Episode 40: Impact Investing and the Complex Math of Doing Good
Impact investing has grown exponentially. According to recent figures from the Global Impact Investing Network, the size of the worldwide impact investing market is at around $1.571 trillion. It’s often framed as a win–win: generate financial returns while doing good in the world. But what does that actually look like in practice and who carries the risk when things don’t go as planned?
The Impact Investing Ecosystem
In this episode of Art of Citizenry, Manpreet Kaur Kalra is joined by Dr. Peter Hinton, impact investor and Associate Fellow at Oxford’s Saïd Business School, to unpack the financial architecture behind impact investing — debt, equity, and quasi-equity — and what these instruments really mean for social enterprises and impact-driven businesses on the ground.
If we only look for profit maximization, then we will not end up with a sustainable world which is good for people and planet.
— Dr. Peter Hinton
Together, they trace the field’s roots from faith-based socially responsible investing and the rise of microfinance to today’s trillion-dollar impact investing market. Along the way, they dig into the hidden risks of hard currency loans and the tension between investor expectations and the realities faced by entrepreneurs and communities. They tackle one of the field’s thorniest questions: how do you measure social impact without overburdening the very organizations you’re trying to support?
In this episode, we explore:
The financial architecture of impact investing: how debt, equity, and quasi-equity shape risk, power, and investor-investee relationships.
Historical roots of the field, from faith-based socially responsible investing and microfinance to today’s global impact investing ecosystem.
Global power dynamics, including currency risk, capital flows, and the implications of hard-currency loans for entrepreneurs in emerging markets.
The challenges of measuring social impact, why standardized metrics fall short, and how reporting requirements can burden social enterprises.
Community-centered evaluation and accountability, exploring methods that elevate beneficiary voices and prioritize cultural and linguistic contexts.
Whether you’re new to impact investing or wrestling with its limitations from the inside, this episode offers a grounded, critical, and hopeful look at what a more equitable approach could look like.
📌 Art of Citizenry is proudly independent. Support us as we critically explore, challenge, and unravel mainstream narratives by empowering listeners with accessible, nuanced perspectives.
Make a one-time contribution via Paypal: visit.artofcitizenry.com/paypal
The Origins of Impact Investing
A quick history lesson since you know how much I love tracing the roots of things!
Impact investments are made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Social impact can be interpreted in many possible forms including job creation, give-back business models that re-invest in community projects, and social enterprises that are committed to fair wages.
Before the Rockefeller Foundation coined the term impact investing in the early 2000s, socially responsible investing can be traced back to faith-based traditions like Riba in Islam, which prohibits investments in things such as alcohol, pork, and gambling.
In the United States around the 18th century, Methodists refused to invest in industries that produced alcohol, tobacco, or promoted gambling since they saw these as immoral consumption. Similarly, Quaker communities avoided investments tied to slavery and warfare. These approaches, referred to as socially responsible investing, emphasize ethical and moral considerations.
However, the term “impact investing” as we understand it today, didn’t emerge until the early 2000s. From there, the Global Impact Investing Network was established with the goal of uniting impact investors across the globe to build standards, share knowledge, and grow the field collectively.
Financial Instruments and Power Dynamics of Impact Investing
Dr. Hinton breaks down the three main financial tools used within impact investing — equity, quasi-equity, and debt — and explains how each one shapes investor–investee dynamics. Understanding these instruments is essential to understanding how power and accountability flow within impact capital.
“Debt puts the burden of risk on the entrepreneur, not the investor. And that shapes whose success is truly being prioritized.” — Manpreet Kaur Kalra
We also unpack the hidden vulnerabilities of hard-currency lending, showing how exchange-rate fluctuations can dramatically increase repayment costs and undermine the stability of mission-driven organizations. It’s a clear example of how power and risk are distributed unevenly in global finance.
“A true impact investor will be there for the long term, not the short term. The social impact is equally important to the financial return.” — Dr. Peter Hinton
Impact Measurement
While metrics are meant to increase accountability and transparency, measuring social impact is far more complex than environmental impact. Peter and Manpreet explore why standardized frameworks remain elusive and how rigid reporting expectations often strain social enterprises that already operate with limited capacity. They discuss sector-specific approaches to measurement and emphasize why effective impact evaluation must be rooted in linguistic accessibility, cultural nuance, and feedback from the communities directly affected.
“Social impact isn’t linear. It doesn’t scale like a business. And it can’t be captured through one-size-fits-all metrics.”
— Manpreet Kaur Kalra
Reimagining the Future of Impact Investing
Looking ahead, Dr. Hinton offers a set of guiding principles for what a more equitable and effective impact investing ecosystem could look like. These include:
Creating a healthier balance between debt, quasi-equity, and equity
Sharing currency risk more evenly between investors and investees
Adopting longer time horizons that reflect real-world timelines
Expanding participation from local pension funds and domestic investors
Strengthening the role of financial intermediaries who can bridge large institutional capital with grassroots enterprises.
Targeted approaches such as gender lens or climate lens investing, ensuring that investors understand the nuance of the issues they are looking to invest in.
Meet the Guest
Dr. Peter Hinton is an Associate Fellow at Said Business School (SBS), University of Oxford. His research interests include impact investing, innovative finance, sustainable growth in emerging markets, finance for development, financial inclusion and increasing access to finance to small and medium-sized enterprises (SMEs). Peter teaches and tutors on the Impact Investing Programme at SBS and The Oxford Nation Building Institute of Thailand Leadership and Management programme at Kellogg College. In 2023 he was awarded his doctorate by the University of Oxford for research on the financing of low-cost, non-state schools in Africa.
As founder and CEO of Summit Development Group, Peter works with impact investors and financial institutions in emerging economies. Peter has over 25 years of commercial experience in the UK and founded Enterprise Banking Group (Botswana) which invested in banks in Kenya and Rwanda. He has worked for BancABC (Botswana), CDC (now BII), Africa Trading (South Africa), BhS plc and Mazars.
Peter is an experienced international speaker, board member and government advisor. He is a director of Bean There Coffee Company (South Africa) which promotes intra-African fair trade in coffee. He is a trustee of Ripple Effect (USA), a Section 503 company promoting rural livelihoods in 6 countries in Africa.
Support the Podcast
Art of Citizenry is 100% listener-supported. Every contribution helps us continue producing research-intensive episodes and paying our small but mighty team. If this episode resonates with you, consider supporting our work:
💸 One-time contribution: Paypal
✍️ Subscribe to us on Substack & upgrade your account to paid
💌 Monthly support: Patreon
Thank You for Listening
Please subscribe and leave a five-star review for Art of Citizenry wherever you listen to podcasts. Also, follow along and share your thoughts on Substack - artofcitizenry.substack.com.