Impact Finance Bulletin: Pursuing impact-first investing doesn’t mean shunning finance-first investors

The discussion around whether impact investing should involve financial tradeoffs continues: should we accept that creating impact needs paying for, as shown by recent research from the Miller Center for Global Impact? Or, as outgoing GIIN CEO Amit Bouri was still arguing this month, is evidence from some impact fund managers that they can create “meaningful change” without sacrificing returns convincing enough? 

I had the chance to discuss, and nuance, this tension in an interview published this month with Markus Freiburg, new chair of Impact Europe and founding CEO of Germany-based consultancy, the Financing Agency for Social Entrepreneurship (FASE). 

Describing Freiburg as an impact-first expert is an understatement. FASE’s purpose is to support social entrepreneurs to access investment, and the financial structures and services it has developed over the years are a perfect example of what impact-first investing can achieve by meeting entrepreneurs’ needs. 

But he was clear that doing impact-first investing doesn’t mean shunning finance-first impact investors. Because to achieve impact at scale, we still need the whole ‘spectrum of capital’: from grants to impact capital that will only accept market-rate returns, he explained. The key is in the blending of all of these types of capital to achieve a mix that works for social entrepreneurs.

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That’s a difficult pill to swallow for some impact-first capital allocators – for example, the reaction of many philanthropists to the idea of providing catalytic capital at a discount to attract institutional investors is often “why should I subsidise someone else’s profits?” which is understandable. They have to see the bigger picture and see how a blended structure can multiply the impact they achieve.

It still feels like a huge amount of effort is going into the design of blended finance structures just so that “big money” in the end gets its market-rate returns (with impact almost as a bonus). What about all the systems change we’re talking about, I asked him? “One thing that we brutally learned with FASE, that we failed... for the last 13 years we tried to convince investors to become impact-first investors. I have to confess that this doesn't work at scale,” he replied. Make sure to read the full interview here.

In the UK, this month’s big story was the arrival of yet another new prime minister (the country’s sixth since July 2016), and much discussion has been going on about what that might mean for the sector. A first development was the transfer of the Office for the Impact Economy from the Cabinet Office – “the heart of government” – to the Department for Culture, Media and Sport (soon to be renamed “the Department for Digital, Culture, Media and Sport”), once described by a former minister as “not the most powerful department in government”. For impact investors, being pushed away from the more finance-focused government departments will be seen as a loss, and they might be put off by the move. It’s not all bad, suggests Social Investment Business’s Jack Wakefield, who argues DCMS has a lot to offer; but we need to ensure the Office remains connected “to the flows of capital that shape the wider economy” by keeping real links to the Treasury and business department, for example.

• This is an abridged version of the Impact Finance Bulletin newsletter. Explore the full edition here.

This month's top stories

‘We are acting as pioneers to develop the true capitalism 2.0’ – Markus Freiburg, new chair of Impact Europe

UK government restructure: ‘The Office for the Impact Economy should capitalise on the strengths of its new home in DCMS’

Aid cuts: ‘When public climate finance shrinks, community-led solutions pay the price’

On our radar

• Upcoming event: My colleagues Anna Patton and Julie Pybus will be at the Latimpacto Impact Minds conference in Manaus, Brazil from 8 to 11 September – make sure to say hello if you’re planning to attend! We are pleased to be media partners of the event, and Anna and Julie will be hosting a workshop focusing on storytelling for impact investors at 5pm local time on 10 September. The theme of Impact Minds 2026 is ‘Connecting Us’, and the agenda features themes including the bioeconomy, biodiversity, climate, territorial development, education and health. Find out more here.
• What we’re keeping a close eye on: A new study on the UK’s impact economy is expected to be released by NPC and Social Investment Business soon. Building on the initial “Impact UK” report by NPC earlier this year (and addressing some of the definitional concerns around it), the study aims to “unpack the impact economy more clearly”, looking at the different groups within it – from charities, CICs and co-operatives to commercial impact-driven businesses. Among its objectives are to help establish which kind of finance is right for each type of organisation, recognising that some of them will be better suited for grants and others for repayable investment. While we wait for the full report, you can find out more in this article by Jack Wakefield from Social Investment Business.

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

Top image: at the Impact Days conference in June 2026, a panel discusses how blended finance structures can mobilise institutional capital for impact.