Formerly published October 11, 2024 to LinkedIn.

When we think of impact investing, we should think about how to use one’s resources to help people, systems, and processes with zero or limited resources.  The right investment in the right person, in the right place, at the right time can change that person’s world. The timely investment can even change the world of those around them. That sounds a lot like impact investment[1], doesn’t it? Correct, but I also want us to think about impact investing from a different lens, from that of lifelong, well-timed, individual investments in others.

If I were to offer to pay you 11.4¢ (eleven point four cents) a day for 24 years, you’d likely scoff at the amount. I routinely see people drop coins and don’t even bother to stop and pick up the coins (for those who know me, I ALWAYS pick up coins; even a penny).  You’d wonder what difference it would make. You’d think it a mighty strange arrangement. You probably wouldn’t bother to take me up on the effort.

However, what if I offered you $41.47 a year for 24 years? Would that make more sense? Would it rock your world? Would it change your perspective when you received it, $41.47 a pop 24 times at the same time each year? My guess is that you’d barely notice it. You’d likely forget about it as the years go by and, instead, just sort of chuckle in satisfaction each time it came to you. The amount might not impress you, but my faithfulness likely would.

Let’s fast forward through the years and I offer you a lump sum of $1,000 when you turn 24. What kind of event would that be in your life? Would it be inconsequential or notable? Irrelevant or impactful? A bother or an encouragement? You’d probably mark it down as a nice birthday present. You could almost by a Macbook.  My prediction is that the significance of my investment in you would depend on your circumstances. I’d bet that my one-time gift of $1,000 will make much more sense to you than 11.4¢ a day or even $41.47 a year for 24 years, even if it won’t radically change the trajectory of your life. But wait…

What if you are a 24-year-old Hurricane Helene victim? You just moved to Boone, NC in August. You are trying to make it on your own earning $21 an hour for a nonprofit organization that gets called into providing non-stop humanitarian relief. Your rental house is inaccessible because its long, paved driveway ended up at the bottom of the mountain in a mud slide. You are couch surfing, without power, without water and with intermittent cell service. Luckily, you’ve been a responsible young adult and, despite being spread pretty thin, you have $1,000 in emergency funds saved.

In the aftermath of Hurricane Helene you are working 13-hour days, and volunteering every weekend hauling debris and scooping up mud to do your part helping those who lost so much. The fatigue and discouragement are palpable everywhere you go, but you try to encourage everyone you meet so that they don’t lose heart. You’re exhausted and, suddenly, you face a $1,000 bill because your car has electrical issues. Are they caused by water and mud? Probably, but no one has time to figure it out; there are more people with much bigger losses than you. You find someone willing to work on your car. You sacrifice your emergency funds so you can keep reporting to work and helping on the weekends. Life just got more complicated. You’re wracked with stress because you don’t know how to keep up with the added expenses you have from being displaced for so long and your emergency fund is down to zero. Your work productivity is bound to be affected.

The American Institute of Stress details what happens when an employee is under stress, regardless whether of it comes from professional or personal sources:

• “Depression and anxiety cost the global economy approximately $1 trillion in lost productivity.
• An estimated 1 million workers are absent every day because of stress.
• Job stress is estimated to cost the US industry more than $300 billion in losses due to absenteeism, diminished productivity, and accidents.
• Over 5 work hours are lost weekly to employees thinking about their stressors.
• Work-related stress costs the United States $190 billion in annual healthcare costs.”

Let’s keep the Hurricane Helene example, changing it from you to a 24-year-old female. We’ll keep it simple and concentrate on hours lost thinking about stressors. Our 24-year-old’s employer will pay her for 5 hours each week that she reports to work but during which she is totally unproductive. The employer is out $105 in real wages, as well as the additional costs of benefits provided to the employee. If this same 24-year-old works with an average of 25 people each hour, that means that 25 people each day, or 125 people each week go unserved. This is a huge loss to the employer as well as those needing service.

If it takes the young lady seven months to repopulate her emergency savings account with $1,000 (which is a realistic expectation given her income and stage in life), she will remain stressed just from this one factor for those seven months, netting her employer a loss of 140 hours of productivity for which she is paid $2,940 (plus appropriate benefits). Given that Hurricane Helene recovery efforts will demand attention for months to come, and the young woman’s actual job (from which she has been diverted) is time sensitive, this is a huge loss. Additionally, this also means that 3,500 people will be left unserved by just this one employee.

Luckily, in this case the young woman did have an emergency savings account, but what if she had not? More than 27% of Americans have no savings at all, with a higher percentage found among those recently out of college and under the age of 30. If she charges the $1,000 to her credit card, has the 2024 average APR of 24.62%, and makes minimum payments (her card requires a $25 minimum payment with a 3% minimum payment percentage), it will take her 6 years and 5 months to pay off the balance while costing her $969 in interest. She also must find a way to start an emergency savings account. Again, if we use our rough calculations about productivity lost, that means her productivity losses are compounded across 6.5 years. If we control for 1 week of paid vacation and 10 paid holidays, that’s a loss of 1,593 in productive workday hours and 7,962 people who go unserved.

The young woman I speak of in this example is real. Luckily, a group of individuals from four states away heard about her car problems. They initiated communication and paid her bill off in full just 3 days after she got it. The young lady’s reaction to the gesture was highly emotional and grateful. It energized her, repopulated her emergency savings account, saved the employer many hours in lost productivity, and guaranteed that a lot of people needing help because of Hurricane Helene will be served.

In our personal lives this is an example of impact investing at its best, it’s just not from the lens of large budgets and huge undertakings. It’s an example investing in the right person, in the right place, at the right time. The ripple effect over time will be significant. It’s an example of getting to do what’s really needed, it is living that creed of doing good while doing well. The $1,000 stake is not high for many of us, but for this young lady, it was. The stakes are also high for those she currently serves in the aftermath of the recent hurricanes. As you ponder on how you can help, I encourage you to start with one person and work your way to whatever makes sense for you.  Impact investment.  Be intentional and leverage the power of one.

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The views expressed in this article are those of the author.

[1] As I wrote in February, “Impact investment is one of the best opportunities facing today’s investors. As opportunity, it promises access to new markets, innovation and competitiveness, portfolio diversification, capital accessibility, and government incentives. As strategy, it’s something every future-oriented investor should pursue. It provides a path to forge into what is really needed, and to finally live ‘doing good while doing well.’ It also leads the way to the attraction and retention of top talent. It addresses long-term challenges. In sum, impact investment leads investors to the triple bottom line. Impact investment is not a feel-good surrendering alpha philosophy, but an intentional investment methodology designed to align impact and alpha.”