Updated: Oct 8, 2021
The Transformative Power of Impact Investing in Rural Communities
Making money is great, but giving back is even better. When we have the means to impact the lives of others for good, it's always worthwhile. The events of the last year and a half have gripped the world and perhaps changed how we live for good, and many people are finding out that they do have the ability to both make money and give back. A growing movement of people across Europe and the United States are discovering the power of what is called “Impact Investing.”
Despite this growing awareness, many people are still in the dark about what impact investing is all about. So let's break it down.
What is Impact Investing?
Impact investing, unlike other forms of investing, is not solely focused on returns; it's all about using investment methods as a means to support causes that matter socially and/or environmentally. Essentially, impacting investing means investing in a cause that not only produces great returns for the investor but also has a positive impact on the lives of others. Impact investing is an arrangement that benefits the recipient of the investment, as well as the investor. The investor can put money into an initiative that matters to them and receive a financial return, while also having the ultimate satisfaction of knowing that they are helping to make the world a better and brighter place.
How Impact Investing Makes a Difference in Rural Communities
One of the transformative powers of impact investing is how it can contribute to the revitalization of rural communities. While research has found trends that show a growing exodus of people from urban centers seeking solace in rural communities, there are still significant levels of poverty, aging homes, and unsustainable living conditions in many rural areas. To combat this, many local municipalities work to entice large manufacturing companies to their area in hopes that they'll create well-paying, blue-collar jobs. Putting their hopes in this strategy can be risky, however, because it puts a major portion of the local economy in the hands of one large company. This risk often leaves locals struggling when a large company closes a local manufacturing plant or automates or outsources work.
With the growing demand for affordable, quality housing, what rural communities need most is capital to support their own entrepreneurial efforts to revitalize local neighborhoods. And this is where crowdfunding in rural communities can make a difference. By building creative funding options, real estate entrepreneurs are afforded the opportunity to revitalize more homes than they might otherwise have had the financial ability to address. When local communities can bring old, slowly deteriorating homes back to life, not only does it create additional housing, but property values for surrounding homes and commercial properties increase as well. It doesn’t just end there though: general contractors expanding their local efforts means greater demand for building materials, subcontractors, and professional real estate services. The impact of increasing affordable housing in rural areas ripples throughout communities, improving the financial futures of many.
Infusing capital into the hands of knowledgeable and hard-working entrepreneurs willing to dedicate their time to housing revitalization might be the goal, but we all remember our parents telling us that “money doesn’t grow on trees.” So where does this capital come from? The answer is simple: crowdfunding.
Crowdfunding as a Means of Impact Investing in Rural Communities
Real estate crowdfunding is able to support, encourage, and fund rural real estate professionals and entrepreneurs. These local professionals can then use these funds to redevelop rural neighborhoods, create better communities, increase and provide access to housing, and boost the value of homes within the communities. In turn, this helps the community to grow, expand, and attract more residents, further building up the local economy.
Additionally, when crowdfunding is applied to real estate, allowing the general population to invest, local residents are afforded the opportunity not only to contribute to revitalization efforts in their own neighborhoods but expand their sources of income as well. Not only do rural entrepreneurs and those working in the housing industry benefit financially, but rural investors can carve out a slice of a project for themselves, stepping into real estate investing and expanding their income without any knowledge of how to buy, renovate, rent or resell homes.
Impact investing holds the transformative power to revitalize and expand rural communities, support rural areas experiencing the effects of de-urbanization, and help build wealth in the Back 40 of America.
The Future of Impact Investing
Impact investing is here to stay, and it's a sign of greater change to come. According to Barron’s, a weekly magazine and newspaper distributed by Dow Jones & Company, not only is impact investing one of the largest investing trends in 2021, but its growth is a trend that will affect the financial world at large. For example, Barron's asserts that impact investing can completely change how companies receive their valuation. In other words, their valuation may be more intrinsically tied to the values of investors, instead of their product output. Could you imagine if a companies worth was evaluated by more than its sales but by the impact it has on the world at large?
Impact investing, and in particular rural real estate crowdfunding, empowers the average person to generate a financial return whilst contributing to a larger cause. The coronavirus pandemic has directly exposed the diverse benefits of impact investing on a large scale, whether at home or abroad. Rural communities are in need, and with this movement, investors can reap a financial reward while helping to revitalize rural communities, especially those that have been affected by the pandemic, giving them an opportunity to build wealth and stability one home at a time.