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Moving from IRR to IMM: Investing Based on the Impact Multiple of Money | Michael Etzel, The Bridgespan Group (#108)

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Manage episode 513544991 series 3368148
Content provided by Scott Arnell. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Scott Arnell or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.

My guest today is Michael Etzel – a partner at Bridgespan, and one of the key architects behind a shift that’s still unfolding: the effort to bring hard-nosed analytical discipline to a field once seen as closer to charity than capital.

Michael came to this work from the social sector, back when “impact investing” wasn’t yet a defined field. At Bridgespan, he began advising philanthropists and foundations – and over time, that work expanded to include some of the world’s largest asset managers as they started asking how capital could solve problems philanthropy couldn’t.

His idea was pretty simple: to put impact first.

Our conversation starts with that principle – and where it sits between two poles. On one side: traditional philanthropy willing to lose money in service of outcomes. On the other: finance-first investing chasing market-rate returns. Impact-first lives in the messy middle. The kind where the first diligence question isn’t “What’s the IRR?” – it’s “What’s the problem we’re solving?”

Michael was one of the architects of the Impact Multiple of Money, or IMM – a six-step process designed to estimate and compare the social or environmental value created for every dollar invested. It starts with what a business produces, connects those outputs to real-world outcomes, and draws on academic research to ground the analysis. The result is a dollar-based estimate of impact – not to put a price on people’s lives, but to give investors a common language for understanding what value really means.

Michael breaks it down in plain terms. He and his team actually put numbers to impact – they start with what a business produces, figure out what real-world benefits come from that, adjust for the risks, and then compare it to the money invested.

The IMM framework is now used across TPG’s Rise and Rise Climate funds, together managing tens of billions of dollars in assets. It’s become part of how they underwrite investments, sitting right alongside financial measures like IRR and MOIC when evaluating performance.

And the best part – it’s open source. The full method and case studies are published in Harvard Business Review (“Calculating the Value of Impact Investing”), so anyone can see how the math works.

But for Michael, this work has never been just about frameworks. It’s about decision-making – what actually happens inside organizations when impact moves from a good idea to something real.

In this conversation, we also got into some of the bigger questions shaping the future of the field:

  • Fiduciary duty, and why that concept needs a serious reset
  • How much progress still depends on individuals, not market forces
  • And why one of the most overlooked disciplines in this work is simply knowing how to say no

Tune in!

*** Impact investing services are provided by Bridgespan Social Impact, Inc., a wholly owned subsidiary of The Bridgespan Group.

About the SRI 360° Podcast: The SRI 360° Podcast is focused exclusively on sustainable & responsible investing.

Connect with SRI360°:
Sign up for the free weekly email update
Visit the SRI360° PODCAST
Visit the SRI360° WEBSITE
Follow SRI360° on X
Follow SRI360° on FACEBOOK


Additional Resources:
- The Bridgespan Group website

- Michael Etzel Biography

- Michael Etzel LinkedIn

- Calculating the Value of Impact Investing

  continue reading

Chapters

1. Intro (00:00:00)

2. Growing up in Massachusetts shaped his worldview (00:04:00)

3. Studying social studies at Harvard (00:05:44)

4. Lessons from the 2004 John Kerry campaign (00:07:01)

5. Choosing Bridgespan over traditional consulting firms (00:08:52)

6. Shaping early U.S. impact investing policy (00:12:07)

7. Bridgespan’s mission and global operations explained (00:20:55)

8. Convincing investors that impact won’t hurt returns (00:30:12)

9. ESG and impact investing are not interchangeable (00:32:36)

10. Lack of tools for measuring impact (00:35:30)

11. Origin and uniqueness of the IMM framework (00:40:19)

12. IMM’s 6-step structure for impact evaluation (00:46:23)

13. Ethical complexities in valuing human outcomes (00:57:13)

14. Family offices operate within the messy middle (01:06:22)

15. Public equity investing faces impact measurement challenges (01:10:11)

16. Aligning capital stacks to de-risk innovation (01:16:11)

17. Connecting climate and social impact issues (01:18:42)

18. Redefining fiduciary duty for long-term risk (01:22:05)

19. Impact investing is not one market (01:32:56)

20. Rapid-fire questions (01:38:19)

21. Contact info (01:46:07)

109 episodes

Artwork
iconShare
 
Manage episode 513544991 series 3368148
Content provided by Scott Arnell. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Scott Arnell or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.

My guest today is Michael Etzel – a partner at Bridgespan, and one of the key architects behind a shift that’s still unfolding: the effort to bring hard-nosed analytical discipline to a field once seen as closer to charity than capital.

Michael came to this work from the social sector, back when “impact investing” wasn’t yet a defined field. At Bridgespan, he began advising philanthropists and foundations – and over time, that work expanded to include some of the world’s largest asset managers as they started asking how capital could solve problems philanthropy couldn’t.

His idea was pretty simple: to put impact first.

Our conversation starts with that principle – and where it sits between two poles. On one side: traditional philanthropy willing to lose money in service of outcomes. On the other: finance-first investing chasing market-rate returns. Impact-first lives in the messy middle. The kind where the first diligence question isn’t “What’s the IRR?” – it’s “What’s the problem we’re solving?”

Michael was one of the architects of the Impact Multiple of Money, or IMM – a six-step process designed to estimate and compare the social or environmental value created for every dollar invested. It starts with what a business produces, connects those outputs to real-world outcomes, and draws on academic research to ground the analysis. The result is a dollar-based estimate of impact – not to put a price on people’s lives, but to give investors a common language for understanding what value really means.

Michael breaks it down in plain terms. He and his team actually put numbers to impact – they start with what a business produces, figure out what real-world benefits come from that, adjust for the risks, and then compare it to the money invested.

The IMM framework is now used across TPG’s Rise and Rise Climate funds, together managing tens of billions of dollars in assets. It’s become part of how they underwrite investments, sitting right alongside financial measures like IRR and MOIC when evaluating performance.

And the best part – it’s open source. The full method and case studies are published in Harvard Business Review (“Calculating the Value of Impact Investing”), so anyone can see how the math works.

But for Michael, this work has never been just about frameworks. It’s about decision-making – what actually happens inside organizations when impact moves from a good idea to something real.

In this conversation, we also got into some of the bigger questions shaping the future of the field:

  • Fiduciary duty, and why that concept needs a serious reset
  • How much progress still depends on individuals, not market forces
  • And why one of the most overlooked disciplines in this work is simply knowing how to say no

Tune in!

*** Impact investing services are provided by Bridgespan Social Impact, Inc., a wholly owned subsidiary of The Bridgespan Group.

About the SRI 360° Podcast: The SRI 360° Podcast is focused exclusively on sustainable & responsible investing.

Connect with SRI360°:
Sign up for the free weekly email update
Visit the SRI360° PODCAST
Visit the SRI360° WEBSITE
Follow SRI360° on X
Follow SRI360° on FACEBOOK


Additional Resources:
- The Bridgespan Group website

- Michael Etzel Biography

- Michael Etzel LinkedIn

- Calculating the Value of Impact Investing

  continue reading

Chapters

1. Intro (00:00:00)

2. Growing up in Massachusetts shaped his worldview (00:04:00)

3. Studying social studies at Harvard (00:05:44)

4. Lessons from the 2004 John Kerry campaign (00:07:01)

5. Choosing Bridgespan over traditional consulting firms (00:08:52)

6. Shaping early U.S. impact investing policy (00:12:07)

7. Bridgespan’s mission and global operations explained (00:20:55)

8. Convincing investors that impact won’t hurt returns (00:30:12)

9. ESG and impact investing are not interchangeable (00:32:36)

10. Lack of tools for measuring impact (00:35:30)

11. Origin and uniqueness of the IMM framework (00:40:19)

12. IMM’s 6-step structure for impact evaluation (00:46:23)

13. Ethical complexities in valuing human outcomes (00:57:13)

14. Family offices operate within the messy middle (01:06:22)

15. Public equity investing faces impact measurement challenges (01:10:11)

16. Aligning capital stacks to de-risk innovation (01:16:11)

17. Connecting climate and social impact issues (01:18:42)

18. Redefining fiduciary duty for long-term risk (01:22:05)

19. Impact investing is not one market (01:32:56)

20. Rapid-fire questions (01:38:19)

21. Contact info (01:46:07)

109 episodes

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