While the underlying approaches are older, the term impact investing has recently created new buzz and attracted a growing followership. I'm very excited about this. It seems to indicate that more people have come to a conclusion that I share after 20+ years of privileged insights into motives and decision making across public, private, and social sector entities: Combining a higher-order purpose with the discipline of private sector financial sustainability has the best shot at solving many of today's pressing societal challenges.
As I'm following the reporting and publications on this space, there are two related issues that I'm struggling with and that I fear, if not thoughtfully addressed, might ultimately harm the positive brand emerging for impact investing. The field can benefit from some of the hard-learned lessons from the three decade-old experience of investments in microfinance institutions, which in 2012 constituted still by far the largest share of impact investing -- estimated to be one third of total new commitments and two thirds of outstanding total in developing countries.