I don’t remember when I first found out about renewable energy co-op SolarShare, but I do remember being very excited about the idea. I was renting in downtown Toronto at the time, a situation not conducive to installing solar panels of my own. But here was an opportunity to contribute toward renewable energy development—and earn a return on my cash, too. More than 20 years after purchasing my first “green” mutual fund, this was my first exposure to impact investing—and I was sold.

The SolarShare bonds I bought in 2021 were my first impact investment, but they haven’t been my last. Since that first purchase, I’ve put money into a variety of initiatives across Canada, from affordable housing in BC to oyster farming in Nova Scotia. The financial returns and time frames vary, but each time I make a contribution, the feeling is the same: a sense of connection to people and projects aiming to strengthen local environments, food systems, and communities. Impact investing is a way for me to allocate a portion of my assets toward causes I believe in, all while diversifying my portfolio and earning interest, too.

I don’t remember when I first heard about SolarShare, but I do remember where. It was on goodinvesting.com, a website and organization aimed at helping Canadians “invest intentionally.” In other words, they support their clients in choosing investments that fit their beliefs and goals and guide them in self-directing their portfolios. (Good Investing doesn’t actually sell investments.)

The mastermind behind Good Investing is Toronto financial planner Tim Nash, who has dedicated his career to sustainable investing. Alongside services ranging from education and coaching to in-depth planning, Good Investing maintains a handy, open-to-all list of impact investments accessible to the average Canadian (as opposed to those lucky souls with massive portfolios). They’re all privately run—you’re not going to buy them from your friendly neighbourhood stockbroker—and are a mix of products like community bonds, preferred shares, and private lending. Naturally, I went to Nash to get more details on how to define this type of investing and how people can—and should—get involved in it. (And note that while I’m talking about Canada here, these kinds of investments are available all over the world, and there’s probably a locally grown Tim Nash near you.)

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Impact investing encompasses products where “the main goal is to generate a positive social or environmental impact,” Nash says—though they still offer a financial return, which is what makes them investments as opposed to philanthropy. “The technical language I use is that it’s about ‘warm fuzzies.’” He stresses that this is different from other kinds of sustainable investing, such as choosing funds designed with ESG (environmental, social, and governance) factors in mind. With those, he says, “you don’t have to sacrifice returns.” With impact investing, on the other hand, “we are accepting either higher risk or lower returns—sometimes both.” And since it’s “notoriously challenging” to hold impact investments inside registered accounts such as registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs), you’ll likely have to pay income tax on your earnings, too.

What are those risks? Nash mentions three: liquidity risk, duration risk, and default risk. The first means that impact investments aren’t liquid: you can’t cash them out whenever you like. This isn’t unique to impact investments—a fixed-term GIC (guaranteed investment certificate) from your bank would have the same conditions—but it’s something to keep in mind. The second means that since you’re locking your money in for a certain period of time, you’re stuck with that interest rate, for better or for worse. And the third means that the organization you’re investing in could default—i.e., be unable to pay investors back, for instance due to going bankrupt. This has happened with impact investments, Nash says, albeit infrequently.

Of course, how much you’re up for facing risk or lower returns depends on your personal financial situation. For the most part, Nash is clear that he recommends treating impact investments as the “cherry on top” of your overall strategy—sample portfolios on his website, for instance, suggest they might make up 10% of an investor’s assets, though he recommends aiming even smaller at first: “start by dipping your toe in the water, especially when you’re at the beginning of your investment journey.” That said, he adds that if you are in a position where you have “more than enough for retirement,” that’s an opportunity to increase how much money you allocate to impact investing.

I’ve put money into initiatives across Canada, from affordable housing in BC to oyster farming in Nova Scotia.

I don’t know about you, but I don’t have more than enough for retirement yet, so I’ve been slowly building up a portfolio of impact investments—they’re at just under 5% of my portfolio right now—alongside contributing to my RRSP and TFSA, which mainly hold a range of ETFs (exchange-traded funds). SolarShare, like a number of impact investments, is only available to people in its own province (in this case, Ontario), so since my move to BC, I haven’t been able to buy new bonds from them. Instead, I’ve been finding other options that are available to me, all found on that useful list on goodinvesting.com. 

Fair Finance Fund, for instance, is “dedicated to strengthening Ontario’s local food and farm sector”—in 2024, they lent about C$1 million to progressive food and farm enterprises in the province. Last year they were offering up to 2% interest on a community bond of either C$5,000 or C$50,000; investors will earn interest payments during the five-year term, after which they can either reinvest or take back their initial investment. And Propolis Housing Cooperative is raising funds to build affordable green homes in Kamloops, BC; they plan to break ground in the fall. Their current interest rates range from 2.5% to 3.5% on a three-year term.

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For some investors, one challenge with many of these opportunities is that they have minimum investment amounts: it might be $500, $1,000 or even $5,000. This is simply for administrative reasons, Nash says—processing paperwork is time-consuming and expensive for small organizations. So I’ve also been experimenting with a newer platform called Goparity, which uses technology to streamline and automate the process that can slow other groups down and has a minimum investment of just C$10. You have to fill out some forms when you first sign on, and then the whole thing is self-serve and easy to use. Every month I see payments come in (a portion of my capital plus interest) from the investments I’ve made. Sober Island Oysters, for example, is a Nova Scotia family farm that borrowed money to purchase and grow 500,000 oyster seeds. And the Afro-Caribbean Business Network took out a loan to acquire a franchise of an organization called Just Like Family, “to provide localized, community-driven home care services for the aging population in Toronto.”

My most recent Goparity investment, though, comes almost full circle from that first foray into SolarShare. A Vancouver Island organization called Barkley Project Group was looking for funds to help finance their operations, and I got on board. I wanted to find out more, so I spoke with Barkley director Ben Whyte and communications specialist Cheryl Eardley. Barkley’s history is in supporting the development of independent clean energy projects, they say, though these days, their primary purpose is to help remote Indigenous communities thrive, whether that’s through renewable energy or other types of sustainable development.

I like earning a return on my investments, but I also enjoy warm fuzzies.

While the loan that I invested in is to help Barkley expand operations, it was also meant as a test run, Whyte says. Now they’re ready to use impact investing as a tool to help the communities they work with fund new projects. There’s nothing specific on the table right now, he adds, but potential future projects include geothermal energy in northern BC, the Yukon, and the Northwest Territories, as well as clean energy development in Manitoba and beyond. “We’re excited to replicate what we do across the rest of Canada,” Whyte says.

As for me, I’m excited to see what kinds of impact investments become available in the future, as I slowly increase the amount of money I have in this piece of my portfolio pie. Because I like earning a return on my investments, but I also enjoy warm fuzzies. It’s all part of diversification, Nash points out—a smart financial strategy no matter how you do it. “I think this is a really cool way for sustainable investors to diversify their portfolio,” he says. Impact investing lets us “support local businesses… in a way that still contributes to a diversified portfolio and brings financial returns.”

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