Pioneers Post: ‘We have to understand the full picture’: why investor contribution is the new frontier

When a social business takes on impact investment and it then reports positive outcomes, can the business’s investor claim the credit – or might this happy ending have occurred anyway? How do all the other decisions made by an investor – from the people it chooses to hire, to its governance, to the policies it tries to influence – affect the world? And how do we know what negative impacts the investor might have had?

These are hugely tricky questions, and there has so far been little consensus on how to answer them, with investors coming up with their own approaches. Now, though, “investor contribution” – a concept some also refer to as “additionality” – is under the spotlight, as part of the Investor Contribution 2.0 project.

Behind this “consensus-building” initiative are Impact Frontiers, a programme of the US-based Bridges Impact Foundation, and the Predistribution Initiative, a nonprofit that supports institutional investors. Together, they hope to get more specific on what investor contribution means and on how to manage it. They’re not trying to create standardised metrics for investor contribution – which by its nature is context-specific – but rather to standardise an expectation that investors carefully consider certain elements of investor contribution; even if they aren’t always able to answer these questions, they can then communicate what they do and do not know.