Polis Perspective 05/06/2015: Impact investment and utilitarianism – a debate worth keeping alive

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Thomas Kruiper: Impact investment and utilitarianism – A debate worth keeping alive

Polis Perspectives are weekly perspectives of our team on Polis-related topics. We also share our favorite articles and tweets. This week’s perspective is written by Thomas Kruiper on the article:  Adam Rein, ’Impact Investing and a 200 year old debate, SSIR, 29/05/2015

Last week Stanford Social Innovation Review discussed a debate within the 100% IMPACT Network about utilitarianism and impact investing, weighing the importance of intentions (echoing Immanuel Kant) against the importance of actual outcomes (echoing John Stuart Mill). Ideally impact funds do both, intentionally impacting society for good while also achieving a healthy return on investment. The reality is more complicated; finding assets that intentionally deliver true social impact and financial return are hard to find. In order to sieve out fake Samaritans and to promote utilitarian instruments, all sorts of standards and certifications have popped up.

At the Polis we also believe that a focus on outcomes over intentions can help shift the balance in favor of the true do-gooders. But those who take utilitarianism seriously also know that impact is always in the eye of the beholder; it depends on who you ask . As soon as impact cannot be measured in monetary terms, which is typically the case with social impact, claiming utility becomes a moral minefield. Social impact standards  seem to help by putting investors at easy, but they also kill the debate; they allow investors to engage in investments without actualy engaging themselves with local realities and asking themselves some fundamental questions: What is utility? How does one create the greatest happiness for the greatest numbers? And who gets to decide on what the correct answers are? Although standards are useful, These debates are essential and worth keeping alive.

Polis Star Articles of the Week

Sam Harris & Noam Chomsky: ‘The limits of discourse’, Sam Harris Blog, 1/5/2015

Aidleap: ‘Why don´t international NGOs follow the hippocratic oath?’, Aidleap, 17/5/2015

Rachel Kleinfeld: ‘Improving development aid design and evaluation: Plan for sailboats, not trains’, Carnegie , 02/03/2015

Polis TweetOur Favourite Tweets @polisproject

@martaforesti: Great new @ODIdev online resource centre with interactive map + everything you ever wanted to know on #differentdev http://www.odi.org/doing-development-differently-0 …

@WhyDev: What do people outside the sector think about #aid? @Dani_Barrington keeps hearing some common misperceptions. http://www.whydev.org/development-work-the-myth-of-the-warm-fuzzies/ …

@estherclimate: Can Africa Make SDGs work for Africans? #NewVision #Post2015ng

 

For more in-depth articles and research, visit our Polis Publications page.

 

 

 

 

 

 

 

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About the author
Thomas Kruiper is a core team member at ReSeT. He specialises in conflict resolution, international development cooperation and governance.

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