One of my favourite people, a brilliant systems thinker who sometimes goes by the pseudonym “Lindy” leaned over during a recent impact investing convening as we listened to people expressing frustration and doubt and whispered: “This is starting to sound like an Alcoholics Anonymous meeting.”
Webs, Pots and Pans
I have been spinning the web of impact finance for almost two decades now. “Web spinning” sounds awfully elegant when the reality has been more like banging on pots and pans - and with varying levels of success in waking up my audiences.
I have observed, cheered and judged from many angles (see footnote on TIIME). There used to be a lot of time upfront on center stage. In recent years I’ve leaned back a bit more for a different perspective (and to looking inwards), while squinting from ivory towers of boardrooms.
After a recent post I made about Joanna Macy’s ‘The Great Turning’ (see footnote) I received a call from the one and only Katapult Tharald: “Hedda, I’d almost forgotten about you!” Ouch.
Musing on the impact investing journey tends to spill out in long conversations with my co-founder Cécile and other beloved peers. Lately there’s been a spate of dramatic criticisms of impact investing that provided an invitation - or perhaps more of a compulsion - to share some reactions and perspectives to the backlash.
Impact Investing’s Identity Crisis: ‘lost in the sauce’
More people are questioning their approach, their impact, even their identity as impact investors. I recently read someone describe themselves as a “recovering impact investor”, which, per L’Indy’s previous comment, is indeed very AA coded. I understand the sentiment, I do. Though I would hope “recovering” means improving our approach rather than opting for abstinence.
Years ago my friend Robert explained in a slide deck called “Impact Learnings” why he jumped off the hype train. He was dismayed with the seductive promise peddled to ‘have your cake and eat it’. I always found that an odd expression but here it means ‘accumulate vast amounts of wealth while having oodles of impact’. This false premise was the reason people got ‘lost in the sauce’ (an expression I learned from my 16 year old son) - and upset both the impact folks AND the others who came for high returns and impact glory. So the onslaught of disillusioned and disgruntled critics comes from both ends.
Another prominent voice (L’Uli) sent ripples of discomfort through the field with his challenges, leaving many proclaimed impact investors clutching their (allegedly sustainable) pearls as they were called out on the discomforting reality that financial return incentives can dilute or subvert impact intent. Watch the TedTalk here.
Never missing a beat, (L)Indy declared at a recent conference: “Impact investing has failed.”
It's hard to disagree. But failure is not permission to crawl into a hole and feel sorry for yourself. It’s an invitation to pull yourself up by the bootstraps and try again. Try harder. Try better. We dont have time to waste with sitting around feeling sorry for ourselves. The window is getting ever smaller.
A recently circulated piece titled “Impact Mafia: How the Elite Invented a Way to Feel Good While Doing Nothing” went to another level, mocking the impact community as ego-led country clubs. The image of a diverse boardroom smugly watching the world burn was especially uncomfortable. As if this was the moment to undermine the modest headway made on diversity issues.
While I find thoughtful challenges welcome, there is a tone of demeaning others to create meaning (and marketing) that is quite distasteful. Simplifying and reducing the field to score points does not build the constructive, accountable culture we need. And it certainly doesn’t help us evolve.
So why is the narrative wobbling? Why does the field feel like it’s going through a morning-after identity crisis with a walk of shame? A few thoughts coming on the underlying challenges that have plagued the field since the beginning…
Warning: the impact journey may include whiplash
Some years ago, I came across the book ‘Hospicing Modernity’ by Vanessa Andreotti. I read it three times - and flinched every time recognizing how ‘colonized’ my own mind is... how much I am part of the problem that I claim to want to fix. Between the aforementioned book and the discovery of Dark Matter Labs work (again - an important footnote below) prompted a deep and at times dark voyage into recognizing how much I have been part of the very problem I was trying to solve - and how painfully far off course we are. So I went through the shadow world of the impact field, and most of all my own shadow work in motivations and incentives.
So there is a bit of discomfort in waking up. We need to be able to handle that. Fragility will not serve us in what we have to address (but tenderness, yes).
Zooming out, we can recall that microfinance went through a similar arc: explosive growth, moral fervour, then hard lessons, consolidation, clearer standards, and a more grounded sense of what it could and could not do. It eventually emerged as inclusive finance with much improved mechanisms and governance. The point is that many ideas follow this pattern where the hype expands faster than the integrity scaffolding - eventually the clean-up comes along and it’s not always easy.
As our gender-lens warrior Sana points out: impact investing in-fighting is detracting from the real issue of capital deployed falling short in quantum and depth. And I recall Robert gave me a similar speech after I spoke at a recent Toniic (global community of impact asset owners) gathering in my own AA-coded laments. This is not the time to sit around and complain or feel sorry for ourselves (or throw shade and insults). We need to recalibrate and redeploy. Now.
Why Impact Investing Struggled to 'Stick'
Here come some thoughts about the foundational challenges we faced in the emergence of the impact investing movement.
1. The Language
Impact can be positive or negative, which confused mainstream conversations from the outset. Who doesn’t claim to have impact in their investment activities? And despite the clarity in definition for impact investing, there is still ambiguity on the level of contribution thresholds - and intentionality simply not being enough. And measurement is forever a pain point and under constant scrutiny - those that measure not at all (doesn’t count), TOO much (at a cost) and then the rest that over CLAIM.
2. Impact investing was pitted against philanthropy
Impact investors had an unspoken condescending attitude towards philanthropy while philanthropy decried ‘cannibalism’ for impact efforts. The tension between the two has persisted as a false binary.
3. Positioned against sustainability efforts
ESG versus Impact Investing: speaking of another false binary. Obviously any positive impact requires solid sustainability practices and minimising harm. ESG is quite simply ‘good hygiene’, and that’s a basic/base requirement for setting positive impact targets. If you want to unpack this further, check our blog on the differentiation
4. Language like “Concessionary" capital
Which reinforced the idea that anything non-maximised is a sacrifice. “Catalytic capital” is a healthier framing. It just came late! And it was treated with disdain by those misguided folks who came for the cake I mentioned above - they got lost in the sauce of ‘finance first’.
5. Silos and blinders
Competition over an imaginary limited pool of capital, ignoring the broader forms of polycapital (hat tip to Regeneration Group who coined the term and created the methods and services to best help people deploy their different forms of capital for impact).
Why the Impact Narrative is Teetering
1. The problems got much bigger, much faster
We’ve made too little progress on the SDGs while planetary boundaries are breaking at speed. We need to move fast but the capital needs to be patient.
2. Capital has barely shifted
Impact investing represents around USD 1.5 trillion out of roughly USD 110 trillion invested globally.
About 1.4 percent. So time for humility and acceleration.
3. A lot of that capital is sugarcoat, not substance
Plenty of wolves in sheep’s clothing as we all know. Bare-minimum doers are still bragging about outperformance and treating impact as a marketing veneer. Perhaps some of them believe they can create impact with all the returns in the world?
4. The field over-professionalised
Frameworks, taxonomies, metrics, compliance. Necessary, yes. But the administrative gravity slowed the movement. As a recent SSIR article warned, the field might collapse under its own weight.
5. Systems change narratives risk eroding the contribution of impact investing
A new and exciting tension emerged as systems change lens gained momentum - and rightly so. In some circles it’s now framed as the “grown-up” successor to impact investing. And it’s a beautiful evolution indeed.
However in building credibility for the systems lens at the expense of impact investing efforts, we risk dismissing the foundational work that made systems thinking possible in the first place.
I try to honour the transition work that brought us here, even the errors and missteps - it’s not unlike compost. We need that to grow and build the new.
Without the last decades of foundational work, the appetite for systems thinking, regenerative models and polycapital would not be what it is today.
Promising Signals
Despite the brow-beating and onslought, I see strong signals that our space is evolving. Here are some anecdotes that signal the shift:
- The Enough Project (www.enough-project.org) - Robert and Brent’s critical platform - asks wealth holders to really look at what we all have/do/feel is ‘enough’. This is a portal into a world of perspective change - and unlocking impact potential.
- Innovative concepts like shared ownership models or the Theory of Wealth challenging the 'preserve and grow' social norm.
- Ananda Impact Ventures (https://ananda.vc) invites other funds to pitch at their investor day — their peers, not their own portfolio. A rare act of field generosity.
- GIIN and Toniic recently collaborated on a catalytic capital event.
- Coalition for Impact (C4I) created a private wealth systems map through cross-organisation collaboration.
- There has been a slew of innovative finance initiatives across the field that have transformed the copy-paste of traditional finance into the impact sector into new and creative projects. Small Giants, Impact Frontiers, Innovative Finance Initiative,Roots of Impact - all leading examples.
- At gatherings, the conversation is shifting away from portfolios and performance and towards systems lenses and catalytic capital.
There are many examples like this - they point in the right direction.
I remain deeply enamoured by Joanna Macy’s concept of The Great Turning - again see the footnote.
So What Now? A Short List
If there’s anything we’ve learned on this journey, it’s that you need to anchor your impact intentions in fertile soil. This means you need to do the preparatory work to understand WHY you are engaging even before the how - and to what extent and at what cost (also echoed in the Enough work). There is some thoughtful work that includes reflection and perhaps some discomfort as you wake up to the state of the world... to others... and to yourself.
Here are some courageous conversations that we need to have. And perhaps pause for a moment and ask where you place yourself.
- Realistic truth telling. We are in a period of collapse and the window to pivot is small.
- Thresholds - Doughnut Economics introduced limits with no more excuses.
- A systems lens. Move away from isolated portfolios and single-point bets and look WIDE and DEEP.
- Collaboration. Look for unusual suspects or try unusual tools.
- Infrastructure that makes collaboration possible and accelerates impact
- Less “preserve and grow” as the default wealth mindset. See the C4I private wealth map (reference in the footnote).
- Commitment to future generations and long-term stewardship.
- Voice and agency for silent and more-than-human communities.
- Technological progress grounded in ethics and restraint (we really need to talk more about AI and the existential risk our friends in Effective Altruism have been flagging)
- Self-Awareness - a.k.a the ‘inner work’. How well do you understand yourself? your intentions, your motivations, your roots, your shadow? This is where your inner strength and resources will unfold.
And the last one is probably the most important unlocker and brings us to:
The Arc of Awareness
So we are all in different stages of awakening. And - as admitted above - it’s not always easy . To address the global challenges we will need to start with understanding how we are part of and contributing to the broken systems - how it is all entangled.
This is a moment of emergence: of different ways of being, of showing up - and of rethinking power structures. Our existence goes through cycles and shifts. This moment is calling us to embrace the uncomfortable and lean into what we don’t know.
We are disconnected from ourselves (mind and body), separated from others (all forms of racism, sexism and colonial mindsets) and from ecological belonging (thank you Wellbeing Project for this lens) which has distorted our view of the world.
The Presencing Institute taught us to move from ‘Ego to Eco’. Indy and DML taught us about ‘Interbecoming’ - all systems are interdependent and in flow.
And - Aletheia teaches Unfoldment Principles - that we are all inherently whole.. not deficient… and just need the conditions to unfold.
These all weave together into the arc of awareness that we would like to help bring others through.
I would love to hear your reflections.
Hedda
My warm thanks to all the wonderful people who helped review and feedback on these reflections: Cécile Sevrain, Jen Braswell, Johannes Weber, Sana Kapadia, Kurt Peleman, Indy Johar
Footnotes:
With TIIME (our organisation and also the temporal construct), Cécile and I have designed social entrepreneurship courses, built investment vehicles (and invested in them), designed impact strategies and governance structures. We have advised funds, families, NGOs and governments, and ridden waves of enthusiasm and backlash. We are called ‘Field Builders’ or ‘Ecosystem Players’ and it’s given a unique view of the evolution of impact in the financial world. And after all these years we’ve ended up with the conclusion that it all begins.. within. Hence the Awareness Consultations. We welcome anyone to reach out to experience Awareness Consultations for insight into the WORLD, OTHERS and SELF. Just write to hello@tiime.org
The Great Turning - (please listen to the podcast of the same name). The movement of systems change and consciousness offers a new transformation pathway. We shared a LinkedIn post about this recently.
Dark Matter Labs is a powerful source of insight on systems change and possibilities. i strongly urge you to follow their work - and Indy’s Johar’s ‘provocations’ on subtstack. They are developing the Civilization Optionality Fund, which touches many of the pain points and offers a compelling investable option. Two keywords I hold close from following Indy’s work: embracing uncertainty, posture and tenderness. I recommend sitting with those concept - it opens up a lot.
C4I systems map: https://coalitionforimpact.org/wp-content/uploads/2025/10/c4i_final-report_1022-ver-final-minimized-edition.pdf