An Argument for Investing Where the Return Is Social Change

The New York Times
April 3, 2021

A new report makes the case for invest­ments that con­sid­er impact first and finan­cial return sec­ond. But crit­ics say such invest­ments are main­ly for the wealthy.

Advo­cates for impact invest­ments have long made the case that invest­ments can do social good with­out sac­ri­fic­ing returns.

And then there are the wealthy phil­an­thropists who give mon­ey to non­prof­it orga­ni­za­tions try­ing to bring about social change with­out expect­ing any finan­cial return.

But there is a mid­dle ground for investors — a lit­tle more impact for a lit­tle less return. It has been the third rail of social­ly respon­si­ble invest­ing, though, main­ly because impact investors fear that such an approach could embold­en crit­ics who have long warned that investors will get low­er returns if they want to push for change.

Now, a new study by the Bridges­pan Group, a non­prof­it phil­an­thropic con­sul­tant, argues that this is the moment to put more mon­ey, time and ener­gy into a mid­dle ground, which it calls impact-first invest­ing. The report, “Back to the Fron­tier: Invest­ing That Puts Impact First,” focus­es on invest­ments that con­sid­er pos­i­tive impact first and finan­cial return sec­ond. It makes the case for how such invest­ments can boost emerg­ing tech­nolo­gies faster than grants or tra­di­tion­al impact invest­ments. These invest­ments, the report says, can help cre­ate new markets.


Impact invest­ing is a big tent and should be a big tent,” said Nan­cy Pfund, man­ag­ing part­ner at DBL Part­ners, an impact ven­ture cap­i­tal fund. “The chal­lenge is, we shouldn’t mud­dy the waters and think impact-first is the only kind of invest­ment. We also don’t want to step back­ward and deal with bias­es about returns that we have spent at least 10 years fighting.”

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