The Missing "S": A Hypothesis (Part 1 of 6)
The problem is not that social outcomes lack value. The problem is that no one has been paid enough to build the machine that turns social value into investable cash flows.
The impact investing field has a profound and largely unacknowledged bias. Venture philanthropists and impact investors have become transfixed by the “E” in ESG — environmental — while treating the “S” — social — as a second-class citizen: underfunded, under-engineered, and chronically deprioritized. This is not a marginal imbalance. It is a structural failure that reveals both the limits of market logic and the moral imagination of the people who claim to be deploying capital for good.
The social services sector remains catastrophically underfunded — not because no one cares, but because the financial architecture built to house impact capital was never seriously designed with social outcomes in mind.
Green bonds, renewable energy tax credits, carbon markets, ESG-labeled equity: these instruments exist because governments, investors, and financial engineers collaborated deliberately over decades to make them possible.
No comparable effort has been mounted for social investment at scale. And we’re losing out on more than we think because of it.
Across the next few posts, I’m going to make three broad arguments.
First, the case against prioritizing social investment is real, substantial, and worth taking seriously on its own terms.
Second, that case ultimately fails to justify the magnitude of the imbalance — the strongest objections to investing in the S are, in the end, more indictment than excuse.
Third, and most importantly: there are concrete, financially credible pathways to building a serious social investment market, and the primary reasons we do not have one yet are structural, political, and historical — not inherent to the nature of social outcomes themselves.
I’m also going to float a quiet, but firm, call to action for investors who dare and philanthropists who truly care to stop treating the ‘S’ as a rounding error and start treating it as the defining challenge of the field.
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