top of page

The Violence of Market Rate Returns

Writer's picture: Katie & Brian BolandKatie & Brian Boland

We find ourselves at a moment of some of the greatest levels of wealth inequality in human history. The gap between the wealthy and everyone else has reached levels similar to the Gilded Age, and it's accelerating. The wealth of the top 1% is growing at a staggering pace, which means they're not just getting richer – they're actively capturing an ever-larger share of our collective economic growth. In fact, the richest 1% have captured nearly twice as much wealth as the rest of the world combined since 2020, while billions sink further into poverty.


If you're reading this, you're likely among the beneficiaries of this system. Perhaps you're even proud of your impact investments. But let's examine what we're really celebrating when we toast to "market rate" returns.


The Machinery of Extraction


We've normalized the idea that "market rate" returns represent some natural economic law rather than what they truly are: a benchmark built upon decades of exploitation, extraction, and externalized costs. When you demand these returns, you're implicitly endorsing:


Labor Exploitation & Wage Suppression 


Retail giants like Walmart that have institutionalized poverty wages to such a degree that they include public benefit application forms in their new hire packets, effectively shifting their labor costs to taxpayers while maintaining profit margins that enrich shareholders. Hotels and hospitality chains that have perfected the art of exploitation, paying poverty wages while charging ever-increasing fees, forcing guests to accept reduced services as "the new normal" while their workers rely on tips to survive. These same chains often fight against living wage legislation while their executives earn multimillion-dollar bonuses. Manufacturing supply chains that rely on labor conditions we wouldn't accept in our own communities, where workers endure 16-hour shifts in unsafe conditions to produce the devices we use daily.


Price Gouging & Profit Extraction 


Consumer packaged goods companies that cynically blamed inflation for price increases while reporting record profits and margins, using economic uncertainty as cover for pure profit-taking – think of Procter & Gamble raising prices by double digits while reporting billions in profit growth, or Nestlé hiking prices while buying back shares. Healthcare companies that price life-saving medications at whatever the market will bear, forcing patients to choose between medicine and food. Health insurance companies that routinely deny necessary care while posting record profits, paying their CEOs tens of millions while patients go bankrupt from medical bills – all while adding no real value to the healthcare system beyond serving as expensive gatekeepers.


Community Exploitation & Displacement 


Financial institutions that extract wealth from vulnerable communities through predatory lending practices, excessive fees, and aggressive debt collection. Real estate investors who accelerate gentrification, displacing long-time residents while celebrating their "market rate" returns on property appreciation. Dollar store chains that target low-income neighborhoods with low-quality products while preventing access to fresh food through restrictive leases.


Corporate Consolidation & Market Control 


Private equity firms that acquire stable businesses, load them with debt, extract maximum value, and leave hollowed-out companies and unemployed workers in their wake. Agricultural conglomerates that squeeze small farmers with predatory contracts while controlling the entire food supply chain for maximum profit. Pharmacy benefit managers who serve as hidden middlemen, driving up healthcare costs while adding no value to patients. Tech companies that commoditize human attention and personal data while investing minimally in user protection, turning human behavior into a product to be sold to advertisers.


Global Exploitation 


Natural resource extraction that leaves communities in the Global South bearing the environmental and social costs while the Global North reaps the financial benefits, creating generations of poverty and environmental degradation.


Beyond Return Theater


Let's be brutally honest: the entire conversation about "responsible" market-rate investing is a contradiction in terms. It's a comfortable fiction that lets wealthy investors feel better about their portfolios while changing nothing fundamental about how capital works in our society. Whether you're invested in a fossil fuel company or the most "socially responsible" tech giant, the mandate to generate market-rate returns inevitably leads to extraction and exploitation.


This isn't about pointing fingers at particularly egregious corporate offenders. It's about acknowledging that the entire system of market-rate returns is built on paying workers less than the value they create, on externalizing costs onto communities and the environment, on finding ever more creative ways to extract wealth from the many to concentrate it in the hands of the few.


Consider this: When was the last time you saw a "market rate" return that didn't require someone, somewhere getting less than they deserved? When was the last time you questioned whether your portfolio's performance came at the cost of someone's dignity, someone's community, someone's future? The quiet violence of market-rate returns isn't in their worst excesses – it's in their everyday operation, in the thousand small ways they prioritize capital over humanity.


The Catalytic Alternative: Building the Society We Want


So what's the alternative? Instead of chasing returns that perpetuate harm, we need to ask ourselves a more fundamental question: What kind of society do we actually want to create with our capital?


For us, the answer is clear: we want to build a society where more people have economic stability and genuine power over their communities' futures. We want to see families achieving durable financial stability instead of living paycheck to paycheck. We want vibrant neighborhoods where residents shape development rather than being displaced by it. We want workers building equity in their companies instead of enriching distant shareholders.


This isn't abstract impact – it's about concrete outcomes that transform lives and communities. When we invest catalytically, we demand that stakeholder benefits match or exceed investor returns. This means:


Providing patient, low-rate capital to diverse emerging fund managers who've been systematically denied access to traditional financing, like Mission Driven Finance’s Capital Partners. Converting business ownership to employee trusts so that grocery store workers and warehouse staff build real wealth through their labor, following models like Common Trust's Groundwork Fund. Creating resident-owned housing cooperatives where tenants build equity and control their housing destinies, as demonstrated by ROC USA. Supporting community land trusts that ensure permanent affordability while giving neighborhoods true ownership of their development future, like Grounded Solutions Network. Backing emerging fund managers who come from underinvested communities and understand how to use ownership to build wealth there because they've lived that experience, such as Apis & Heritage Capital. Investing in community-controlled real estate funds that prevent displacement and keep ownership local, following models like the Dearfield Fund that help Black families overcome systemic barriers to homeownership. Funding redemptive funds like Black Star Stability Fund that help homeowners shift from extremely predatory contracts for deed to actual equity-building home ownership. Supporting innovative models like Trust Neighborhoods that give residents collective control over their community's future.


What's your vision? What society are you trying to build with your capital? If you can't answer that question concretely – if your investment strategy amounts to nothing more than maximizing returns while hoping some good trickles down – then you're not really an impact investor. You're just a traditional investor with a marketing twist.


Yes, this work is harder than checking a box on your standard investment form or adding an ESG screen to your portfolio. It requires creativity, patience, and the courage to challenge conventional wisdom. It means designing new financial structures and accepting that transformative change rarely generates market-rate returns in the short term. But if you're serious about using your capital to build a better society – one that's more equitable, democratic, and sustainable – this is what it takes.


The Choice Before Us


We stand at a crossroads. The concentration of wealth and power has reached levels that threaten the very fabric of our society. As investors, we can continue to hide behind the fiction that market rate returns are neutral and natural, or we can acknowledge our role in perpetuating inequality and choose a different path.


This isn't about charity or concession – it's about expanding our definition of returns beyond the narrow confines of our own bank accounts. When we accept 5% or lower financial returns in exchange for greater community benefit, we're not giving anything up – we're investing in the creation of a more stable, vibrant, and prosperous society that benefits everyone, including investors.


Think about it this way: What good is a 20% return in a society crumbling under the weight of inequality? What's the real value of market-rate returns when they come at the cost of community stability, environmental health, and social cohesion? The myopic pursuit of maximum financial returns has created the very instability that now threatens all forms of capital – financial, social, and environmental.


By embracing single-digit returns that create community wealth, build local power, and strengthen the social fabric, we're not being concessionary – we're being smart investors who understand that our own long-term prosperity is inextricably linked to the health of the broader society. We're investing in the kind of stable, equitable society that ultimately provides the foundation for all forms of sustainable wealth creation.


Those of us who have benefited from the current system have a unique opportunity – and responsibility – to redirect capital toward building this better future. The problems we face were created by ruthlessly maximizing financial returns while ignoring social costs. The solution requires optimizing for a different set of returns altogether – ones that measure success in democratic participation, economic security, and community resilience.


A Call to Action


The frameworks for change exist. Concepts like Doughnut Economics provide models for balancing social needs with environmental constraints. Alternative ownership structures like cooperatives and employee ownership trusts offer proven paths to more equitable wealth distribution. Innovations that seek to provide greater access to wealth building through the home you own and the apartment you rent. 


What's missing isn't frameworks or models – it's courage. The courage to accept that doing good might mean making less. The courage to question systems that have benefited us. The courage to invest differently even when everyone around us is chasing the same extractive returns.


We need to fundamentally change how foundations and DAFs invest, ensuring their corpus aligns with their mission rather than contradicting it. We need to develop policies that reward genuine impact rather than just financial returns. Most importantly, we need investors willing to put their capital behind their convictions.


The question isn't whether market rate returns are possible in impact investing. The question is whether pursuing them is compatible with creating real change. The evidence suggests it isn't. The sooner we accept this truth, the sooner we can get to work building something better.


Are you ready to invest differently? Or will you continue to demand returns that perpetuate the very problems you claim to want to solve?

1,586 views4 comments

Recent Posts

See All

4 Comments


Graham Boyd
Graham Boyd
5 days ago

Excellent post, and having left a successful P&G career (at least by conventional metrics!) because we were not really serving our purpose of improving lives, but rather TSR, I recognise all you're writing. Two thoughts though that may offer us an additional inviting off-ramp.


1) The transition I witnessed as a South African out of Apartheid was enabled by recognising that most are victims of the system rather than having malicious intent. Dieterich Bonhöffer captured it well in his essay on how we're made stupid!

2) The system is designed to work in a fictitious world where all capital growth is ergodic, because the first economists couldn't work with the full equations of our real world where capital growth is…


Like
Brian Boland
Brian Boland
2 hours ago
Replying to

This is great! I like the idea of "truth and reconciliation" around investing. Also like the idea of helping people to see how the system harms them as well!

Like

Bernard Prusak
Bernard Prusak
Jan 28

Bracing, illuminating post; thank you. It seems to be addressed, though, to active investors. What would your advice be to passive investors, the great number of people whose retirement savings are in the hands of, say, TIAA or Vanguard? I’m increasingly interested in alternatives to the asset management industry.

Like
Brian Boland
Brian Boland
2 hours ago
Replying to

You highlight a glaring gap in the products for everyday investors. We need some alternatives that can do the work for people and deliver them financial growth and impact - just not the financial growth they will see in full market returns. BII (Boston Impact Initiative) has a really innovative structure where small investors receive a higher return than HNW and foundations. Imagine if we could package a bunch of mid single digit enterprises with high impact into a product that everyday people could buy. We know that younger people claim to want to have the money have impact rather than just extract and grow.

Like

Subscribe to Our Blog

Thanks for submitting!

  • Facebook
  • Twitter

©2023 by Delta Fund.

bottom of page