I participated an interesting conversation tonight of about 30 people all interested in the “impact investing” space which, broadly defined, is focused on taking an investment-based, market-based approach to solving major social problems. Acumen Fund, where I work, is one of the pioneers of this space, and we’re excited to see the growth of the sector, especially in the last few years.
Tonight’s conversation started with a question – “what are the limits of philanthropy?” And while I thought this was an interesting question to kick off discussion, I thought it was a misleading starting point for a conversation about how to use patient investment capital for social change.
It’s not about what’s wrong with philanthropy. Rather, we opened our tool box one day a few years ago and discovered a strange new tool – using the markets and an investing mindset to make social change. What we’re all in the process of trying to figure out is, “What’s this tool for? Where can it best be used?” I don’t know if philanthropy is a hammer or a screwdriver or an awl, but I do know that we can waste a lot of energy trying to figure out all the things that other tool cannot do, energy that would be much better spent holding this new tool in our hands, playing with it, trying it out in different situations, and honestly looking at the fruits of our labor.
Where does this tool work? Where does it do a fabulous job? And where does it prove to be awkward or misshaped or just plain inappropriate?
This new tool alone isn’t going to solve all our problems just like philanthropy doesn’t and the markets don’t either (nor does microfinance; nor does infrastructure; nor do projects for women and girls). But those who spend their time mastering this new tool, apprenticing and toiling and honestly assessing what they have worked to build – these people will show us the way forward.