As impact investing is maturing, we’re seeing an evolution of that very definition.

In an earlier FOX Insights blog post, FOX Thought Leaders Council™ member Mark Harder of Warner Norcross & Judd defined impact investing as “making investment with the intention of generating positive environmental or social impacts, as well as financial returns.” But even as this definitely has come to be widely accepted as the industry standard, the process of implementing such a strategy is far from universal.

Gretchen Postula, Head of Investor Relations for North Sky and a speaker at the recent 2016 FOX Wealth Advisor Forum, says that generating an impact investing strategy for your family client often comes down to knowing what “impact” means to them:

“If someone is looking to implement an impact investing model, I think it is beneficial to start by asking themselves, ‘What do we want to achieve?’ No two definitions are the same, but it’s most often a variation on something that will make a positive impact. So you have to ask questions of the family stakeholders about what they want their impact to be—‘What’s meaningful to you?’

Start from the point of what impact is and means to you:

• What is our legacy going to be?
• What do we want to be known for?
• What matters to us, and what do we want to be remembered for? Is it environmental issues? Good jobs? Educational opportunities? Fossil fuel-free energy? Water quality?
• What is our return expectation from impact investing?

These are questions that can foster conversations within families. Answering them will help shape their definition of impact, and then use established investment policies to execute on those goals: How much of an impact metric do you want to track and get back from the investment, in addition to the financial returns?

Much like any investment thesis, once you’ve answered all of these questions, it’s a matter of implementing your traditional due diligence, creating risk profiles and identifying cash flow needs to determine your investment allocations. Impact, in general, can be thought of as an “overlay” to all of these.

Keeping a family client on-point and focused on what their impact goals are can be hard—especially when there are many issues that are important to them. It’s crucial to stay focused  to ensure they can achieve their goals. From there, it’s up to the investment leaders to ensure the investments are sound and have good return and risk profiles by taking an investment diligence approach to those impact investments the same way you would any others.

Gretchen Postula and Abigail Noble, CEO of The ImPact, led a session on “Targeting Efforts: Making Impact Happen” at the recent 2016 FOX Wealth Advisor Forum in Coral Gables, FL. Hopefully, these questions will help get you and your family clients thinking about what impact means to you.