The basic structure of the neo-liberal capitalist system is the problematic structure, and not impact investing. In Germany, the basic system is capitalist but it acknowledges a need for social policy and the welfare state. Impact investing in a welfare state environment does not have to remedy the insufficiencies of welfare services and other flaws of the system. Released from this burden, impact investing can concentrate on its social innovation role in search of better solutions.

While the German impact investment market may have failed to reach the size of its US counterpart, German foundations and family offices have been the drivers of its market dynamics over the last five years. As a result, a small but effective market segment of almost three billion euros has been built – applying rigorous standards including around measurement of the impact of impact investing. Along with the corresponding specialised private equity funds, social banks, and asset managers, the results are a contribution towards some of the new kinds of structures which Kramer is calling for. In itself, that is a contribution to structural change.

Volker Then,
Centre for Social Investment
Heidelberg University