Aspiring to Something Better: Book Review of The Impact Investor

Impact Investor

This review was written by Jem Hudson, founder of the Caldy Group, in December 2014. To read the original post and other insights, subscribe to the Caldy Group blog here.

“The stakes are high. If impact investing spurs the socialization and growth in Collaborative Capitalism that we believe it will, for the first time in history we will be responding to some of the world’s most difficult challenges appropriately, proportionally, and sustainably – through massive deployment of the world’s global capital markets.

– Cathy Clark, Jed Emerson, & Ben Thornley
The Impact Investor

Earlier this fall, three highly esteemed impact investing experts – Cathy ClarkJed Emerson, and Ben Thornley – published their much-anticipated book The Impact Investor: Lessons in Leadership and Strategy for Collaborative Capitalism. A result of years of research and active participation in developing the field of impact investing, the book aims to help practitioners in the field as they create their own impact investing strategies.

In this day and age, when most people have barely enough time to read a 2 or 3 page article, this 357-page tome comes as a formidable challenge. Indeed, global audiences tend to lack the time or attention span to dive into the “real meat” of someone’s work, often relying on press releases, general impressions, and sound bites for information. Many so-called “experts” have emerged based on a single TED talk or well-received piece in the Huffington Post.

But The Impact Investor is the kind of book that you will want to read cover-to-cover, because only then will you fully appreciate its breadth and depth of insight. It is a tour de force – a truly groundbreaking work that delivers some of the very finest thinking on impact investing, and presents it in a warm and inspiring way. The authors come off as brilliant, highly strategic experts who also have enough groove and charisma to effortlessly sprinkle the narrative with clever and highly astute nuggets.

Though The Impact Investor is a book about impact investing, it is grounded in a much broader concept – the idea of Collaborative Capitalism. In a sense, Collaborative Capitalism captures many recent trends that move us from a bifurcated world where “doing well” and “doing good” are viewed as separate, to a newly emerging paradigm rooted in the idea of “doing well by doing good.” The authors define it as follows:

“Collaborative Capitalism is the realization of a community’s highest economic and social aspirations through the enterprising deployment of ideas, capital, and shared resources in pursuit of common impact.” (p. 19)

But though the concept may come across as something that has descended upon us from the heights of an ivory tower, with limited real-world relevance, the authors are quick to clarify that “Collaborative Capitalism is not a theoretical construct. It is made real in myriad markets through a wide range of business approaches and financial innovations.” (p. 19)

Within the Collaborative Capitalism framework, or what the authors refer to as a pyramid, impact investing is the mechanism that enables the deployment of capital to projects and enterprises in order to achieve predetermined positive social and environmental outcomes that are then tracked and measured. As such, impact investing reflects the three core elements of Collaborative Capitalism: (1) transparency; (2) outcomes orientation; and (3) attention to constituency. These elements present a myriad of both opportunities and challenges, and the authors acknowledge that “we are now in a period of exploration.” (p. 43)


As the authors begin to “rais[e] the curtain on impact investing,” we start to see just how complex and unwieldy the impact investing ecosystem, and its adjacent fields of socially responsible investing and US community finance, really are. Though the idea of impact investing is so elegant and promising, the history of the space paints a very different picture. As we discussed in one of our very first articles, pioneers in the field started to deploy capital for social and environmental impact in so many different ways and for so many different reasons that simply superimposing a framework – as elegant as it may be – might not sit well with them. In their view, their ideas came before the framework, so why should they need to adjust their thinking and approach to accommodate it?

But if anyone can speak to the power of expansive strategic thinking in a challenging, highly fragmented and siloed field, it is the authors of The Impact Investor. Through their individual and collective efforts, they’ve helped introduce structure and cohesion into the field; collaborated with a broad range of experts and stakeholders in order to hone in on the ideas and solutions that really work; and worked tirelessly to capture and showcase the most successful examples of impact investing in action. Though each and every page of this important book is filled with invaluable insights, the book’s greatest strength lies in its detailed and insightful analysis of twelve carefully selected impact investment funds.

The book provides a framework that maps the impact investment fund landscape across two main dimensions. The first dimension focuses on the intentions of a fund’s investor base, which can either be driven by public policy or private interest. The second dimension focuses on the type and scale of enterprises the fund aims to support, which range from early stage (or “blueprint”) to mature (or “scale”). The twelve funds are then organized in a two-by-two matrix, with four main categories:

  • First Responders – Public policy driven investors focusing on early-stage solutions, typically in severely underserved markets
  • Solution Specialists – Public policy driven investors focusing on scalable solutions, typically with a narrowly defined area of thematic impact focus
  • Early-Stage Innovators – Private interest driven investors focusing on innovative, early-stage enterprises that address specific impact areas
  • Scale Agents – Private interest driven investors focusing on more mainstream, large-scale solutions and enterprises that deliver positive impact

Once the twelve funds are introduced, the book delves into four key practices that define effective impact investing:

  • Mission First and Last – Clearly identifying the problem being addressed through an “investment thesis of change” (ITC) prior to investment, and then making sure to track and report measurable social outcomes
  • Policy Symbiosis – The interplay between the private and public sectors through public-private partnerships and other models, with a focus on innovation, collaboration, trust, and clearly stated mutual interest
  • Catalytic Capital – Intentional collaboration among different parties in order to configure a deal structure that will help trigger the future flow of capital, while serving the diverse interests of parties involved
  • Multilingual Leadership – A leadership style characterized by the ability to express concepts and practices across silos, and in an equally compelling manner, to audiences from finance, nonprofit, and the public sector

As we dig deeper into the strategies and operational approaches that have historically led to success in impact investing, we begin to realize just how powerful impact investing in particular, and Collaborative Capitalism in general, truly are. At the same time, we also begin to see the difficult road ahead as the field tries to expand and gain mainstream acceptance. Because this important transition into the mainstream is the only way for impact investing to achieve its true potential, it’s important to consider the forces standing in its way.

Though we strongly agree with the insightful commentary offered in the final section of the book – “Looking Ahead: Trends and Challenges” (Chapters 7 and 8) – we’d like to focus on a broader issue that we see when thinking about the future of impact investing. In our view, the ultimate success of impact investing as an idea and a field will rest on our ability to live up to its high ideals and ambitious aspirations. A part of why so many young Millennial leaders have become passionate about impact investing is because it feeds into their idealism and a general desire for something better. But we fear that people’s inescapably human tendencies will ultimately get in the way.

First, even the very idea of Collaborative Capitalism is likely to face challenges. Despite their strong desire to collaborate for the greater good, most people simply can’t help but act in a highly competitive manner. This strong human tendency to compete has served as a basis for some of the most important management thinking, including Professor Michael E. Porter’s work on competitive strategy. In short, through fierce market competition, companies and organizations are pushed to think strategically about their market positions, to innovate and seek new opportunities, and to improve their operational effectiveness. Competition is so deeply integrated into the very fabric of capitalism, and human behavior in general, that even our highest ideals can’t make us resist the temptation to compete.

Second, one of the book’s main overarching messages is the importance of coordination and cohesion in a space that continues to come across as too fragmented, siloed, and confusing. This ideal of harmonious movement toward the same vision of impact investing as a transformational force is so compelling that it is hard to believe that it is not already the status quo. But alas, people are people, and the thrill of seeing the world truly transformed for the better often competes with a basic human desire to speak up, stand out, and be different. This affinity for straying away from the crowds and the beaten path has fueled many successful careers in socially responsible investing, community finance, and impact investing, and some of the pioneers in the space will likely never be comfortable with getting “folded” into a broader movement, no matter how compelling its overall vision may be.

Lastly, the book emphasizes the importance of effective public-private partnerships, especially through Policy Symbiosis. While we agree that impact investing as a concept tends to appeal to policymakers across party lines, it remains to be seen how this will translate into practice, especially as we move into the upcoming Presidential election cycle. Recent events continue to raise concerns about growing divisions in the United States, fueled by a strangely outdated reliance on ideology, deeply entrenched interests, and the increasingly damaging effect of the media that magnifies and distorts different issues. Within this context, even the most enlightened bipartisan leaders are likely to struggle to have their voices heard.


We are deeply inspired by the ideas and ideals put forth in The Impact Investor, and we applaud Clark, Emerson, and Thornley for their extraordinary achievement in developing this important work. But more importantly, we admire their continued emphasis on drawing insights from real-world evidence and driving change through action and hard work. The authors put it well: “We would be well served not to lead with our press releases and events, but rather let our actions and results tell the story of our work.” (p. 287)

At Caldy Group, we are deeply committed to driving change through action. We encourage all of you to think about how you too can do your part to make sure that our society can truly live up to the vision of something better that this book so thoughtfully presents. At the end of the day, it’s up to us to face the challenges confronting this promising field and use all of our talents and skills to drive change for the better.