Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
4.38 It is also important to distinguish “intent” from actions taken by companies to limit negative
externalities arising from their business activity. The later should be considered Corporate Social
Responsibility (CSR) and would not be included within SII.
4.2.5. Measurability of Social Impact
4.39 Just as with financial returns, SII investors require some form of measurement of social impact to
factor both financial outcomes and social impact into their investment decisions (WGAA, 2014). This
characteristic can range from the lack of measurement to formal evaluation with monetary valuations of
social impact (see Table 4.6 below). Without having any form of social impact measurement a transaction
cannot be considered SII.
Table 4.6. List of attributes for Measurability of Social Impact
CHARACTERISTICS Attributes of the Characteristic Eligibility *
No measurement
OUT
5. Measurability of Social Impact
Informal evaluation, not valued
OUT
Formal evaluation but not valued
IN
Formal evaluation and valued
IN
* Eligibility used in the OECD definition for the purpose of this report.
Source: OECD.
4.40 Impact assessment can be carried out in a qualitative (e.g. “improved the healthcare provision”),
quantitative (more robust analysis, e.g. “increased the number of patients treated that would otherwise
would remain untreated”) and\or by the monetisation of outcomes (e.g. attaching a value to the benefits for
each treated patient as well as to the benefit to the society). It is important to attach a measure of the
benefits (e.g. tangible changes in social outcome indicators or even in pecuniary terms) to impact
measurement so that it is possible to understand if the workings of the delivery organisation and the
investment have a de facto social impact.
4.41 The measurement of social impact is not straightforward, and difficulties associated with its
elaboration resulted in the creation of a working group to focus on impact measurement within the process
of the SIITF. The Working Group identified four main phases of the impact measurement process,
hereafter “formal” impact evaluation process. First, planning requires agreement upon impact goals
(including a priori selection of indicators) and the strategy to achieve them (see Chapter 5 for a discussion
on selecting indicators). Second, building the evidence base includes collecting, storing and validating
data. Third, the quality, level and efficacy of the impact are assessed based on the analysis of data
gathered. Finally, the impact and the measurement process are reviewed, providing input to future
improvements in impact measurement (WGIM, 2014).
4.42 In addition, a working group on impact measurement for social enteprises was created in the
framework of the GECES, the European Commission's Group of Experts on Social Entrepreneurship,
which released a report on “proposed approaches in European Commission legislation and in practice
related to EuSEFs and the EaSI” (Clifford et al 2014).
4.43 Building on the results of these working groups and expanding the analysis to the policy
dimensions of social impact measurement, the OECD (forthcoming 2015) underlined the importance of
encouraging experimentation and further analysis of ongoing developments in social impact measurement
by social enterprises. This could help to foster a social impact measurement culture among stakeholders.
The issue of proportionality of measurement is also important. Measurement should only be done if, and to
52 © OECD 2015