social problems.”
In a subsequent post, I will outline some of the changes in U.S. fiduciary and tax law that I believe must occur before impact investing can fulfill its promise as predicted by Mr. Brooks.