[W]hen asked if there should be a cap on returns on equity in impact investing, all four panelists disagreed. In fact, the topic seemed to rile up Emerson – he took the occasion to lob a few broadsides at Muhammad Yunus’ belief that social business should deliberately limit its financial returns. Calling it “hugely simpleminded,” he said such a "dogmatic approach to what is impact and what is righteous" would inhibit innovation. The sector’s organizing principle was starting to sound more like “share the wealth … with investors.”
The dynamic was best revealed by this awkward question: Since the impact sector often addresses social problems exacerbated by an eroding tax base, should impact investors avoid efforts to minimize their own tax burdens? In the rather chaotic discussion that followed, it was unclear where most panelists stood – but there clearly was no appetite for paying more to the taxman.
These are sensitive questions about complex issues, and I don’t mean to put these panelists on the spot. They discussed them frankly and honestly, and they should be credited for having the courage to do so publicly (though halfway through the panel, one of them plaintively – and certainly belatedly – asked that there be “no tweeting.”) But it was striking to see how quickly SOCAP’s “hippie vibe,” for lack of a better term, went out the window when the discussion shifted from the need for “the world” to “change its wealth structures” to the suggestion that impact investors themselves might have to accept less money in the process.
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