Current Conversations at Toniic: "Scale, Neglectedness, Solvability” as a Framework for Impact

While some Toniic members are inspired by the Effective Altruism (EA) movement, others embrace different guiding principles. At the Toniic Campfires on October 8, we will delve into the topic of impact, beginning with the question: Are there concepts from EA that can be helpful to impact investors?

Although there are diverse opinions within the Toniic community about Effective Altruism, Toniic does not take a stance on the topic. We believe that there is greater value in fostering dialogue around complex - and sometimes controversial - issues as a community, presenting multiple points of view, to inspire interesting conversations about impact, and to broaden our perspectives.??

One example of an Effective Altruism tool is the scale/neglectedness/solvability framework. This tool is frequently employed in Effective Altruism impact assessment evaluations. Could this framework also be adopted by impact investors to gather valuable insights on how to maximize their positive influence?

Understanding the Framework

The scale/neglectedness/solvability framework, sometimes referred to as the importance/neglectedness/tractability framework, offers a structured approach to evaluating potential areas for intervention.

To break down each component:

1. Scale (Importance): How large is the problem, and how significant would the impact be if it were solved?
2. Neglectedness: How many resources are currently being directed towards addressing this issue?
3. Solvability (Tractability): How feasible is it to make progress on this problem?

By considering these three factors, can investors identify opportunities where their capital may have the greatest marginal impact?

The EA Framework in Impact Investing

Scale

Evaluating “Scale” may help investors better understand the potential reach and depth of an investment's impact. EA investments would consider:

• The number of people affected by the problem
• The severity of the issue for those impacted
• The long-term consequences if the problem remains otherwise unsolved

Relative to Scale, investors might prioritize issues like climate change mitigation, global health initiatives, or poverty alleviation based on their enormous potential for positive impact.

Neglectedness

Examining “Neglectedness” helps investors identify underserved areas in which additional resources could make a significant difference. EA investments would note:

• Current funding levels in the sector
• Media attention and public awareness
• Policy focus and governmental support

Neglectedness often indicates opportunities for high marginal impact. In neglected areas, additional resources are more likely to make a significant difference. This suggests that low-hanging fruit may still be available, as obvious solutions might not have been tried yet.

Solvability

Assessing “Solvability” requires investors to consider the likelihood of success and the potential for quantifiable and sustainable impact. Effective Altruism investors would reflect on:

• Existing evidence of effective interventions
• Scalability of proposed solutions
• Regulatory environment and potential obstacles

Highly solvable problems might include expanding access to proven educational technologies or scaling up successful microfinance programs.

Possible Benefits of the Framework for Impact Investors

As we know, some investors may focus on other approaches or evaluate impact at a systemic level. However, the EA Framework could allow impact investors to go beyond traditional financial analysis and provide a structured evaluation of potential investments. By considering the Scale, Neglectedness, and Solvability of each investment, the EA framework can provide clear and quantifiable impacts to the problems being addressed. Ultimately, this framework challenges impact investors to remain curious about emerging trends, agendas, and opportunities.

In our Toniic Campfire this month, we aim to feature speakers who will present a diverse set of opinions on Effective Altruism and their approaches. For more information about the above framework, this article goes into more detail . If you are interested in learning more about different viewpoints on EA, you can read this article and this article, both of which are co-authored by Toniic member Paolo Fresia with Romy Kr?mer.