If We Want Impact to Matter, It Must Be Additional

In the world of investing for impact, few words spark more debate – and confusion – than additionality. Yet in a time of shrinking public budgets and widening funding gaps, it may be one of the most important.

That’s why Impact Europe opened its Tap the Untapped webinar series with a deep dive into the questions:

What makes capital additional? And what role do financial returns play in impact finance?

In a growing market, the challenge isn’t just putting more money on the table. It’s making sure that capital enables ‘positive outcomes that wouldn’t happen otherwise’ – the definition of additionality.

Why Additionality Matters Now

Tap the Untapped #1 – Making Impact Additional, as well as the whole series, opened with a stark reminder: despite a growing impact investing market – estimated at €190 billion in direct assets – the financing gap to meet the Sustainable Development Goals (SDGs) remains vast, with only 17% of the SDGs on track.

Public funding is retreating. USAID, for example, faces over 80% budget cuts and the OECD anticipates a sharp decline in official development assistance (ODA) in 2025.

So, the ask is not just more capital, but capital that changes outcomes and reaches where the market wouldn’t go on its own.

Hence, additionality: making a positive contribution that would not have happened without the deployment of capital itself.

What the Data Tell Us

The European Impact Investing Consortium’s latest data – drawn from the Size of Impact report and expanded through granular analysis – indicates that the majority of impact investors are additional. This finding highlights how additionality is a key characteristic of our market in several ways:

• Multifaceted strategy: additionality is not a single approach but a suite of actions, either through financial (55%) and/or non-financial contribution (38%). Focusing just on one aspect would risk missing the entire picture of opportunities.
• Not only about returns: concessionality (i.e., accepting financial returns lower than the market rate) is certainly emphasised as a key strategy for financially additional investors. But the data also reveal that financial additionality is not a single sacrifice or action, but a suite of intentional capital strategies. In fact, similar percentages of investors accept lower returns than the market rate (75%) but also address underfunded sectors or geographies (70%), show flexibility (69%), provide patient capital (64%), and accept disproportionate risk to create positive impact (61%).
• Returns can coexist with impact: among investors targeting market-rate returns, 50% can be still considered additional.  The data suggest that market return expectations do not preclude additionality. Additionality can and often does coexist with commercial performance goals.

Practitioners Weigh In: “Being additional means being a good partner”

The panel featured Alice Carle of Inco Ventures and Petr Vitek of Tilia Impact Ventures, who both emphasised a crucial shift in mindset: additionality is not a static label – it’s a relationship, a strategy, and a responsibility impact investors have and put in place.

Alice brought the data to life, illustrating how Inco Ventures embraces additionality as a multifaceted strategy: evergreen funds, support for underfunded social enterprises, patient capital, and deep engagement through board roles and peer learning. Non-financial support is structured, measured and constantly refined based on feedback.

Petr offered a complementary lens: “Being additional means being a good partner,” he said in the session. Sometimes that means offering guidance, based on a true understanding of an organisation’s mission and evidence-based analysis. Other times, it means knowing when to step back. He stressed that additionality demands not just action, but humility – a willingness to admit when advice might do more harm than good.

Not Just Capital But Collaboration

Both speakers flagged the need for collaborative additionality – especially along the continuum of capital. Alice pointed out that too often, impact investors operate in silos. Mobilising more resources will require co-investment with mainstream investors, foundations and public actors.

Petr agreed, but with a caveat: “Collaboration isn’t always better by default. It’s only valuable when it’s rooted in shared trust and a clear understanding of roles.”

Levers for Additionality

Additionality is not binary – levers are many and varied – and it’s not only about sacrificing financial returns. The data revealed several financial strategies. The panellists stressed that non-financial contribution – from impact measurement support to being a thought-partner – can be equally catalytic.

But it’s not enough to claim it.

“If you connect a founder to one mentor once a year, does that count?” Alice asked. “We need clearer standards and feedback loops from those we aim to support.”

The session pointed towards a fundamental question: If we want impact to scale, we need to ask not just how much, but what kind of capital we’re putting to work. And what difference it truly makes.

Ultimately, the session highlights that more investors should actively aim for additionality. There are many different strategies they can adopt, differentiating across investments, vehicles and capital levers.

Because impact isn’t just a matter of deploying funds.It’s about unlocking positive outcomes that wouldn’t happen otherwise.

Missed the live discussion?
Watch the full session recording here.

Want to continue the Tap the Untapped series?
> Read: Reflections from Tap the Untapped #2
> Read: Reflections from Tap the Untapped #3

Want to keep the conversation going?
Join us at Impact Week Malmö 2025 on 18-20 November.

A European collaborative effort:
Impact Europe would like to thank all the partners of the European Impact Investing Consortium that contributed to the data harmonisation efforts in 2024: GSG France for Impact Finance, Impact Finance Belgium, Impact Investing Institute, MAZE, Netherlands Advisory Board on Impact Investing, NorNAB, Social Impact Agenda per l'Italia, SpainNAB, and The Hellenic Impact Investing Network. Impact Europe would also like to thank EYDK – GSG Impact National Partner Türkiye and Invest for Impact Denmark, and the national academic partners Esade Center for Social Impact and Politecnico di Milano - Department of Management, Economics and Industrial Engineering for the support in producing consolidated figures of their national impact investing markets.