Impact Investing Is Not Your Rescue Plan - But It Might Be Part of Your Future
A reflection on the SID-US panel "Impact Investing: From Concept to Practice," May 14, 2026
Impact investing is one of the most misunderstood tools in the development finance conversation right now. It gets overestimated as a replacement for ODA, and underestimated as a structural opportunity for organizations willing to do the slow, unglamorous work required to access it.
That tension was at the center of a SID-US institutional member event on May 14, hosted at FHI 360 headquarters in Washington, D.C. Ninety minutes with practitioners who have built impact investing vehicles, navigated their failure points, and watched the sector respond to the USAID collapse with both urgency and confusion. The conversation was honest in ways that matter for NGO leaders navigating today's shattered funding landscape.
The Ground Has Shifted. Permanently.
Moderator Ira Hersh of Brunswick Group opened with a frame that has held up in every serious funding conversation of the past year: "We are in a disruptive funding moment for ODA, philanthropy, investment in general." For organizations like FHI 360, 2025 was, in the words of CEO Tessie San Martin, "highly disruptive," with large revenue-generating contracts simply disappearing. John Simon, Managing Partner of Total Impact Capital, added a concrete measure: the collapse of USAID-backed catalytic capital left more than 40 investment vehicles stranded, vehicles that would have collectively mobilized over a billion dollars.
This is a structural cliff, not a cyclical dip.
A Tool, Not a Panacea
Impact investing is not a replacement for grants, government aid, or philanthropic capital. It is a powerful instrument for a specific subset of development problems.
Kurt Dassel, a former Monitor Group and Deloitte consultant now serving on the board of Polylabs, offered the clearest diagnosis: the fundamental dividing line is between public and private goods. Strengthening health systems, building judicial infrastructure, and providing universal primary education are public goods. Important. Necessary. And largely not investable. You cannot generate a financial return from a strengthened healthcare system the same way you can from selling contraception, clean water, or housing materials.
For NGO professionals, this is the first honest stress test for your own portfolio: which of your programs produce something that someone can pay for? That is your entry point into the impact investing conversation. Everything else still requires grants and aid, and that is a reality, not a failure.
The Scale of the Opportunity Is Staggering - If You Can Access It
John Simon framed the scale argument precisely: there are approximately $200 trillion in assets under management globally, and "we only need a tiny fraction of that to address the SDGs." Compared to the finite pool of grant capital, investment capital is almost unlimited. The constraint is not the money. It is building the conditions to access it.
Simon identified four reasons why impact investing, when it works, is compelling: it harnesses market forces and proximity; it accesses capital at a scale grants never could; it builds sustainability into the model by design; and it shifts the relationship: the people you serve become customers, not beneficiaries; and an empowered customer has agency in a way a passive beneficiary does not.
The Hard Prerequisite: Investment Readiness
Geoffrey Chalmers, President & Managing Director, AV Ventures, LLC, brought the most grounded operational perspective. His firm spent two years doing what he called a "pre-mortem" before launching its impact investing work in 2016: mapping failure points, designing around them, and – critically – asking where there was an actual market gap.
His warning was direct: "The last thing the sector needs is lots of people kind of jumping in just because of the requirement for new business lines." Impact investors are not philanthropists. They need a return. Getting enterprises to the point where a fund manager will invest takes roughly three years of pre-investment ecosystem work, and most funds won't do it, because they need investment-ready targets, not early-stage nurturing.
That is where NGOs have a real and often overlooked role: providing technical assistance. Not the post-investment hand-holding that investment funds already provide, but the pre-investment ecosystem-building: incubation, market-making, and investment-readiness support. This is work NGOs know how to do. Presenting it as a service to the impact investing ecosystem, rather than a charitable program, is worth the conversation.
What Has to Break
The session forced one question into the open that development organizations rarely answer honestly: what has to break inside an organization – and inside a board – before years of conversation about revenue diversification finally turns into action?
Tessie San Martin's answer was unambiguous: everything helps. Because at FHI 360, everything did. Diversification, she said, was always discussed, but nearly impossible to pursue seriously when hundred-million-dollar USAID contracts kept crowding out everything else: "No matter how successful you were in getting other types of revenue, there were these really lumpy, gigantic projects that just clouded over everything else."
The brutal irony is that the funding crisis has created the opening that comfortable abundance never would. "It is incumbent among us to think differently," San Martin said, "because it can actually be transformative for development. It can also be transformative for our organizations."
This is an argument for intentionality, for using the disruption caused by ODA reduction as an opportunity to change, rather than waiting for the familiar to return.
What an NGO Can Actually Bring to the Table
One of the most underappreciated points in the session concerned risk, and it directly reframes how NGOs should be entering this conversation.
Organizations approaching impact investors often position themselves as grant-dependent entities seeking a new source of capital. That framing misses their strongest asset. As Simon put it, organizations that know how to deliver healthcare outcomes in a specific regulatory environment, navigate community trust, or manage last-mile distribution are performing a function that directly reduces investment risk. "A lot of the risk you're taking on is things you know really well. You know how to deliver water, you know how to deliver healthcare. So that takes a lot of risk out of the equation that a lot of other folks don't have."
Development practitioners carry technical expertise that investors value, but most NGOs do not present it that way. They arrive as supplicants seeking capital rather than as technical partners who de-risk the investment. The framing is fixable, and fixing it changes the conversation.
What You Should Actually Do Tomorrow
Impact investing will not solve your cash flow crisis this fiscal year. But the conversation at SID-US on May 14 pointed toward three concrete starting points for NGO leaders:
Map your portfolio for investability. Which of your programs touch private goods: clean water access, health products, financial services, housing materials, food security? Where could a market-based model actually work?
Build or join technical assistance infrastructure. Position your organization as a pre-investment ecosystem builder. Engage directly with the impact investors who will eventually fund the enterprises you are helping develop. That conversation changes your standing in the room.
Start educating your board now. Entering impact investing requires a different skill set from development programming or traditional fundraising. The governance conversation needs to start before you need the capital.
The old funding architecture is gone. What replaces it will be built by the organizations willing to do the hard, slow work of thinking differently, not by those still waiting for things to go back to normal or to be somewhat replaced by the generosity of others.
The author attended the SID-US Institutional Member Event "Impact Investing: From Concept to Practice" on May 14, 2026, hosted by FHI 360 in Washington, D.C. (https://sid-us.org/civicrm-event/810). The video recording is here: https://www.youtube.com/watch?v=3g7Z3MXHCAI
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