Impact investing is changing the world, offering socially conscious investors opportunities to drive social and environmental change without sacrificing financial returns. It’s become common in sectors like renewable energy and education. But what about health care? It currently ranks seventh among sectors receiving the most capital from impact investors. That’s not high enough to kick-start momentum in the advancement of precision medicines that will save millions of lives.

But it won’t take much to change that.

Unlike charitable giving, impact investing provides individuals with the opportunity to achieve financial and social returns. Although impact investing is a relatively new strategy, its global market size is estimated to be $228 billion and growing, with 75 percent of investments generated from private investing strategies. Most importantly, impact investing makes good on its promises: A 2018 survey conducted by the Global Impact Investing Network found that the vast majority of impact investments met expectations for both impact and financial returns. There is a real opportunity to apply what has worked so well in other sectors to health care.

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Impact investing can boost health care funding

Impact investors can choose from an array of sectors and causes. Yet the Global Impact Investing Network reports that just 5 percent of impact investments were dedicated to health care in 2018, well behind other areas like energy, microfinance, and housing. This may be due to a misguided belief that investments in life sciences are higher risk or require higher capital. Adjusting these assumptions with sage investment advice could boost health care impact investments and provide the funding needed for better treatments and cures.

Consider precision medicine and cancer. Though we’ve made astounding progress, including improved life expectancy for patients with melanoma or lung cancer, we’re just beginning to scratch the surface of precision medicine’s full potential. Precision medicine could save the lives of hundreds of thousands of cancer patients each year by making it possible for doctors to tailor treatments based on their patients’ individual genetics and lifestyle. By better predicting how cancerous cells will react to medicines, doctors can eliminate the trial-and-error phase of an individual’s treatment journey, leading to faster cures and fewer debilitating side effects.

But this can’t be done without funding. A surge in impact investments to health care companies would offer a more stable, continuous source of capital.

A win-win-win for financial companies, millennials, and patients

How do we close the gap between health care companies that need investors and socially minded individuals looking to make their money work for them by also doing good? This is where financial companies can make a huge difference. Since many individual investors turn to financial services to handle their investment strategies, these companies can introduce their clients to the benefits of impact investing. Doing that can also help financial services court millennial clients, who are advancing their careers and are eager to grow their wealth in socially responsible ways. In fact, millennials are already driving the future of impact investing. Nearly 80 percent of affluent millennials have already made an impact investment, and more than one-third say investing in health care would be their number one priority if they were to make an impact investment.

Many major financial institutions have established impact investment offerings, paving the way for others to follow. Some have acquired smaller impact investing advisory firms that are fully equipped with the expertise to identify high-potential impact investments. Others have launched impact-specific funds focused on specific missions. UBS, for example, raised $471 million for an impact fund that invests in companies dedicated to creating new cancer treatments. If more financial companies followed suit, that would help set the stage for incredible milestones in the quest to cure cancer and other devastating diseases.

Impact investing can help business-savvy, socially conscious individuals and organizations fuel the future of precision medicine. The social return on these investments is simple and invaluable — personalized cancer treatment that will extend and save lives. To get there, powerful financial institutions need to create impact investment services that make investing in precision medicine accessible and profitable for all of their customers.

Richard G. Hamermesh is a senior fellow at Harvard Business School and co-chair of the Harvard Business School Kraft Precision Medicine Accelerator. Kathy Giusti is co-chair of the Harvard Business School Kraft Precision Medicine Accelerator and the founder and chief mission officer of the Multiple Myeloma Research Foundation and the Multiple Myeloma Research Consortium.

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