In 2004, a half dozen of Trillium Asset Management's well-heeled clientele wanted to invest a portion of their portfolios to improve the environment and find alternatives to harmful carbon dioxide emissions. On the group's behalf, Trillium invested $1.5 million in EcoEnergy International, a developer of renewable energy, including hydro, wind and coal-carbon capturing.

When EcoEnergy was sold to Suez Energy in 2008, the investors made two and a half times their investment. When the deal closed, they'd both helped the environment and generated a spectacular return. Matthew Patsky, CEO of Boston-based Trillium, calls this a prime example of impact investing, which involves investing in community development projects or companies that benefit society - and produce solid returns.

Ten years ago, a community organizer in New England in his twenties inherited $400,000 from his grandparents, who'd been educators and missionaries. He turned to First Affirmative Financial Network, which specializes in socially responsible investing, and asked how he could put his inheritance to use in ways to help society as a testament to their legacy. First Affirmative recommended Calvert's Community Investment Notes, which loans money at a fixed rate of return to community development groups that invest in such projects as overseas housing and women-owned international micro-businesses.

He earned 2% to 4% annual yields over 10 years, says First Affirmative's CEO George Gay, who's also a CFP. The organization, based in Colorado Springs, Colo., handles $700 million in assets. Greenvestment Resource Center, part of First Affirmative, holds a three-day annual conference, SRI in the Rockies, set for Oct. 2-5 in New Orleans this year, covering the latest socially responsible investing and impact investing trends. For more information, visit sriintherockies.com.

Charly Kleissner, one of the first engineers hired by software and info-tech company Ariba, came into a multimillion dollar windfall when he sold his sizable stock options when he left in 2002. Feeling a responsibility to try to exert societal change, Kleissner and his wife, Lisa, challenged financial planners to do something positive with the money and make sure the results were measurable.

As a result, Kleissner launched the Beartooth Capital Fund to help ensure land conservation in the West. Beartooth is a real estate fund that produces income in two ways: selling conservation easements to conservation funds run by nongovernmental organizations and land to developers who agree to follow sustainable development practices.

A TIGHT FOCUS

The latest catchphrase in the socially responsible investing community is "impact investing," intended to appeal to institutional and high-net-worth investors focused on private equity or nonprofit projects rather than public stock. While much socially responsible investing tries to change or reward the practices of publicly traded corporations, impact investing affects society on a neighborhood or micro-level by helping families, strengthening small businesses or building housing, says Justin Conway, a relationship manager at the Calvert Foundation in Bethesda Md. Calvert's Community Investment Notes, which launched in 1995, lends to a portfolio of 257 nonprofits involved in affordable housing, micro-finance and community development.

JPMorgan Chase, TIAA-CREF, UBS and the Rockefeller, Kellogg and Casey Foundations, as well as a number of venture capital funds, have all gotten into the act, working with nonprofit organizations that specialize in socially responsible investing, such as Calvert and RSF Social Finance. A handful of retail mutual funds, such as Pax World, are making direct investments, and an individual can open an account with the Calvert Foundation for as little as $1,000.

A NICHE FOR PLANNERS

Impact investing is presenting an opportunity for financial planners who become savvy about potential investments, know how to arrange and pursue deals, and do the due diligence. High-net-worth families and asset managers are exhibiting a growing impatience with the old ways money was used to solve deeply entrenched problems, says Antony Bugg-Levine, managing director of the Rockefeller Foundation and co-author of Impact Investing: Transforming How We Make Money While Making a Difference.

Impact investing taps deeper pools of capital than philanthropy. "The challenges around climate change and poverty are so vast that giving a little to charity isn't up to the task," he says. In fact, he adds, the idea for impact investing emerged from discussions among early investors in environmentally friendly technology and micro-financing.

The Opportunity Finance Network established a rating system to help evaluate community development financial institution investments. The ratings found at carsratingsystem .net, measure how well a program is meeting its mission and assigns a 1 (the highest) to 5 (the lowest) rating on creditworthiness and financial performance. The ratings can help planners identify opportunities in certain geographic areas and determine whether investments are sound. The service costs about $15,000 a year and is used mostly by financial institutions, socially responsible investors and government agencies.