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What Counts as Impact?

India Development Review Nov 24, 2019
This article is deemed a must-read by one or more of our expert collaborators.
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Giving Compass’ Take:

• Vineet Rai explores what impact investing is, and how it has the potential to fight economic inequality and empower the disenfranchised.

• How can funders focus on stakeholder interest in order to create impact? What does impact look like to you?

• Learn about three ways to engage in impact investing.


At the turn of the century, some of us set out to find an alternate way to look at development. Capitalist principles had brought about steep economic growth; however, this had come with gaping economic disparity. We wanted to understand: could one tame capitalism and steer it to bring positive change in the lives of those who had hitherto been ignored in capitalist systems?

The quest for answers to these questions in India, USA, Europe, and Africa, led to the birth of impact investing.


Impact Philanthropy is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.

  • This article is deemed a must-read by one or more of our expert collaborators.
    Click here for more.
    Climate Change Focus: too little, too late?

    It seems like it was just yesterday when we started to pay attention to an inconvenient truth, exhaustively analyzing the changes in environmental patterns. Whether most changes are man-generated or not, the climate system seems to be moving beyond the patterns of natural variability that allowed our modern society and world economies to grow and flourish. But what are those parameters and is there anything that individual donors can do to help to address the problem, or are we doing too little, our efforts too fragmented, and too late? The core parameters cited to show the path of climate change, include: Global mean surface temperature, Sea-level rise, Ocean and ice sheet dynamics, Ocean acidification, and Extreme climatic events. Some experts explain there are significant risks that many of the trends will accelerate, leading to abrupt or irreversible climatic shifts. Others think that our society faces challenges, in other areas, which are more urgent to address. This week at Giving Compass, we will have a special focus Climate Change, aggregating articles, tools, and resources from third parties, combined with some original pieces that will help donors chart their journey by learning more about the topic, taking action giving time or money to organizations focused on this important issue and connecting with others on events and conferences. It is never too late, and we can be part of the solution. It does not need to be an inconvenient sequel... Can we address the urgent issues we are facing on global security, democracy, civil rights, food, jobs, workforce development and health care, among others, but also building sustainable economies while preserving the planet? It is never too late, and perhaps we can do it all.


Given that most investments, at first sight, make impact, it may seem that there is a significant similarity between a commercial investor and an impact investor. Both need to find entrepreneurs, evaluate business plans, help attract new talent and capital to scale, and back ideas or enterprises that take risks and generate returns.

The difference is that for the impact investor, it is imperative that the business passes the impact screen before even conducting diligence on its return potential, whilst for the conventional investor, maximising returns is the sole objective.

The other critical difference is that the impact investor is seeking a profitable solution to a complex social problem, most likely in a broken ecosystem.  A venture investor, on the other hand, is creating value by filling a ‘want’ gap in an evolved ecosystem to achieve a disproportionate return.

The impact investor’s role in creating impact is limited to the strategy of finding the most impactful idea and channelling capital to it. Hence, the right impact metrics for a fund to report would be its contribution in identifying the complex social problem; the number of entrepreneurs it supported to solve the problem; the governance and diversity it promoted; the initiatives the fund took to reach new or challenging geographies that do not usually attract commercial capital; the kind of commercial capital that was attracted by the fund; and the value added by it in furthering the thesis of impact.

Impact investing brings together different stakeholders—the limited partner, the impact investor, the entrepreneur, the community on the ground—to achieve a complex goal. All these stakeholders come from different cultural contexts and values, and one person’s definition of impact may not align with the other’s. For an impact investor, navigating these differences can be difficult but is paramount to create real on-ground impact.

Read the full article about what counts as impact by Vineet Rai at India Development Review.

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