Is it a fair question or expectation that at the end of the day, firms like Goldman Sachs or JPMorgan value social impact more than financial returns? Can we really believe that funds would put social impact returns above their fiduciary duty to produce consistent positive financial returns to their shareholders?
And what would these mean as more capital and dollars continue to shift away from non-profits and philanthropy to impact investing funds? “A philanthropic dollar in a nonprofit social enterprise produces an internal financial return that can be recycled again and again to multiply impact. An impact investment dollar demands an eventual exit for itself and its aggregated returns, regardless of whether any true impact was created in the first place. A better deal for the investor, perhaps, but not for impact,” Kevin Lynch, Social Enterprise Alliance CEO, suggests.
These are important questions to consider, and which suggest the need for more rigor in developing standardized impact metrics, social impact scoring systems and building systems for measuring accountability.
