When an investor puts money into a company, it is with the expectation of getting a good return. Impact investing is not charity and investors expect a return here too. The difference is that here they also want to make a positive impact. Besides looking at returns, they look to invest in companies whose activities can influence the environment and society.

If a private-equity fund or a venture capitalist was to invest in a chain of schools in backward regions of the country, that would be impact investing. Investors who put money in solar power plants, would similarly be called impact investors.

In such cases, apart from other financial controls, the investment would come attached with methods of assessing the social impact. Often, such investments are made in the initial stages of the business and the investors do the due diligence to know the objectives of the company they are investing in.

Read more: De-jargoned: impact investing—the business of doing good – Livemint