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In recent years, increasing numbers of investors have sought opportunities that support community development while generating financial returns. One of the clearest ways to do this is through impact investments, which enable small and medium-sized businesses to grow and create jobs. The communities where these businesses operate benefit directly from this approach.
The Global Impact Investing Network defines impact investing as investments that generate measurable social impact alongside financial performance.
Impact investing allows investors to deploy capital without relying on traditional banks. This strategy allows investments to support projects ranging from clean energy development to affordable housing while maintaining market returns.
Research from Harvard Business School shows just how significant this market has become. From $25 billion in 2013 to over $1.1 trillion in 2022, impact investing now reaches communities nationwide. Consider AVANA Companies’ recent partnership with Oaktree — a $250 million commitment to fund commercial real estate development through private credit. This approach creates jobs while targeting competitive returns.
Impact investors look beyond standard financial metrics when evaluating opportunities. They track job creation in local communities, measure environmental benefits, and assess how each investment strengthens the surrounding area. This focus on measurement ensures capital creates real value.
For example, when investors provide funding through private credit, they enable business owners to expand operations and hire local workers. The benefits multiply from there — supplier networks grow, local spending increases, and communities become more resilient. Historical analysis shows these effects are particularly strong when traditional lending becomes constrained.
The convenience of impact investing comes from its flexibility. Investment committees can structure deals that work for both the business and the community. More importantly, they maintain direct relationships with borrowers, allowing better monitoring of both financial and social returns.
The numbers support impact investing’s effectiveness. Recent surveys show that 79% of impact investments meet or exceed market-rate returns. Private credit strategies perform particularly well, offering steady returns while funding tangible community growth.
These investments provide natural portfolio protection. They typically have low correlation to public markets and offer some shelter from inflation. The direct relationship between investor and borrower also allows for more flexible terms when market conditions change.
Impact investments often show stability during economic uncertainty. When traditional lending tightens, private credit can continue supporting businesses and communities. This reliability benefits both investors and borrowers through market cycles.
Impact investing keeps growing because it works — for investors, for businesses, and for communities. Private credit leads this expansion, turning investment capital into community development. New measurement tools make it easier to track both financial and social returns.
Investment managers now regularly include impact strategies in their portfolios. The success of partnerships like AVANA and Oaktree’s joint venture provides clear examples for others to follow.
At AVANA Companies, we believe impact investing success requires both intention and measurement. Our approach combines rigorous financial analysis with clear impact metrics, ensuring every investment drives both returns and positive change in the communities we serve. Approximately 60% of our funding ($1b+) has been lent to minority entrepreneurs/SMEs in the US, which has helped to create over 5000 jobs in underserved communities. For a copy of AVANA’s Social Impact Report, which provides insights and additional metrics of our impact investing, please email: cathy.ellsworth@avanacompanies.com.