Social Impact Investing

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SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE is important to further understand the evolution and behaviour of the SII market to inform policymakers of any regulatory adjustments that might be needed. On the other hand, data collection efforts should also serve to inform investors about SII market potentiality. 6.75 Priority should be given to capturing objective data before stepping into areas where definitions are not yet established and data is deemed subjective. This may apply to either demand, supply or transaction data. However, given that transaction data usually entails some information on both demand and supply, a thorough collection of this type of data can be a valuable starting point. In early stages of market development surveys can be a valuable tool. However, these are resource intensive and entail significant challenges in terms on ensuring representativeness. In the long run, data collection needs to be based on standardised reporting because, as the market grows, surveys will become increasingly expensive. 6.7. Possible Future Approaches for Data Collection 6.76 Different players are engaged in collecting data on SII components from different angles, with different approaches and using different definitions. The plethora of new initiatives and reports attempting to size the SII market is a positive trend and suggests growing interest in understanding SII. However it makes it harder to identify key sources of data and compare and consolidate estimates. In addition, effort duplication and data overlapping is a serious risk. Collaboration between those players currently involved in data collection efforts is key. Some steps in this direction are already being taken. For example, the “<strong>Social</strong> Investment Research Council” was recently created in the UK to consolidate research efforts and avoid duplication. 31 Also, efforts to increase data comparability across countries are being made through initiatives such as the GIIN or the work of the SIITF. 6.77 To ensure comparability across data collection efforts taking place in different geographies, metadata is crucial as it helps understanding what exactly is available and how detailed are currently available data. This is particularly relevant when SII definitions are not yet established. Moreover, transparency requirements can help moving towards common standards. Such transparency requirements might be burdensome on the different players involved in the market, but they necessarily come with a standardisation exercise, whose benefits can outweigh the costs. It is however important to note that standards might limit the scope for innovation. The right balance should be found so that the standardisation procedure does not gridlock the SII market and prevents it from further innovating and growing. 6.78 A system based on automatic reporting would bring some advantages in terms of coverage and quality of the data. Such data can then be complemented with further information collected via surveys for specific purposes. Data reporting can be very costly for companies (especially for small social businesses), investors, intermediaries, while a significant part of the data obtained might end up not being used. It is important to note that the direct benefits SII players accrue from reporting are relatively small, so the adequate incentive mechanism needs to be put in place. 6.79 Requiring certification is an approach that can work as an incentive for companies to make the effort to report. By being certified (see Box 6.6 for the case of B-corp certification procedure), social enterprises gain more visibility as was as it sends a positive signal to potential investors. The certification procedure by B-corp is burdensome as it involves a survey, an interview, request for documentation and random checks, but it guarantees high data quality standards. 31. The <strong>Social</strong> Investment Research Council is a joint venture between Big Society Capital, Big Lottery Fund, City of London, Citi and the Cabinet Office. © OECD 2015 101
SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE 6.80 Certification can also have positive effects in terms of more formalised outcome measurement practices that support the development of the SII market. However, from the viewpoint of businesses, certification can significantly increase reporting costs, thus the benefits of a move towards more stringent certification procedures should also be balanced against the increased regulatory burden. The certification requirements necessarily need to be mandated by public authorities in each country and possibly coordinated internationally. Public authorities can also play a role though regulation because it necessarily implies a standardisation exercise. Since SII is a new concept, data collection agencies, regulators and authorities have not yet developed standardised and internationally comparable definitions and classifications that would allow a systematic collection of data. Box 6.6. Certification & labels: B-corp example B-Corporation is a NPI that certifies for-profit companies according to their practices in terms of achieving social impact. The certification is based on a set of company information obtained through an online survey (done in collaboration with CASE i3, Box 6.5). Scores are attributed to companies according to a previously set methodology that values survey answers (thus company characteristics) differently through a weighting procedure. For example a question on the commitment to achieve social impact embedded in the company’s mission is given a higher weight than a different question regarding stakeholder engagement. Other characteristics include different indicators on transparency, reporting, treatment of employees, work environment, the type of impact, targeted populations, community involvement and impact, inter alia. In total, around 130 company characteristics are surveyed through an equal number of questions. Base on the set of predetermined scores, companies are profiled and evaluated across the different set of characteristics, after which they are given a final overall score that will be the basis for the eligibility to become a B-corp (above a certain global score threshold. To become a B-corp, companies are also required to make amendments to the articles of incorporation, explicitly recognising the importance of other stakeholders beyond shareholders. A snapshot of the profile information is provided in the table below. After a there is a clarification procedure through which B-corp reviews the data provided together with the company. This and further quality checks (e.g. requests for official documents) are time and resource consuming, but help ensuring that the data is accurate. Table. Snapshot of the B-corp profile information Name City State Industry Overall Score Accountability Beneficial Method Local Community *** San Francisco CA NULL 137.4 16.8 NULL NULL *** Poulsboro WA Consumer Products & Services: Housewares NULL NULL NULL NULL *** Richmond BC NULL NULL NULL 29.7 2.1 *** Vancouver BC Technology: Information Technology Serv. NULL NULL NULL NULL *** Belvedere CA NULL NULL NULL 50.7 5.2 *** Philadelphia PA NULL 83.5 8 27.2 6.1 *** Fremont CA NULL 145.2 23.6 NULL NULL *** Haleiwa HI NULL 88.1 7.5 NULL NULL Note: Only four variables out of 133 are shown here. The variable Overall Score is an aggregation of the 133 scores. The names of the companies are omitted here for anonymity purposes. The maximum score is 200 and only companies over the 80 points threshold can be considered a B-corp. Source: B-Corp Profile information available at: http://sites.duke.edu/casei3/files/2013/03/B-Corp-Profile-Information.xlsx Source: B-Corporation website, available at : http://www.bcorporation.net/ 102 © OECD 2015
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Fund Azzad Ethical Mid Cap Fund Bri
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Fund Fund A Praxis Growth Index Fun
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development in the US, or are made
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concern, and submitting and voting
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sustain land trusts, to a meeting o
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that are often excluded from market
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Some organisations that have used S
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it helps identify the critical sour
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and shareholder trust through posit
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Approaches Some commentators have i
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Wieland and Handfield (2013) sugges
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EthicalQuote (CEQ) tracks reputatio
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Displaying commitment to CSR is one
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Brand Differentiation CSR can help
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takes health and safety, diversity
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advance with the practice of CSR wh
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Stakeholder Influence One motivatio
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Regulation Fifteen European Union c
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jurisdictions. E.g., some jurisdict
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"Impact investments can be made in
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venture capital community. Investor
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countries via local intermediaries.
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determining views of affected commu
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Another measure of economic impact
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The Board for the CCEG was to inclu
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17 Love Relationship Online dating
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Social Value Act 2012 legislation.
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Development released a report outli
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Benefits and Costs of Social Impact
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UK On 18 March 2010, Secretary of S
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US Massachusetts: The second of two
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US Federal: The U.S. Department of
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would establish a five-year pilot p
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We are dedicated to finding ways to
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In the past, public monies have oft
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indicate that more Americans want t
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Youth" to "Opportunity Youth" in or
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income must file a Form 990. The fo
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In its first three years, SIF has a
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The Office of Social Innovation pri
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of Management at UCLA; and launched
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Notes _____________________________
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Investing for Impact Case Studies A
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Contents What is Impact Investment?
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What is Impact Investment? Impact I
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A case study approach in an asset a
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Segments of Impact Investors High T
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Foundations Like high net worth ind
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in the developed and the developing
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By creating mechanisms through whic
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Asset Allocation Framework Asset cl
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Cash Shorebank Deposit Program fina
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Mezzanine/Quasi Equity Instruments
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Venture Capital Bridges Ventures CD
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Real Estate JP Morgan Urban Renaiss
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absolute return (hedge funds) BelAi
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senior debt Root Capital Impact Fir
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Venture Capital Aavishkaar Impact F
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eal estate Ignia Impact First Inves
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senior debt Root Capital Layered St
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The New York City Acquisition Fund
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Appendix Methodology The Investing
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Websites •• Bridges Ventures: h
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Cash Quasi Equity Public Equity Buy
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Page 212 and 213: SOCIAL IMPACT INVESTMENT: BUILDING
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Page 301 and 302: Global Research 29 November 2010 Im
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Impact Investments: An emerging ass
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Advocacy Foundation Publishers The
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XVI for Drug-Free Communities Landm
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Vol. VIII 2022 ComeUnity ReEngineer
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Vol. XV 2029 Inner-Cities Revitaliz
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The e-Advocate Journal of Theologic
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Issue Title Quarterly Vol. I 2015 I
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The e-Advocate Juvenile Justice Rep
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2018 - The Theological Law Firm Aca
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About The Author John C (Jack) John
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