The psychology of NOT investing for a 10% return on an ‘ethical investment’
Why is it that even when an investment is demonstrably profitable, and asset-backed, some people still hesitate the moment the word ethical appears?
It comes down to psychology — not maths.
Profit vs. virtue: a false dichotomy we learned early
For generations, we’ve been conditioned to believe profit and purpose belong in different boxes. “Good deeds” sit in one category, and “making money” sits in another. Even when we outgrow the stories, the mental separation remains.
This is why many investors subconsciously file “ethical” alongside “charity,” “sacrifice,” or “lower returns.” It’s a legacy narrative that no longer fits today’s markets — but psychological inertia is powerful.
Loss aversion: the invisible handbrake
The human brain is hardwired to fear loss more than it desires gain. So when an opportunity comes with an unfamiliar framing — “social impact,” “ethical development,” “supported housing” — the instinctive response is caution.
Not because the numbers don’t add up, but because the framing feels different. Difference triggers doubt. Doubt triggers hesitation.
Confusing impact with charity
A deeper misconception adds to the hesitation: the idea that anything designed to help vulnerable people must come at the expense of financial performance. Many investors have only ever encountered “impact investment” through philanthropic contexts, which reinforces the bias.
But charity and commercial impact investment are not the same. One gives money away. One puts money to work.
What happens when people see the structure?
When investors actually dig into the structure behind Goldfinch, the narrative shifts almost instantly.
High quality property
Long-term leases
Dependable institutional partners
Predictable income streams
Measured development risk
Suddenly, the mental model changes: this isn’t charity — it’s disciplined, responsible capitalism. And when the financials show asset-backed development capital earning a 10% return, the cognitive dissonance resolves.
The penny drops.
Ethical doesn’t weaken returns. It strengthens resilience.
What we build at Goldfinch isn’t “nice to have.” It’s necessary — thoughtfully designed, quality homes for people who need them. That purpose doesn’t reduce returns; it underpins them.
Strong fundamentals aligned with strong social outcomes create a more resilient investment environment:
Lower void rates
Stable long-term demand
Reduced volatility
Stronger partnerships
Doing the right thing becomes good business, not a compromise.
Time to rethink the old narrative
The outdated belief that ethical = lower return is more a psychological echo than an economic truth. As investors increasingly seek both financial performance and values alignment, the two worlds aren’t diverging — they’re converging.
And the data is catching up with the psychology.
If you’ve ever hesitated over an ethical investment because you assumed it meant accepting less, it’s worth re-examining where that belief came from. You may find it’s rooted in inherited assumptions, not real numbers.