Accountability and impact investing

An anonymous blog on the Nesta web site (25 Jan 2017) caused Tom some concern – here is his published comment. The original article is here.

This is a worrying article – not because of its content but because of its lack of rigour. First, it isn’t true that trust in charities is ‘going downhill’. A recent blog by NFP Synergy explains why one recent poll (unfortunately commissioned by the Charity Commission) was out of step with their own research. They concede that trust in charities can be volatile – even though it’s higher than that of most other public institutions (and a lot higher than financial institutions).

Second, there’s no crisis on senior pay in charities (unless you read the Daily Mail) though there is an odd reluctance by charities to explain why they pay what they do for posts which are demanding, responsible, big – and much lower paid than equivalents in other sectors.

But I won’t let these Aunt Sallies distract me.

Impact investors are either essentially charitable people who realise that impact investing is a more efficient use of resources; or they are essentially investors who want to achieve social as well as financial returns. Neither group is as naive as your anonymous blogger appears to believe!

Yes, there needs to be accountability and there needs to be strategy in impact investing. Yes, impact investing can be more impactful than charity work (and I’ve had a lifetime in charities). But it isn’t a choice between the two.

There are lots of good reasons for doing what this piece advocates – but they don’t include the main reason advanced here!