Impact Finance Bulletin: Towards a community of impact-first investors

“It is a failure of our sector that impact investing no longer means putting impact first.” Those were the words of Caroline Bressan, CEO of impact investing firm Open Road Impact, during a recent webinar organised by the Miller Center for Global Impact. 

The event looked at findings of a study, expected to be published in the next few weeks, produced by Miller Center with a number of partners including impact firms Acumen, Open Road and Village Capital. Called “The True Cost of Impact Investing”, the report tackles the controversial question of whether investors can really have it all – positive impact plus market-rate returns. 

“I've worked in impact investing for a long time, and remember when, as a sector, we were pushing the messaging of ‘beyond trade-offs’,” said Bressan. “Frankly, that just never felt right. We are living in a world steeped in trade-offs and compromises.” 

Miller Center defines “impact-first” investing as capital that reaches where markets don’t: focusing on solutions to address societal challenges that require below-market rate or riskier investments, and as a result will require concessions from capital providers. At the other end of the impact investing spectrum is the “finance-first” type, which will not compromise on returns.

“There is this persistent, rather facile, rather seductive narrative that you can have it all,” said Dan Waldron, director of insights at Acumen, also speaking at the webinar. “Which is only true if you are willing to drastically narrow the problems you are willing to take on.” Solutions rarely come in “profitable, scalable packages”, he added: they are always more complex than anticipated, because social entrepreneurs have to tackle multiple needs at once, within a system that doesn’t work for them. 

The study sought to find out how much impact-first investing really costs by analysing the data from several impact-first fund managers. It found that cost is about 13 cents more than traditional funds per dollar invested. 

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The reason is not inefficiency: the report shows that impact-first funds outperform traditional funds in the number of deals per year, and the cost per transaction is lower. The added cost per dollar reflects the additional work necessary to make these smaller and more complex investments work for enterprises that are not finance-first.

Because of this cost, impact-first investing requires catalytic capital from investors ready to make concessions on returns and risks, for the sake of impact. This can then be blended with commercial capital to create impact-first funds at a sufficient scale to address the market gap. 

“Great work costs more, and you get more for it,” said Waldron. But this is only possible because some investors are “willing to pay for what impact investing really costs”, he added.

It’s hard work to do that, said Bressan: “Maximising for only financial returns seems easy in comparison to weighing the trade-offs between financial return, impact, risk, etc, on a daily basis.” 

At Pioneers Post, we speak to social entrepreneurs day in, day out; many of them see “impact investing” as something alien that’s detached from what their needs are – to the extent that there is actually frustration about the growing use of the word “impact” in that sense. What they are looking for is precisely “impact-first investing”, as described by Miller Center.

One of the aims of the study was to build a community of impact-first investors and “find solidarity in the path that we chose”, Bressan explained. The webinar was attended by hundreds of people from across the world, evidence that this already resonates with many stakeholders in the sector.

On our radar

• I’ll be at ChangeNOW next week, and very much hoping to see some of you there! If you are yet to grab your tickets, Pioneers Post readers get 30% off ticket prices – just add the code PIOPOST-CN2026 at checkout. Do reach out if you’re attending too to say hello!

• The SE100 Impact Pioneer Awards are taking place on 13 May in Manchester (UK). Join us to discover this year’s winners, including this year’s Social Investment Pioneer.

Below the radar...

• We’ve heard that the mid-term review of the EU’s Social Economy Action Plan is to be published in the next few days. The plan aims to support the social economy across the bloc, including through dedicated financial mechanisms. Keep your eyes peeled on Pioneers Post to find out more.

(Have some off-the-record leads or tips you'd like to share? Let's have a chat.)

Top image: Acumen / Peter Irungu.