Research Report
Research Report

Beyond Trade-offs

October 31, 2018

As the impact investing industry has grown, so too has the polarized debate about whether there is a trade-off between financial return and impact. Some argue the two must go hand-in-hand; others that meaningful impact necessarily requires lower returns. These competing claims fuel confusion that threatens to leave critical capital on the sidelines.

In Beyond Trade-offs, a new series published on The Economist’s digital platform, leading impact investors – from family offices to foundations and institutional investors – paint a more nuanced picture of today’s impact investing market.  Some pursue purely market-rate returns, and demonstrate that under certain circumstances it is possible to achieve risk-adjusted, market-rate returns with substantial social impact. Others identify types of impact that are not conducive to market-rate returns, underscoring the importance of a rigorous approach to making decisions about when and how to deploy subcommercial capital. But if we learn only one thing from the series, it is that many investors have already moved beyond the trade-off debate to develop sophisticated approaches that deploy capital at multiple points along the continuum. Embracing capital from across the continuum is key to seed and scale solutions to the world’s greatest challenges.

When we first introduced our investment framework in 2017’s Across the Returns Continuum, we hoped that it would be the beginning of a robust conversation. We are indebted to the authors who leant their voices to the Beyond Trade-offs project, taking valuable time to share their perspectives for the benefit of the field. We are all still learning, and we invite others to engage with the series to share your own approaches.

You can find the full Beyond Trade-offs series here. Omidyar Network’s Matt Bannick, Mike Kubzansky, and Robynn Steffen introduce the series and highlight prominent themes here.