Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
the extent that it will actually influence decision-making, and the cost of measurement is not excessive
compared to the significance of that decision.
4.44 Evaluation processes are very challenging because ideally they require having a comparison
group — i.e. what would have been the social outcomes if the delivery organisations would not exist.
Given that running experiments and\or alternative empirical testing methodologies can be very resource
intensive and require special skills, most intermediaries and companies do not take such an approach but
rather use a mix of qualitative information with a range of quantitative indicators on social impact.
4.45 As an example, Investisseurs and Partenaires have a clear strategy for measuring impact (WGIM,
2014). Impact measurement does not follow an impact evaluation approach based on counterfactuals due to
significant data challenges (and high costs of running experiments). Instead focus is given to impact data
provided by investee companies. The impact assessment framework is nevertheless well developed
(WGIM, 2014). 13
4.46 Active Minds, briefly described above, reports the achieved social impacts on a yearly basis. 14
This report provides an overview of data regarding business activities (e.g. number of devices sold) and
features the result of a survey conducted with 7% of their customers regarding the impact that the devices
have had on the quality of care (for corporates) or on the life quality of dementia-suffering family members
(for individuals). Even though such an approach is far from a formal and thorough assessment of social
impact, it reveals awareness for the need to provide information on social impact.
4.47 The most comprehensive (but also challenging) approach to impact measurement requires a
formal evaluation that also allows translating social impact into value. For example, the design of SIB
contracts requires that predetermined social outcomes are attained before any payment is made by the
contractor. This means that social impact needs not only to be measured but also to be valued in designing
the “impact value equation” that balances the interests of outcome funders and investors (SIITF, 2014b).
4.2.6. Investor intent
4.48 Investors’ social impact intent is also a characteristic that features in most SII definitions (e.g.
GIIN, SIITF). As discussed above, clearly identifying intent is challenging.
4.49 On the one hand, investors can have a social impact even without having any social intent in the
first place, if their investments happen to produce an unexpected or unintentional social outcome
(incidental social outcome). For example, VantagePoint Capital Partners was awarded the 2013 financial
investor in the cleantech industry. Investments in clean technologies create positive environmental impacts,
but the main purpose of VantagePoint Capital Partners is to make profitable investments. Since there is no
clear intent in achieving a social impact, such investments will not be considered as SII. Conversely,
CANOPUS Foundation has been investing in solar power in Africa with a clear mission towards
environmental sustainability. 15
4.50 On the other hand, some investment contracts may formally require intentionality to achieve
specified social outcomes. As an example, having a social intent may be compulsory under certain settings
13. Further information about Investisseurs and Partenaires is available at http://www.ietp.com/. The impact
measurement report can be found at: http://ietp.com/our-esg-impacts-annual-report-online
14. The report can be retrieved from Active Minds website at: http://www.active-minds.co.uk/index.php
15. Further information about VantagePoint Capital Partners can be found at: www.vpcp.com Further
information about CANOPUS Foundation is available at: www.canopusfund.org
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