The article by Paul Brest and Kelly Born is a timely and insightful addition to the growing discussion of impact investing. It makes three core contributions: stabilizing the rhetorical extremes, parsing the big tent of impact investing, and setting the right focus (hint: it’s impact).

First, conversations about impact investing have been tacking between two extremes. At one extreme are excessive claims, hopes, and aspirations that we can make money and save the world, all without breaking a sweat or risking a dime (from Panglossians). At the other extreme are critical views of dire, ineradicable trade-offs (from naysayers who hope that the life of impact investing is nasty, brutish, and short). Brest and Born offer a thoughtful middle ground, recognizing a variety of interesting avenues to have impact through investments, but asking for mindfulness and intellectual honesty in considering them.

Second, the article comes at a moment of transition to the next conversation in impact investing. The pivot to impact investing from socially responsible investing (SRI) succeeded in raising awareness of and interest in how to use capital for positive purpose, but with some costs. One was ruffled feathers among community development investors and SRI pioneers without whose decades of work impact investing would not have been possible. Another was in creating a very large tent of different investment types, investors, strategies, and so forth—a tent that has been collectively labeled “impact investing.” The process of parsing this big tent and adding clarity to support focused, effective execution is a critical next step. Imprint Capital is a microcosm of this large tent, having made 110 impact investments that span asset classes, structures, mission areas, and return expectations and working with clients whose circumstances and goals mirror the diversity of impact investors. The article’s push beyond generalizations to more focused conversation, analysis, and practice is valuable.

Finally, the authors’ desire to create a more nuanced approach to understanding and evaluating whether one’s impact investment does indeed have impact is important. It’s easier to gloss over this new field’s complexity than to wrestle with it. Brest and Born include some (but not all) of the more nuanced elements that can make a market-rate investment impactful, such as the investor’s differential insight or value addition. In sectors, such as health or education, in which key customers or regulators of companies are nonprofits or governments, we and our foundation clients are seen as strategic additions to a shareholder base (such as W. K. Kellogg Foundation’s investments in Revolution Foods, Happy Family, and SeeChange Health). In some areas (for example, a pending clean-energy financing we have structured), we see that impact-motivated time, effort, and flexibility can yield an impact—unsticking a market—and have (we hope) quite attractive financial characteristics. We also appreciate the distinction between enterprise impact—corporate social responsibility analysis of company operations and impacts on stakeholders—versus output impact.

I would offer a few friendly additions to this article’s solid discussion. Over the past six years we have seen a variety of ways investments can have impact,  and we believe that it is as much of an error to ignore or minimize these paths as to exaggerate what can be accomplished with market-rate capital. Three thoughts emerge:

First, find reasonableness on the “but for” question. The additionality question, though important, suffers from rapidly diminishing returns. While it is reasonable to question the additionality of market-rate capital, there is also no basis to automatically assume that concessionary capital (or a grant) results in activity greater than or different from what would have happened without it. Some impact investors gloss over the question of additionality, but we see others getting stuck or, in some cases, simply making mediocre investments to “assure” their additionality.

Second, marginal thinking has limitations. One reason the additionality question is important but not decisive hearkens back to Immanuel Kant’s injunction to universalize the maxim behind one’s act, in determining appropriate behavior. Individuals whose actions’ marginal impact is negligible (for example, voting) shouldn’t cease those actions based on awareness of this mathematical fact. We have seen the real effect that more diverse investing can have on the larger investment community. To cite one example, a $20 million client portfolio 100 percent invested for impact disproportionately influences other organizations to change their behavior.

Third, impact goes both ways. Brest and Born highlight a number of nuanced ways to reconcile the twin facts of market returns and additional impact, but our work at Imprint has revealed another powerful result of solid impact investments: the “learning return” (a term coined by Tony Berkley, director of mission-driven investing at the Kellogg Foundation) that flows from investee to investor. Especially for individuals and institutions also engaged in advocacy and grant making, the insights gathered from investees to improve the core business of philanthropy can make a considerable impact that has little to do with the significance of the capital to the investee.

All of us active in impact investing recognize that this is a process of continuous improvement and refinement. Brest and Born’s article (with a few modest suggested provisos) is a constructive aid to the industry’s effort to improve the clarity of its thought, quality of its execution, and ability to evaluate, discuss, and improve performance.

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