Bono doesn’t know. It’s not that he’s wrong, or right. He just doesn’t know. Nor do I, nor I would argue, does anyone else.

But let me back up. Bono is an investor and board member of the new $2 billion impact fund called Rise from the private equity firm TPG Growth. The fund is making a big splash. The New York Times’ Andrew Ross Sorkin wrote a Dealbook column about it back in December, in which he quoted Bono as saying that impact investing has become “a lot of bad deals done by good people.”

It’s a good line. He apparently repeated it yesterday on the big stage at the Skoll World Forum, because when I checked my Twitter feed, a new meme was developing before my eyes: “Impact investing = bad deals done by good people.”

It’s not just a good line. It’s a great line.

But I don’t think Bono knows either way.

How could he? How could any of us impact investors, without a track record of data on the financial returns and impacts of our investments? In the absence of data (or more broadly, evidence) all we have is our deeply held personal convictions, which we can repeat to one another until we’re blue in the face, and whoever has the catchiest line or biggest megaphone wins the debate. Score one for Bono.

The grain of truth in Bono’s mic drop is this: From the outside, it’s incredibly hard to tell good “market-rate impact investing” from “impact-washing”– that is, slapping the label of “impact” on something a commercial financial institution was going to do anyway, regardless of the actual impact it does or does not achieve.

And it’s even worse in the “concessionary,” or below-market financial returns space. As an outside donor or investor, it is nearly impossible to distinguish good below-market impact investing from simply bad financial investing.

The only way to know would be if you had data on impact and data on financial returns, and you put them together. To be sure, there have been several reports on the financial returns of various segments of impact investing, but these reports don’t have any actual data about impact. And there has been a proliferation of reports about how impact investors are measuring their impact, but these reports generally don’t have any actual data about impact either, and they certainly don’t have data about financial returns. If there is research that integrates data on realized impact and financial returns of impact investments, I haven’t seen it.

The impact investing sector needs integrated data on impact and financial return to scale with integrity. That data—along with tools and standards to make sense of it—will create the economic and impact transparency investors and donors of all stripes should demand before they provide the capital impact investing needs to scale.

We need that data on impact, because impact investing continues to attract more players at ever-larger scale. Just this week, Darren Walker announced that the Ford Foundation would invest up to $1 billion of its endowment in mission-related investments over the next 10 years. That’s an important endorsement of impact investing from one of the world’s largest foundations.

Back in November, in an article titled, “Toward the Efficient Impact Frontier,” my organization, Root Capital, shared the tools we’re developing to manage the risk, return, and impact of our loan portfolio in an integrated and quantitative way. But it’s only one fund’s first crack at the challenge.

What is most striking about the response we received after the article’s publication is the fact that interest comes equally from impact investors on opposite ends of the spectrum of financial returns—the philanthropic end and the commercial end. Just last week, two peer impact investors shared that they were struggling with the exact same issues as Root Capital. One was the impact investing arm of a large and highly sophisticated charitable foundation. The other was the impact investing arm of one of the largest financial institutions in the world.

I’m convinced that Root Capital’s crack won’t be the sector’s last or best—not by a long shot. From peer impact investors, I sense an increasing hunger for both rigor and transparency. That is the direction the sector was headed already, and that’s the best news I’ve had about impact investing in a long time.

But if we can bring Bono and the new Rise fund along for the ride, all the better. At the end of the New York Times article, Bono was quoted as saying, “We have to be a bit modest about where we are with Rise and be actually a bit tough on ourselves.”

Now that’s something we can all get on board with—not just for Rise, but for Root Capital and the sector as a whole.

Until we impact investors have a track record and clear ways of reporting not only financial return, but also impact, I’d propose we keep expectations modest and focus on building our track record. 

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