Investments in US Low-Income Housing Tax Credits (LIHTC) are an excellent example of impact investing. Impact investing seeks to create positive social or environmental benefits in addition to financial returns. To call an investment an “impact investment”, it is necessary to have an agreed upon understanding of what benefits are generated in addition to financial returns, as well as a mechanism for measuring those positive impacts. In this paper we explain the basic workings of the program, investigate some of the positive effects it has on lower-income residents and society, and discuss ways these impacts could be quantified.
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