Creating Transparency In Impact Reporting

For the impact investing wonks out there, here’s one that deserves more attention than it’s getting: the Lafayette Square BDC 10Q dropped and once again is breaking new ice for integrating impact data into regulatory investments filings. This is admittedly esoteric but it’s built on a simple and important premise: that if fund managers and investors are as serious about impact as some say we are then we should reflect that seriousness by reporting on impact data in the place where it will get the most scrutiny and accountability, not in a sidecar annual impact report. Putting impact data into quarterly and annual filings with investment regulators raises the seriousness of impact reporting in three ways: ✅ Raises the legal accountability to report accurately. No good lawyer is going to let a fund manager make a claim in a regulatory filing that’s not backed up with evidence. And if they do, the regulator can impose real penalties for false statements. We all know that’s sadly not the case for most impact reports. ✅ Invites scrutiny that will limit cherry picking of data. Especially for publicly traded companies, investment analysts, and increasingly AIs, are eager to pick apart these filings. A fund manager who cherry picks impact data by changing what gets reported from filing to filing will get called out. A lot more light on this data leaves fewer places to hide and obfuscate. ✅ Allows a manager to tell an integrated story of how impact and financial returns work together, as Lafayette Square’s filing does on its first substantive page here. It makes sense that if we really believe impact and financial returns are reinforcing and equally important, then we wouldn’t relegate one to a sidecar, ad hoc report. Do you know of any other financial entities integrating their impact into their regulatory filings? I’d hope it would have become a thing by now but haven’t seen it. As an impact investor, why are you comfortable letting fund managers continue to segregate financial and impact reporting? As an impact fund manager, why not follow this lead? I know that the standard practice and legal advice most people receive will be to limit the legal scrutiny you hold yourself up to. But a lot of standard practice is what we have to break free from. Would love to know other good reasons for not doing this. In the meantime, let’s give Damien Dwin and Team LS their flowers for taking the leap. (Disclosure: I worked at Lafayette Square Holding company, am an investor in the Lafayette Square BDC, and an advisor to the affiliated nonprofit Lafayette Square Institute. None of that is why I’m highlighting this news but it did give me direct insight into the conviction and leadership required to make this kind of progress.) Link to SEC filing below

Impact ALWAYS has a cost. Time. Money. Resources. The only real question is: who’s paying? Most businesses dodge the bullet, passing the bill down the line, to underpaid workers, overexploited ecosystems, or blissfully unaware consumers. It’s a shell game, dressed up as “green,” “purpose-driven,” or “ESG-compliant.” Impact doesn’t just show up on your balance sheet. It is your balance sheet. So, how do you pay for impact without screwing over someone else? Let’s break it down: 1. Reframe Impact as an Investment, Not a Cost Stop treating sustainability as a PR expense. Instead, think of it as a long-term strategy that reduces risk and creates new revenue streams. Companies with strong ESG practices outperform peers financially in the long run. Unilever’s Sustainable Living Brands, which grew 69% faster than others in its portfolio. Shift resources from unnecessary marketing fluff (hello, greenwashing) into real, measurable initiatives like renewable energy adoption or waste reduction. Show your numbers; consumers care about receipts. 2. Stop Cheap Labor in the Name of “Efficiency” Your $4 organic cotton tote isn’t “impactful” if the person stitching it makes $0.10/hour. The exploitation is baked into the margins. Research shows consumers are 55% more likely to purchase from companies transparent about fair wages, even when prices are slightly higher. Build supply chain transparency. Tools like Sourcemap and Fairtrade certifications help. Yes, it takes time. Yes, it’s worth it. 3. Transparently Price in the Cost of Doing Good Nobody trusts businesses that promise impact without costs, because it’s BS. Customers aren’t afraid to pay a premium for ethical practices if you show them why it matters. 73% of millennials (your biggest buyers soon) prefer sustainable brands, but only if they trust the claims. Stop burying the cost of sustainability in your margins. Be upfront: “This product costs more because it doesn’t exploit people or the planet. Period.” 4. Co-Fund Impact with Your Customers When impact costs feel too heavy, bring your audience into the equation. Consumers want to feel like stakeholders, not passive buyers. Crowdfunded impact initiatives (think TOMs’ buy-one-give-one or Allbirds’ carbon offset surcharge) not only cover costs but strengthen brand loyalty. Add micro-impact pricing like a small donation baked into every transaction for reforestation or clean water. The buy-in builds emotional equity with your brand. It’s uncomfortable to face the real costs, but trust isn’t built on convenience. It’s built on truth and truth ALWAYS comes with a price tag. So, stop passing the bill. Start paying for real. With purpose and impact, Mario

The most valuable page in your impact report isn't the one showing numbers. And its not the one telling a story. It’s the one showing both! While stories drive initial gifts, statistics and clear impact metrics keep donors giving year after year. Your impact report needs both. Not just numbers. Not just stories. But a powerful combination of the two. The most valuable page in your report? The one that connects a single story to your broader impact. It looks like this: 👉 One person's journey of transformation including specific details about their experience 👉 Clear connection to donor support 👉 Tangible outcomes that donors can grasp 👉 Data showing this story represents hundreds more Your donors give because they connect emotionally with your mission. They stay because you show them their impact clearly. Next time you create an impact report: 1️⃣ Start with your most powerful story of transformation 2️⃣ Show how this story represents your broader work 3️⃣ Use numbers to demonstrate scale, not lead the conversation 4️⃣ Connect everything back to donor impact Keeping existing donors engaged matters more than ever. Your impact report isn't just about sharing results. It's about building donor confidence in their investment in your mission.