Impact Investing starts in the home, and every consumer has the power to become an Impact Investor. This message rings especially true when we enter the holiday season. This year, as we search for tokens of gratitude for that special someone, what if we consciously make a decision to buy gifts that will benefit a greater good? The effects of doing so could make a surprisingly positive impact on our world.
According to the American Research Group,the average shopper is expected to spend $646 this year on Christmas gifts. SpendingPulse reports that total Holiday spend for 2010 was $584 billion. What is the money being spent on, and how could it be distributed more effectively to represent true impact? The answers, ultimately, lie in the consumer's hands.
There are three means for Impact Investing in which we, the consumers, can directly play a role. They are 1. Rethink and Redistribute 2. Buy with Purpose and 3. Walk Away.
Rethink and Redistribute
Every January countless articles are published about consumers who bought/received gifts that were not needed. In fact, we've even devised "White Elephant Parties', whose core purpose are to offload these unwanted mementos (into the hands of an unsuspecting friend). What if we take the time to rethink our purchases, only making those that are absolute priorities. For those that fall to the wayside, take the dollars saved and reallocate them.
If we redistributed the money spent over the holidays in the United States, we'd be able to do some startling things. Consider this:
- Over 3 billion people live on less than $2.50 per day. We could allocate $194 to every person living below that poverty line.
- Haiti's GDP was $11.59 billion in 2008. We could match that 50 times over and transform their struggling country.
- The UNDP estimates costs for a 4-year university degree in Africa total $10,000 per student. We could put 58 million students through college.
It might indeed be unrealistic to reallocate all of our holiday monies to donation. But even a fraction of these dollars could make a substantial difference.
Buy with Purpose
Alternatively, we can choose to buy those products that also present a secondary benefit to society. We, in effect, can become Conscious Capitalists. Shoes that provide a second pair for a child in need, nutrition bars that also feed a family abroad, water that supports clean drinking in developing nations; they are all exist. With a bit of extra research legwork, we as consumers can buy goods with greater social purpose.
Harvard Business Review defines the practice of Conscious Capitalism as that which creates "shared value", or "enhance(s) the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates". We should start reading the labels of the goods we buy beyond the ingredients, demanding that they also contribute to a greater social benefit with purchase.
Consumers have the option to forego products that don't clarify their means of production. MSNBC recently released an article titled Digging for Gold, Children Work in Harsh Conditions, Paid with Bags of Dirt. The article profiles a young boy in Mali who traveled 200 miles to work to support his family, and is paid with plastic bags full of soil. If precious metals are found inside, they are his to keep. If nothing but dirt lay within, he doesn't get paid. According to the Human Rights Watch Report, approximately 100,000 to 200,000 people in Mali are working in artisanal mines, 20 to 30% of whom are children.
The question is, are you certain that the last gold emblem you purchased was completely conflict free. The bigger question is why don't retailers have stronger communications stating that their goods are 100% void of these practices. The answer may be two-fold: 1. They can't guarantee such and 2. Consumers have not demanded that they do so.
As we move into 2012, a new opportunity for social power arises -- one where we must no longer solely rely upon governments and non-profits to create social change. The Rockefeller Foundation, in their report titled Solutions for Impact Investors, states that "while philanthropy has always relied on other sectors to co-create and sustain social change, the fact remains that governments and traditional philanthropy do not have sufficient funds to address the world's most serious problems. Commercial capital and the tremendous power of market forces will have to be part of the solution."
Capitalism can ignite change, if used effectively. At the end of the day, the consumer has the ultimate vote. The decision is ours.