Gender-Lens Investing Strategies for 2019

Using Measurement to Manage Impact

Giving Compass' Take: • The CDC Impact Fund shares its learnings on how investors can understand the environmental and social impact of an investment.  • How are you measuring the impact of your investments and charitable giving?  • Learn more about impact investing here.  Over the last few years, impact investors have made many efforts to standardize “output metrics”—data about products, services, and business practices—so that they can draw better comparisons across companies (see IRIS and HIPSO). But while these metrics are useful for portfolio monitoring, they have two important shortcomings. First, they are typically effective in capturing the scale of social impact but are less telling of its depth. Outputs can tell us about the nature of products and services, and the number of people they reach, but not about their effect on people’s livelihoods and well-being. Second, this approach tends to view businesses as data providers, rather than data users. Yet companies also need data as they build their business lines, explore new markets, and target customer segments. By collecting data directly from people, companies can better understand who they want to source from, sell to, and staff up with. The CDC Impact Fund invests in funds and other intermediated vehicles that deliver high development impact, particularly to underserved populations. In-mid 2016, we began piloting insights studies, which we called “deep dives,” to complement existing data reporting and get a deeper, bottom-up understanding of how people engaging with portfolio companies were experiencing change. Our North Star was to develop a measurement approach that was light-touch but in-depth, and that could generate value for investors, investees, and end-beneficiaries alike. Here’s a look at the approach we developed and what we learned. Match the research methods to the investment context.   Anchor around business decision-making needs. Draw clear boundaries to make findings actionable. Make sure you are ready to mobilize quickly. It’s never too early to think about impact.  Adjust language to the business reality.  Standard measurement should remain rigorous. Ensure that findings are actionable.  Read the full article about managing impact by Martina Castro & Matt Ripley at Stanford Social Innovation Review.