With the decline of confidence in big business and big government, a new opportunity may be appearing which spotlights the hope and trust of the people in small entities: small business, local government and local financial institutions.
Americans, increasingly alienated by national politics and the influence of big corporations, are looking for solutions and finding unique ones. There are positives that the American public feels about its institutions. There is trust for small business. There is trust for community efforts. The key is to find the things that can grow and which embody elements of what people appreciate about the nation. This is where impact investing comes in.
This column is going to read like a litany of complaints. But there is hope. Community-oriented economic institutions are a significant part of the answer.
The catalyst for change is the alienation we feel from our government, big businesses and institutions. The transformation in our society starts with our local businesses and even more fundamentally, with individuals.
One of the current trends involves the development of what is called impact investing. Global Impact Investing Network defines impact investments as “investments made into companies, and organizations… with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets…in sectors such as sustainable agriculture, affordable housing, affordable and accessible healthcare, clean technology, and financial services.”
Impact investing also encourages investment in employees and their communities. When shareholders choose to invest in this way, they create jobs in poor regions of the world and the in our own country. This is just one way which we have started to use local institutions and individuals’ capital to tackle social problems and do good. Impact investments may bring small victories but together they are helping communities make great progress.
Across the country, it seems that Americans have lost faith in their traditional institutions. According to a recent Gallup Poll, Congress was among the least-trusted institutions, scoring only 7 percent. Television news received just an 18 percent vote of confidence, while big business received 21 percent. Only 23 percent of respondents had confidence in the criminal justice system. Public schools, banks and the medical system were also rated quite low. Yet, the police, small businesses, and the military scored the highest among all the groups with 53 percent, 62 percent, and 74 percent respectively.
It is dangerous for a society when the most important legislative bodies continue to be seen as unresponsive to the populace. According to a recent article in The Atlantic, seven in 10 Americans believe that the nation is on the wrong tack. Eighty percent are dissatisfied with the way we are governed.
This loss of confidence in traditional institutions has real behavioral consequences too. Parents have increasingly pulled their children out of regular public schools and turned to homeschooling and charter schools. Only 58 percent of Americans vote in presidential elections, and that percentage is much lower for the younger generation. Many consumers have chosen to buy locally rather than supporting big businesses.
Americans, on the other hand, feel that they can have some significant impact on local government and benefit when they support small businesses, buy locally and invest in social progress.
The problems in the world often look too large and complex for us to solve alone. However a focus on small, local institutions can once again allow Americans to feel empowered to find solutions to the problems that surround us. It may be trite to say it, but our problems now are opportunities.
Review a Short Guide to Impact Investing: Act Now
Fox will graduate with honors from Brigham Young University with a bachelor’s degree in public health in August 2015. She hopes to work in the field of infectious disease epidemiology. She is also a director of Progress Through Business, www.progressthroughbusiness.org.