Impact Investing: a Ruse or a Means to Reducing Inequality?

As an African-American, 30-year veteran of community development and social justice struggle, my entry a few years ago into the “space” of financial dealings — even among socially responsible-oriented folks — was quite an adjustment. Pretty white; much more corporate feeling; driven by numbers (i.e. financial “performance” and “returns,” albeit with an eye towards “doing good while also doing well”); and more elaborate conferences, offering options beyond chicken.

What do we make of “impact investing?” It is seemingly the new social change fix-it — providing smart young liberal college grads with not only an opportunity to do good but to make good salaries and hold prestigious investment titles. How does its rapid ascent — amidst the continued Wall Street boom – compare with and relate to the persistent structural inequity and ever-growing vulnerability of the majority of the American public? Is it merely a ruse — the latest means of keeping us enthralled with markets and the promise of capitalism, as we are surrounded by unprecedented inequality, overflowing morgues, an out of control police state, and looming climate catastrophe?

Cynicism is more than understandable; and yet, the world shows us examples of markets and morality not being in such disjuncture. Indeed, we can even recall a time not too long ago in this country when, but for significant racial discrimination, economic growth did bring widespread prosperity and a sound trajectory of hope and opportunity. Is this vision not worth revisiting?

In a longer piece in Nonprofit Quarterly — Building the Social Justice Architecture for Impact Investing — I strive to strike what appears to be a needed balance in this discourse. I offer a sobering reminder to market loyalists of the severity of the structural challenges we face — not obviated by a litany of exciting eco- or worker-friendly innovations or shareholder resolutions, few of which sadly are successful. On the flip side, however, I note global examples of markets that don’t run roughshod over their political economies, helping to produce a high quality of life for the majority of their citizenry.