From Impact Investing to Restorative Investing

Many recent studies have analyzed ethical approaches to investment decisions, new financial instruments for socially responsible and impact investing and ESG investments with the environment and climate change at the core of the decision criteria. Some of these approaches can accelerate incremental change over a period of time and allow seasoned investors, including everyday citizens with a retirement account to make a social statement in terms of portfolio allocation and investment decisions. The authors believe that while this moves the needle in the right direction, a more radical approach and mindset shift is necessary to accelerate meaningful long term, tangible benefits for organizations, neighborhoods, communities and society. This will require a re-design of our economic system, in a manner that, consistent with Ignatian values, helps to uplift those that are left behind in the current system. This paper describes a new model of investment that seeks at its core to address the lack of equity in access to capital and new markets by a large proportion of entrepreneurs, particularly women and minority-owned businesses. It builds on the scholarly contributions of Paul Hawken, Charles Eisenstein and Neamakah Agbo on “restorative economics” and calls for a restorative investing model that integrates targeted capital investment in communities and entrepreneurs with additional training and ongoing support to maximize success and empower individuals. The paper highlights several entrepreneurs’ journeys that have gone through a carefully designed community business academy offered by Rising Tide Capital, a Jersey City-based nonprofit, in the process of national expansion. It defines restorative investing and maps out a process of how this philosophy can restore communities from within, create wealth in a more equitable fashion, and contribute to healing and solving some of the broader and more complex challenges facing our communities. Data collected from over 1,400 community entrepreneurs in urban New Jersey will be infused into the analysis and findings, and recommendations for a new model of restorative investing will be detailed in the full paper.