Giving Compass' Take:

• Sarah Williams, CEO of Propel Capital, discusses the lessons Propel has learned the last decade on how to measure and pursue impact through investment.

• How can a systematic strategic mindset improve investors' decisions?

• Read about getting started with impact investing.

From the start, Propel Capital set out to explore how we could move capital to create sustainable solutions for inequality. Since 2008, we have committed nearly $50M to 100+ partners tackling some of today’s most challenging global issues — just economies, engaged democracy, quality education, racial equity, and more. At this milestone moment, we paused to take stock of what’s been accomplished and assess how we can drive our impact forward over the next 10 years.

Exploring the Impact Frontier

Since Propel’s inception, we have intentionally constructed our portfolio along a returns continuum, often taking financial concessions where we believed there was potential for outsized impact and an absence of market-driven products to meet the financing needs of the enterprise. While it’s intuitive that, as impact investors, we would adjust financial return hurdles for investments  generating different levels of impact, it has been affirming to see the mapping of our entire portfolio and witness the strong correlation as we balance these two factors.

The Future of Impact Measurement and Management

Perhaps even more important than a one-time mapping of the portfolio is the application of a rigorous and structured analysis to investments we know has enabled us to reflect on our practice and begin to integrate new processes into our due diligence and investment decisions going forward. As you move further out on the impact spectrum, you often have to make considerable financial concessions. We have always embraced the premise that in our portfolio, in certain asset classes and geographies, there will be alpha generated by our investments that will accrue to others in the form of community benefits or impact.

Impact investors of all kinds can use an Impact Frontiers approach to move from an intuitive to a systematic and quantitative lens where impact is integrated alongside considerations of financial risk and return. Thinking clearly about the risk, return, and impact trade-offs will enable all of us to build better tools that manage the multi-dimensionality of impact investments and optimize our portfolios along both the impact and financial returns spectrum.

Moving More Capital for Impact

A decade in to supporting the growth of impact investing, we believe we have only just begun to realize the potential of deploying positive-impact capital. The current state of the world requires all of us to shift significant resources on new terms to accelerate social and economic progress that serves the many, not just the few.

Read the full article about lessons learned from 10 years on the impact investing frontier by Sarah Williams at Social Capital Markets.