A few weeks ago, the Impact Minds 2024 event was held, organised by the network promoting Venture Philanthropy, Latimpacto.

This edition, noted for its impeccable organisation and topic selection, allowed me to immerse for the first time in a space that brings together experts and visionaries committed to finding solutions to social problems through innovative and sustainable approaches, and through radical collaboration.

Latimpacto has experienced impressive growth in just four years, something we have been fortunate enough to witness as founding members. This year, 653 participants from 36 countries came together, all sharing a common vision: to find new ways to deliver and promote social solutions and ensure that the organisations implementing them achieve significant impact while remaining financially sustainable.

Philanthropy vs. impact investing: two opposing paths?

One of the most frequent topics during the discussions was the question: Should we focus on philanthropy or impact investing? This debate is framed within the growing relevance that impact investing has gained in recent years. The idea that an investment can generate a financial return while positively impacting society seems, at first glance, like a better option to traditional philanthropy, which does not offer an economic return but still generates impact.

These approaches are not mutually exclusive, nor is one better than the other. To determine the correct approach, it is essential to deeply understand the organisations and the problems we want to address.

Different issues, tailored solutions

Let’s take, for example, a startup that allows teachers to measure social interaction and coexistence in their schools. This is a critical issue for the education system, as solving it can have profound effects on students’ lives, such as boosting self-esteem and improving academic performance. In a country where there are government subsidies allocated to this issue, this startup could be a strong candidate for impact investing.

On the other hand, funding care centres for impoverished elderly people might not have a clear market and, in many cases, would depend on donations to stay afloat. This type of initiative could benefit from traditional philanthropy to meet its needs.

Let’s return to the startup we mentioned earlier. In its early stages, it might need more philanthropic support. Being in a nascent phase and without having proven its solution yet, it could benefit from a donation to measure its impact, proving its effectiveness before being able to access investment funds.

A holistic approach: the capital continuum

It’s not about choosing between philanthropy or impact investing, but rather understanding that both are valuable tools in the ‘capital continuum’. Each is suitable for different types of organisations and problems, and each has its moment and place. Instead of competing with one another, they should be seen as parts of a toolbox that allows us to address social problems efficiently and strategically. This highlights the importance of coordinating between different actors—philanthropists, foundations, investment funds, and even the government.

Impact Minds is a great space where, once a year, hundreds of minds committed to social impact come together to share insights, coordinate efforts, and build bridges to solve the most pressing social problems in an open, sincere, and creative way.

Most importantly, as Carolina Suárez, CEO of Latimpacto, wisely said: ‘Money alone does not drive social and environmental transformation. While it plays a role, true change is catalysed by the human and intellectual capital that each of us brought to the event’.

I hope to see you next year in Medellín.

Patricio Mayr is the CFO of the Mustakis Foundation in Chile. He has led the implementation of a sustainable investment approach and venture philanthropy initiatives, he also serves at the board of the Bien Público, the leading corporation implementing Social Impact Bonds in the country.