About Our Impact Index

Organising The Impact University

Our perspective
Impact is far from monolithic.
It’s actually a broad movement comprised of different groups of people working on improving different parts of the global financial system

Before we give you our theory on the world of ‘impact,’ maybe let’s start with some points that we think (and hope) most impact proponents will agree on.

Here’s what we understand ‘impact’ to be:

Impact is a movement that seeks to change the way we do business by changing our financial system for the betterment of collectives rather than individuals.
Commonly, we use ‘planet’ and ‘societies’ as shorthand for doing good at large.

Impact does this by advocating for the idea that we need to put our far-reaching impacts front and center.

We see two essential parts to the definition:

Impact is a financial movement

Its mission is improving the planet – commonly divided into its seeking social and environmental progress

While that narrows what impact is about a little bit, it’s still a pretty wide definition.

We actually think that this is a good thing (if many parts of the system are broken, we need to approach the problem from a wide perspective).

But it does make mapping out the impact ‘ecosystem’ – if such a thing even exists – challenging.

We suggest that there are at least 3 “sub-movements” within the larger impact community.

3 Core Movements In ‘Impact’

As we’re big on metaphors and communicating ideas visually, here’s one that we think makes sense in this context: “impact” is a big building site dedicated to improving the planet through reshaping our financial system. The different parts of the system are like different groups of contractors.

Each group is competent at what they’re doing. But it’s surprisingly easy for us to work on the same project side by side without actually having all that much to do with one another.

At the micro level, this informs how we organise this website and attempt to segment it in to best appeal to different parts of the impact world.

On the macro level … well, we suggest that there’s room for us to think more broadly about what unites people working in ‘impact’ and what’s the most logical way to delineate between the various parts of the system.

The Impact For Better Business Crew

Many business leaders want to adopt ‘impact thinking’ and lots of them advocate for objective yardsticks of impact measurement

Firstly, let’s think about business leaders 💼.

There’s a school of thought that says that investors can cajole businesses into ‘doing’ impact (because for many companies they hold the purse-strings).

We think that that’s a very limited and autocratic view of how change can come about. It also excludes non-public companies who constitute an enormous proportion of the economic system. We don’t believe that the impact movement is served by ignoring the needs of this group of people.

We know that there are many companies who want to start thinking about impact and measuring impact because they believe in the idea. By way of contrast, some businesses may wish to embrace impact because they think that doing so will give them a strategic advantage over their peers who may not see value in this activity. There are different motivations why even businesses want to come to the table and discuss impact.

Impact business owners may care about questions like:

How do I measure impact in my business?

What advantages might come from measuring impact?

What types of impact should we be measuring?

Is it a lot of work to measure impact?

How should we quantify and report on our impact?

What happens if we find out what we’re performing poorly in some areas of impact?

The Impact Investing Movement

Impact investors want to see a world in which private capital markets are both profitable and impact-positive

To this day, the impact movement is most closely associated with the practice of impact investing.

Impact investing advocates for the idea that private capital markets should get involved in attempting to achieve positive ‘impact’ through their investments.

A rallying call for this part of the impact movement is “do good and do well” – a phrase used frequently by Sir Ronald Cohen who has provided the ideological inspiration for this part of the impact world.

Impact: Reshaping Capitalism to Drive Real Change

Throughout the world, capitalism and democracy are being challenged with great force. The world must change, but we cannot change it by throwing money at old ideas that no longer work. We need a new path to a new world where inequality is shrinking, where natural resources are regenerated, and pe…

Many impact investors are particularly enthusiastic about the themes of impact measurement and impact accounting.

Once impact measurement becomes a robust and viable discipline, it will be possible to integrate impact into the calculus of financial decision-making.

The former would devise ways to measure ‘impact’ objectively (through the development and implementation of regulation, for instance). The latter would entail devising objective accounting principles with which to capture those impacts in financial terms, thereby allowing the publication of ‘impact statements’ alongside conventional line items in financial accounts.

Impact Investors Might Care About Questions Like:

How do I measure the impact of my portfolio?

How do we calculate impact-adjusted profitability?

How can I target my investments towards impact-positive businesses?

What reporting standards for impact are out there and how do I assess the credibility of them?

Impact For Development Finance And Aid

Impact also considers how the operation of international aid and development finance could be optimised through ways to measure and improve ‘impact’

Finally we come to impact development finance which we think is a hugely important part of the impact movement.

Naturally, not all money seeks to make a profit. Philanthropy, development aid and private grantmaking are all examples of instances in which money is simply given away as donations with the hope that it will do good but without the expectation that any of it will be returned.

The supply of capital in the world, however, remains limited. Impact development finance therefore encourages (for profit) impact investors to participate in instruments like outcomes funds which may also be participated in by purely altruistic entities (like governments and philanthropists).

Ideologically, there’s a strong degree of alignment between the worlds of impact and development finance. Both want to make the world a better place through tackling some core humanitarian issues.

In the context of development aid, impact commonly proposes uses some mechanisms (such as pay for success) that were pioneered initially in domestic social finance programs. Indeed, impact investors often seek to find ways to bring impact investors together with donors in the form of blended finance schemes.

In the context of development finance, impact proposes pay for success as a kind of results based finance (RBF) that can align the interests of private investors and governments – and suggests outcomes funds as mechanisms that can be used to aggregate capital from these two groups.

Those Pioneering Impact Approaches To Development Finance May Wonder:

How can we use outcomes-based approaches in our programs?

How do we design programs suitable for participation by both impact investors and donor governments?

Text: Daniel Rosehill, Images: DALLE3. The views expressed in this page are those of the author alone.