In early 2026, Anthropic stepped back from a significant engagement with the Pentagon. The decision turned on something harder than a financial calculation: As a public benefit corporation whose charter commits it to the long-term benefit of humanity, Anthropic faced obligations that pulled it in directions that couldn’t be easily reconciled.
At the time, conventional logic held that choosing corporate values over financial opportunity would cost them. It didn’t play out that way. The decision that many expected to hurt them commercially appears to have done the opposite: their revenue trajectory has continued to accelerate.
For boards and executives of impact-oriented organizations, the Anthropic story is instructive, but not for the reason most assume.
It’s not just about the values-versus-financial-performance tension that impact investors navigate every day. Behind each decision lies “governance process risk.” This is the risk embedded not in what a board decides, but in how it decides.
Most board and management decision processes focus on the quality of information inputs and the resulting decisions, i.e., the positions people take. Not enough effort is invested in understanding and optimizing the mechanics in between: the actual process by which a group moves from information to decision. This is especially important – and fraught – in impact organizations.
Because impact organizations face different decision dynamics than conventional businesses, they need to address these risks differently. For impact investors, portfolio performance connects directly to how their company boards and management navigate their hardest decisions. What to do about it is less obvious than most boards recognize and more consequential than most investors track.
When the balance scale won’t settle
Many leaders assume that difficult decisions are primarily a function of uncertainty, complexity or insufficient information. But in impact-oriented organizations, an additional dynamic is at play: The hardest decisions are difficult not because they are unclear, but because they are clear in different, incompatible ways at the same time.
Oxford philosopher Ruth Chang, whose TED Talk on these types of hard choices has reached 10 million views, describes the experience as a balance scale that wobbles back and forth without ever settling. And the reason this happens in impact organizations, and continues to happen, is because the challenge is structural, not situational, and isn’t solved through people moves like board refreshment.
In my work helping boards and executives of impact organizations navigate high-stakes decisions, this phenomenon shows up regularly but rarely gets acknowledged or addressed. Here are some forms it can take:
- A board faces investor activism whose assertions have merit, but challenge foundational aspects of the mission or culture.
- A senior leader whose values and commitment are beyond question is no longer effective in the role.
- A donor or investor offers funding that would significantly improve the organization’s trajectory, with conditions that push against the mission in ways that are hard to ignore.
- A founding community that helped build the organization resists a strategic shift that the data says is necessary. Their opposition carries moral weight that’s hard to argue against.
Why impact organizations feel it differently
In conventional organizations, competing considerations typically distill into a dominant metric: financial performance, risk-adjusted return, operational efficiency and the like. It’s usually a number that breaks the tie.
Impact-oriented organizations reject that norm. Mission integrity, community and stakeholder obligations that extend beyond shareholders, cultural commitments that reflect organizational values, and reputational considerations tied to public trust all carry real weight. By design and desire, it is difficult to subordinate any without consequence, and none translate cleanly into each other.
What it looks like in the room
The board-management interface is where fiduciary duty, mission fidelity, reputational risk and strategic judgment all collide. When competing obligations carry equal weight, that interface bottlenecks: not because the people are failing, but because the nature of the decision itself resists the way most governance processes are designed to work.
The strain shows up as process friction: conversations that circle without resolution, then suddenly compress into urgency; agreement that appears to form but doesn’t stick; decisions that are revisited not because they were wrong, but because they were never fully settled. Most impact organization leaders will recognize in Anthropic’s example the types of competing goals that resist easy resolution.
The instinct is to gather more data, refine the options or push toward faster alignment. These moves are intuitive but they assume the problem is informational. In impact organizations, it usually lives beyond the data. Adding better information to a process that lacks shared evaluative ground doesn’t resolve the tension and often deepens it.
What actually helps (and no, the board is not already doing this)
Tackling this problem requires two things that sound straightforward but rarely happen without intentional effort: gathering the full range of stakeholder perspectives before the room starts narrowing toward a conclusion, and creating the conditions for genuine collective intelligence rather than the filtered, socially managed version that most boardrooms produce.
Research by Cass Sunstein and Reid Hastie on deliberating groups consistently identifies these as the conditions that drive better decisions. Creating these conditions requires deliberate design and effort that goes beyond the typical board agenda and the way the board itself deliberates high-stakes decisions. It means treating the decision process itself with the same rigor used to gather the information that feeds it.
This process is best pursued using a principles-based approach rather than a fixed set of tactics, since what works will look different in every organization. There are four conditions that enable this kind of work. They are not complicated, but they only succeed with committed support from board leaders:
Creative space. Creative space is not about comfort, or just about psychological safety (though that’s critical). It is about creating the conditions in which people will bring their best thinking. (For example: Do you do your best individual thinking upon waking up? When driving? Showering? Running? There is a reason for that.) In a group context, fit-to-purpose environment and structure will increase the group’s creative output. Every board chair wants to believe their boardroom is a place where people say what they really think. That might be true for one or two individuals; rarely for all. The filtered version of candor that most governance settings produce limits depth of sharing.
Key enablers include: Inspiring spaces and productive aesthetics; structured (vs. open) interaction to ensure full participation; anonymous contribution methods to encourage full and candid disclosure.
Shared understanding. Diverse perspectives only produce better decisions if they are processed on common ground. This starts with ensuring that everyone is working from the same understanding of context and information, which creates the foundation for exploring individual perspectives. And this shared understanding must also extend to each other’s perceptions and thinking. This understanding is what enables the shift from arguing positions to exploring the contributions that everyone’s perspective brings.
Key enablers include: Confirmation that key context and information is known and understood; active exploration and articulation of key beliefs and underlying assumptions.
Purpose alignment. Exploration starts not with the decision itself but the goal the decision is meant to serve. In impact organizations this sounds obvious: The mission is the mission. But with a specific high-stakes decision, “the mission” starts to mean different things to different people. Getting explicit about what success actually looks like for this particular decision, before the deliberation begins, gives everyone a shared orientation to return to when the conversation starts to pull in different directions.
Key enablers include: Catalog individual ideas around decision outcomes and their alignment to the mission. Identify areas of misalignment and work through them creatively.
Diversity of inputs. One of the easiest ways to improve leadership decisions is by expanding the diversity of perspectives that goes into making them. With impact organizations, this diversity of perspectives includes not just the beliefs and assumptions relating directly to the decision itself, but also how the decision lives in relation to the mission.
Key enablers include: Getting the other three conditions in place, and especially making time and space for anonymous contribution methods to encourage full and candid disclosure.
The mission doesn’t protect you
This kind of leadership engagement creates deeper alignment that gets underneath the positions people are expressing and the assumptions and priorities driving them: beliefs about risk, interpretations of data and the implicit sense of what a good outcome actually looks like. That alignment creates the foundation for decisions that hold.
Some assume mission-driven organizations are more aware of these dynamics, the thinking being that values-orientation increases sensitivity. But the conditions that make impact-sector decisions structurally harder than conventional ones are the same that challenge conventional deliberative processes. The mission doesn’t protect against that, and it can instead increase the pressure. That’s why the governance process risk faced by impact organizations is usually greater than conventional ones: Their heightened intent requires a governance process built to match it.
Back to Anthropic. The outcome surprised many. The process challenge should not: Any impact organization will face these decision dynamics and their influence on organizational and financial performance. For impact investors, that ultimately connects to portfolio performance. The question, and the opportunity, for boards and executives alike is whether they share a clear understanding of what they are actually navigating when it happens.
For impact investors, it may be worth asking portfolio company leadership a simple question: When the board and management are navigating high-stakes decisions, does it ever feel like it’s taking longer than it should?
Ariel Goldfarb is the founder of Concentric Growth Partners, a board advisory firm serving impact sectors.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
