Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
6.42 Examples of the use of this approach can be found in measurement exercises focusing on
potential funding from institutional investors or funding from governments. As an example, work being
carried out by NABs has provided information on the scope of public expenditures and public procurement
based on National Accounts aggregates. The potential SII demand was identified by narrowing down to
social service delivery funded by government. Another potential use of this approach is the measurement
of potential investments by institutional investors as described in section 6.3.2.
6.4.2. Bottom-up approach
6.43 A different approach to sizing SII components is to focus on individual units (e.g. social
enterprises, specific types of investors or intermediaries). This approach requires that sufficiently detailed
information is available at a high level of disaggregation that allows identifying individual units within SII.
Information to identify SII delivery organisations would include sector of economic activity, legal form,
business description\mission, inter alia. This information could either come from NSO micro databases or
from commercial data providers. As a second step, it is then essential to understand whether the individual
units gathered represent the population or a subset of it. In the most likely case that it only represents a
subset of the population, it is important to ensure that the sample is representative (e.g. through observing
characteristics contained in the data). Finally, based on the information gathered, the SII component can be
measured either through aggregation (if the population is observed) or by inference (if using a subset of the
population).
6.44 The key challenge of using this approach is ensuring that either the whole population is observed
or the sample is representative. Section 6.6 discusses sampling challenges at length. The emphasis given to
NSOs derives from the fact that they usually provide information on a population set or at least on a
representative sample. In addition NSOs have expertise in collection of high quality data in a consistent,
cross country comparable way. The United Nations Handbook on Non-Profit Institutions in the System of
National Accounts (UN, 2003) provides guidance for NSOs to identify and collect data on NPIs. An
interesting feature is the practical solution to the measurement approach to non-market output (i.e. social
impact). As a long term goal, it would be important to consider agreement on definitions and legal
structures in such a way that (demand) data can be collected in a systematic and internationally comparable
way by NSOs.
6.45 Examples of this approach can be found in efforts to size the demand side of the SII framework
(specifically measuring the social enterprise sector). In a study of the Italian social enterprise sector, Fedele
and Miniaci (2010) use commercial data sources (Amadeus database from Bureau van Dijk) to distinguish
the capital structure of cooperatives (proxy for social companies) vis a vis for profit enterprises.
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