Breaking the impact ceiling

Paul Blyth discusses what’s stopping non-profits from aligning their investments with their mission

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Ufi VocTech Trust has just smashed through the impact ceiling. A lot of people talk about impact investing; few do it. Even fewer do it with all of their capital. In fact, outside of private wealth, very few invest 100% of their capital through an impact lens. In the world of UK non-profits is there a “public” organisation (not family or faith-based) investing all of its capital through an impact lens?

The capital is there, the law supports them (CC14), and there is plenty of opportunity, so what’s stopping non-profits from investing their capital in line with their mission? Why is there an ‘impact ceiling’?

It’s the same thing that stops innovation in any industry – the combination of inertia, lack of peers, hard work, vested interest in the status quo, too many other priorities, and the potential for messing up. As the saying goes: “You never get fired for buying an IBM”.

In his seminal work, Diffusion of Innovations, Everett Rogers reviewed 508 diffusion studies across six diverse fields; he showed that a marketplace’s take-up of innovation follows a bell curve. The time from the original innovation to 15.9% market take-up (i.e. tail to the border of 1σ) takes an age; the time from 15.9% to 50% is much quicker, and 50% to 84.1% happens in the blink of an eye. Some say that modern responsible investment began at the March 1971 General Motors AGM when Paul Neuhauser from the Interfaith Centre on Corporate Responsibility filed an anti-apartheid shareholder proposal. It wasn’t until the ‘ESG gold rush’ of 20/21 that responsible investment became a market norm, and boy did the market shift quickly. Today, impact investing is between 2σ and 1σ  – rapid growth, but yet to achieve mass market take-up.


Ufi is a UK-based trust dedicated to improving education and employment via digital technology. It innovates across its grant making, its investments in mission-aligned start-ups and now – taking a lead from the ESG Olympics – investing its main portfolio through both a financial and an impact lens.

The unsung hero is CEO Rebecca Garrod-Waters. She echoes the view of Clara Miller, President Emerita of the Heron Foundation, who once told Forbes that the business model of endowed non-profits “is designed so the investing side is sort of a hedge fund with a small giving fund attached”.

It made sense to Rebecca to use all of Ufi’s resources to achieve its mission, but the more she asked around, the more she realised how unusual that was. Her biggest challenge was to bring the whole organisation together around a common, but unusual and innovative, goal. This required a long-term vision and an understanding of the requisite change. She knew that putting effort into winning the hearts and minds of key stakeholders around the vision and the goal was a prerequisite to success; impressively, she succeeded.

So what’s so different? Ufi’s high-level process followed market norms; but, in the detail, there are material differences, some examples:

1. Strategic intent to invest for mission-aligned impact

Ufi’s strategy includes this statement: “Recognising that all of our investments have a social and environmental impact, we are looking carefully at the impact of these fund investments. Our goal is to invest in funds that contribute towards our mission whilst continuing to generate the financial returns we need.”

2. Focus on impact goals

Having agreed strategic intent, Ufi held an impact investing workshop at a Trustees’ Away Day. Using the Sustainable Development Goals as a communication tool, the Board was able to agree the focus of their investments, determining which goals were closest to their mission (e.g. SDG4. Education), and which were furthest away (e.g. SDG14. Life below water).

3. Investment Policy including impact

The Investment Committee (IC) used the Board’s work and the IMP matrix to clarify the types of impact contribution Ufi seeks. The Board/IC work created a new Investment Policy, including statements such as:

“Ufi believes all investments have an impact on society and the environment. Ufi believes that its decisions on what to invest in, what not to invest in, and how it exercises its stewardship responsibilities as an investor should, where possible, contribute to advancing the charity’s mission and purposes and should always be in line with its values, in addition to meeting Ufi’s financial return objectives.”; 


“The objectives of Ufi’s financial investments are to i. Provide sufficient liquidity for grant making and operating expenditure,  ii. Provide sufficient liquidity such that Ufi may invest in ventures,  iii. Make a positive impact on Ufi’s charitable purposes and mission”.

4. Focusing on cashflow vs. external benchmarks

Ufi chose to communicate its financial needs through a cashflow forecast. Some argue that defining financial needs via cashflow is more closely aligned to fiduciary duty than other methods.

5. Plain language impact RFP 

Ufi’s RFP required investment service providers to answer a challenging investment problem and an impact requirement; it requested responses written in plain English and limited to 10 pages.

6. Inclusive, respectful tender process

Ufi consciously set up decision-making processes to encourage diversity of thought, including through the use of anonymised pre-IC voting and fully transparent due diligence processes. Ufi chose to involve its finance team early in the tender process, unusually focussing considerable attention on transition management and operational processes. In addition, Ufi’s operating principles for tender included respect for all invited, illustrated by it providing full feedback to all participants. Feedback from investment service providers was that the RFP and tender process was challenging, atypical and a welcome change to the norm.

7. Recording learning in a case study

Few publish detailed case studies and podcasts on their investment work; fewer still focus on process and critical success factors (i.e. the ‘how’) as opposed to investment strategy/outcome.


  • If there is one piece of advice – you learn most from listening to peers who’ve been there and done it.
  • It is entirely possible to invest to meet financial needs and, with those reasonably satisfied, to also further mission.
  • The process of impact investing the main corpus was an overwhelmingly positive experience for all, far exceeding expectations.
  • Moving away from the established norm is more about changing attitudes than it is about anything else like laws, fiduciary duty or financial goals.
  • It takes time to get your Investment Policy ‘right’ and that’s okay; it’s a necessary part of the process.
  • It may be boring, but project management 101 is a critical success factor: gain broad consensus on objectives; establish clear roles and responsibilities; communicate frequently, succinctly, and clearly; develop a core team with the right blend of skills, experience and capacity to succeed.
  • Impact investment expertise on the IC/Board/Executive helps, as does a specialist consultant to add market knowledge.
  • Investment service providers welcome mandates that are defined by cashflow.
  • The devil is in the detail: spending time investigating aspects of a proposal that concern you often surprises.

Who won? This article is about process; if you want to know the outcome, listen to the podcast.

Paul Blyth runs Paul Blyth Consulting. He is co-founder of impact investment house Snowball, Chair of the Financial Inclusion Forum, board member of the Church Investors Group, and a member of the Investment Committee at the Friends Provident Foundation.