Why build an impact investing strategy firm?

Rehana Nathoo
6 min readJul 17, 2018


In the last year, the impact investing sector has been celebrating exponential growth.

Earlier this year, the Global Impact Investing Network released their 2018 Annual Impact Investor survey. The GIIN offered trends across the activities of 229 respondents managing $228bn in impact investing assets. This year’s survey is up from 208 respondents managing $114Bn in 2017. And in 2010 — when the GIIN partnered with J.P. Morgan and the Rockefeller Foundation to provide the first of their annual industry insights — they spoke to a mere 24 respondents who weighed in on 1,100 total investments labelled “impact.”

We have seen the creation of many intermediaries to address this growth. Impact-oriented Registered Investment Advisors (RIAs) focused on managing assets on behalf of clients are on the rise. So too are wealth advisors, tax strategists, legal experts and other investment interpreters rushing to increase service delivery around impact. Even investment banks, syndicators, and other clearinghouses are seeing the need for better and more thoughtful matchmaking between the demand for impact capital and its supply.

But the growth in impact assets under management isn’t just a story of opportunity. It’s also a cautionary tale. As many sector experts and leaders have already mused, is our field-wide shift towards the “how” running the risk of glossing over the “why”?

The why has always had a champion in strategy:

A formal, thoughtful, long-term effort at matching what you can do with what you want to do.

But it isn’t an easy part of the value chain to focus on.

At the firm-level it can be hard to create a revenue-generating (or even semi-sustainable) business. At the individual level, clients are ready to move right to the action — allocating and deploying assets.

Ultimately, the answer of “why strategy?” depends on how you grapple with imbedding sustainable and scalable thinking. Here’s my take on why strategy needs to be a part of every organization’s journey:

1. It makes intention explicit

As AUM rises, so does “impact greenwashing” — the rebranding of the decision to pursue an investment based on positive impact outputs, after the fact. Gone are the days where that goes silently unnoticed. An ecosystem of practitioners — and skeptics — are quick to point out the holes in an organization’s impact story. It’s part of the reason we fixate on the idea of “intentionality.

And nothing codifies intention better than a strategic approach to integrating impact. Instead of investing in one fund, designing a social impact bond, or investing in a single entrepreneur, it creates a framework to analyze breadth and scope. Done correctly, it establishes organization-wide assumptions and expectations around what systems-wide change can actually look like. It also makes the case for a range of interventions based on the problem you’re trying to solve.

A strategic framework doesn’t just satisfy the exercise of asking questions, it makes answering them priority number one. Understanding the relationship between your approach and what it means for the sector creates a set of criteria to have actual impact on the problems you’re trying to solve. That criteria is evolving, but it can be used to measure every decision made, tactic used, or experiment undertaken.

And in a time of constrained resources and limited bandwidth, every decision or experimentation should pass the “are we solving the problem?” criteria with flying colors.

2. It ensures long-term thinking

Old habits die hard. It’s why we so deeply celebrate novelty and innovation — it’s hard to do things diferently. Take the seismic reaction to Larry Fink’s annual letter to shareholders in 2018. Earlier this year, the BlackRock CEO (who represents the world’s largest asset manager), suggested that companies need to account for social impact across their value chain. He went on to explain that in order to do this, we need to shift to long-term thinking around how we create value and how we measure financial performance.

That a financial behemoth would publically suggest that quarterly stock performance, bi-annual manager performance, and other short-term measures are not the whole story around how to do business was considered game-changing. And yet, Fink joined an already clamoring chorus of CEOs, development professionals, politicians, technologists and so many others that have shouted from the mountain top that real systemic change is a game of years — and ages — not months.

The same can be said for actually generating impact. The types of tactics and tools that need to be employed won’t move the needle on a quarterly basis. Often, there’s a combination of outreach, education, and investment that has to work hand in hand to create new markets, prove out an intervention, or painstakingly crowd-in more capital. It’s a long game.

Without a strategy in place, it can be hard to know if the experiment is succeeding or failing. A strategic framework offers a larger narrative for what success or failure looks like. Within that broader framework, every step creates internal learnings for the organization and valuable guidance for the rest of the sector.

Crafting, solving, and planning for that future is true fieldbuilding.

3. It activates all the tools in your toolbox

Impact strategies are not a panacea. Integrating impact into investment activities and organization-wide programs is diverse, discrete and appropriately subjective. The same is true of the actual organizations looking to integrate impact in what they do. Each has its own strengths and weaknesses, dictated by history, expertise, and talent.

A singular tactic — though specific and potentially groundbreaking — is not comprehensive. It doesn’t always represent your organization’s entire theory of change on what it means to implement impact — it’s simply one solution. And the needle moving (or not moving) is often reflective of that single experiment.

A comprehensive strategy can help figure out how this one tactic fits into your broader approach. Perhaps an accelerator platform helps your place-based partners access the early-stage funding and technical assistance they need to grow. Maybe it sits alongside your grantmaking team, which has the technical expertise to understand how to reach the individual beneficiary. Perhaps both are supported by your thought leadership function, which succeeds in shining a light on the problem you’re solving and bringing partners to your door.

Impact should sit alongside what it is you do best — not supplant years of organizational history and learning. Without a strategic framework, it can be easy to think that everything is a nail to your impact investing hammer.

— — — — —

In April, I talked about going “all in” to start a new impact investing strategic effort — Spectrum Impact. Since then, I’ve spoken to numerous stakeholders, experts, and clients. And in all of those conversations, a particular piece of wisdom resonated with me.

“Stay specific and stay focused. In this space, we all could benefit from people staying focused on solving one specific part of the problem.

Keep it personal. Make it meaningful. Most importantly, stay focused.

That’s why I decided to start an initiative that focuses — explicitly — on strategy. The long-term answer to “why” do this work at all. Yes, part of that approach requires designing specific investment tools and vehicles to maximize that impact. And, this specificity is only possible because of a growing ecosystem of incredible intermediaries — including asset managers, investment advisors, and wealth and tax professionals — that can then move capital from intention to action.

But that exercise is done in service of the broader strategy around how to have impact — not the other way around.



Rehana Nathoo

#impinv founder at Spectrum Impact. Ex @CaseFoundation + @BNYMellon + @RockefellerFdn. Bookworm, travel glutton, and lifelong Pens fan. www.spectrum-impact.com