Giving Compass' Take:

• Stanford Social Innovation Review asks impact investors to examine the concepts of profit and return in the context of promoting social good, and to ask themselves whether they are perpetuating societal imbalances.

• Can we both take and give back at the same time? It's a worthwhile question, and one that the field needs to address if it's truly to show how social progress can fit into a capital-driven market. It needs to solve problems, without creating more.

• As you ponder that, read how impact investing could be at a tipping point.

An increasing number of investors — individuals and institutions alike — are deploying capital in more socially and environmentally conscious ways. Under the present economic system, which endlessly extracts natural and capital resources, and leads to ever greater wealth concentration, that’s a shift worth celebrating. Yet even impact investments rarely stray from the conventional investment approach that prioritizes capital preservation and profits. As impact investing matures, it’s worth asking: Can we finance mission-driven enterprises in a way that shifts the core emphasis to regenerative environmental and social benefits?

Martin Luther King Jr. once said, “Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.” One could say the same of impact investing and social finance; it is incumbent upon those of us who steward and invest capital to both evaluate how we came into such a privileged position and consider the ways in which carrying out this role may perpetuate systems of resource extraction and inequity.

When capitalism is successful, money begets more money. And today’s vast wealth gap isn’t a sign that our system is broken; it’s a sign that the system is working as designed.

Impact investors, unquestionably well-intentioned, have been eager to demonstrate that social value and competitive financial returns are not mutually exclusive. It is reasonable to wonder, however, if capitalist approaches can meaningfully address challenges created by capitalism.

Read the full article about breaking the shackles of extractive thinking by Stu Fram at Stanford Social Innovation Review.