A decade ago, I worked on impact-measurement guidelines for what was then called the venture philanthropy and social investment field in Europe. At the European Venture Philanthropy Association, we came up with five steps to measure impact for investors and support social enterprises.One of the things we learned through that work is that it’s more important to look at how an organization uses impact data in its management—for what purpose and for whom—than the specific data point that emerges from the analysis.

Since then, initiatives such as the Impact Management Project and the Operating Principles for Impact Management (OPIM) have successfully promoted the integration of data in impact-investing management processes so that investors can learn from it and make adjustments as needed. OPIM requires that investors provide independently verified disclosure statements, for example, to show that they are considering impact throughout the investment process, from deal screening through exit.

On the grantmaking side, from our work with foundations and discussions with people like Jeremy Nicholls, more foundations are acknowledging that positively impacting their target populations requires that they formalize processes for listening to beneficiaries, learning from mistakes, and implementing corrective actions.

While the field has become more sophisticated, it still has a long way to go in terms of transparency and accountability. Impact reporting still mainly displays aggregate output figures without explaining methodology or learnings. This contributes to a tension between the standardization of methodology, which enables the kind of benchmarking financial markets require, and generating opportunities for learning so that grant makers can take corrective actions. Both impact investors and grant makers have an opportunity to understand if they are channeling resources to organizations and projects that are tackling the most important problems and making a difference in the lives of beneficiaries. The two fields also stand to learn from each other.

Read the full article about impact measurement by Lisa Hehenberger at Stanford Social Innovation Review.