Hi, my name is Donna Loveridge and I work with the Donor Committee for Enterprise Development (DCED), a forum for learning about the most effective ways to create economic opportunities for the poor, in line with the SDGs – based on practical experience in private sector development.
International development organisations, such as DCED members, have traditionally used grants to create economic opportunities for the poor. Now they are increasingly adding impact investing to their repertoire of strategies. But how do impact investors know social and environmental impacts are occurring? Recently, I compared current practices in social impact measurement (SIM) in the impact investing field and results measurement (or M&E) in international development to find the similarities and differences (the full paper can be found here).
Lessons Learned: Here are some insights:
- Impact: In international development, the term ‘impact’ has traditionally meant long-term changes (positive, negative, intended, unintended) produced by an intervention directly and indirectly. In impact investing, impact can mean short, medium or long-term changes, including outputs and changes that a business may make to the way it operates, as a means to an end, e.g. more community or employee consultation.
- Standardisation: Impact investing is more interested in standardising results measurement approaches and methods to compare investment opportunities and returns than international development. This can be challenging since appropriate approaches and methods are those that consider factors like the investment’s goals; implementation model; location; timescales; and stakeholders such as investor, investee and beneficiaries.
- Intermediaries: Currently, impact investing and international development place few expectations on businesses to measure their social and environmental impact – greater onus is placed on intermediaries like fund or programme managers.
- Monetary value: Impact investing places greater priority on assessing the monetary value of social impacts than most development programmes, although there has been a strong push towards assessing the value for money of development programmes in recent years by DFID, including using approaches such as social return on investment.
- Communicate –Take the time to understand what people from the other field mean when they use certain terms or words.
- Look to see what is already out there – exchanging views, sharing resources and cross-fertilisation will contribute to the development of SIM and results measurement.
More than 100 private sector development programmes use the DCED Standard for results measurement. Check out practical guidelines for results measurement on challenge funds, a type of development programme with some similar attributes to some impact investments, here.
In 2017, the DCED is looking at what information investees value enough to measure and evaluate themselves; and how results (financial, social and environmental) are attributed to different investors. Subscribe to the DCED newsletter here to keep up with developments.
The American Evaluation Association is celebrating Social Impact Measurement Week with our colleagues in the Social Impact Measurement Topical Interest Group. The contributions all this week to aea365 come from our SIM TIG members. Do you have questions, concerns, kudos, or content to extend this aea365 contribution? Please add them in the comments section for this post on the aea365 webpage so that we may enrich our community of practice. Would you like to submit an aea365 Tip? Please send a note of interest to email@example.com. aea365 is sponsored by the American Evaluation Association and provides a Tip-a-Day by and for evaluators.