Abstract
Impact investing is a promising area, but few Effective Altruists have looked into it. The argument for impact investing is simple: if you’re going to invest money, why do it in an index fund with little social impact if you could earn similar expected returns while also creating positive social impact? However, the article argues that figuring out how to do impact investing well is complicated and requires a new approach. It also cautions that although impact investing industry has developed standards for measuring performance, these tend to focus more on outputs rather than outcomes. Ultimately, an Effective Altruist would want to be able to answer Yes to all of the following questions before making an impact investment: Is the business targeting a big problem? Is there strong evidence that the organization’s solution will work to solve that problem? Will the startup have significant difficulties getting off the ground if I do not invest? – AI-generated abstract.
