Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
Predefined: Social impact investment should predefine its purpose, this allows for the intervention
to be assessed on a common goal for all aspects of process and implementation. It allows other
social impact investments to run complementary to it, and set expectations for social impact
investors in the case of SII.
Measurable: Alone, whether an outcome is measurable is not enough to justify its selection, it also
needs to accurately operationalise the predicted social outcome (see below). However, this is
important because some aspects of a social intervention might be hard to measure (e.g. the
preferences for care for dementia sufferers, or early year’s children in childcare) and selecting
unmeasurable outcomes will ultimately devalue future evaluations and bring into question the real
impact. Whether monetised, (as may be required for SIBs), quality of life based (reduction in
poverty) risk reducing (reduction in criminality) or efficiency enhancing (reductions in emergency
service use) outcomes indicators should be – proxies or otherwise – the predefined outcome should
be measureable.
Valid: A valid outcome measure accurately represents the desired outcomes, and is particularly
important in the case of proxy measures for hard-to-measure outcomes. Inappropriate responses to
social needs could occur if social enterprises focus their efforts on invalid representations of
desired outcomes. Depending on the population being evaluated, and the type of outcomes being
measures (particularly survey responses) outcomes measures may need to be validated during
pilots to ensure they are not biased by gender, age or culture of the recipients – or generate biased
non-response to evaluation requests.
Repeatable: In the case of multiple evaluations on the same measure, to determine outcomes or
cost-effectiveness relative to a time frame, outcome measures need to be repeatable – insofar as
they should be measured accurately more than once over a period of time (ensuring previous
surveys or evaluations do not affect future measurement). For external validation of an
intervention or its methods, or the transferability of an intervention, the measurement of the social
outcome of interest should be repeatable in other settings.
Independent: Target setting may create incentives for selecting in easy-to-treat individuals into a
social service, achieving measureable change but unequally. This can restrictive the inclusivity of
social impact investment, and create further social problems down the line. Any outcome measure
linked to payment-related targets should be measurable independently of the policies’ target
measures in order to assess ‘real change’, and include at least one distributional measure to retain a
check on the ‘inclusivity’ of the intervention effect.
7.39 In some policy settings, an intervention may be expected to have spillover effects in other
sectors, both positive and negative. Additional indicators may be needed to monitor these spillover effects
for the purposes of addressing the ‘wrong pockets’ problem (when returns to investment are found in other
sectors), or adjusting a social impact score for SII based on negative externalities.
7.40 Finally, social impact investors and social delivery organisations should be prepared to adjust the
outcome measures used to evaluate an intervention based on the time since the intervention occurred –
these might be termed ‘accumulated outcomes’ and valued accordingly. The Perry Preschool intervention,
mentioned in Chapter 5, is a working example of this, where early years’ interventions were still having
positive social impacts decades later, but in the labour market and educational outcomes, as oppose to early
years’ outcomes of child health and parenting skills development. Equally, spillover outcomes may also be
subject to this principal.
7.41 Another example is the recent evaluation of the first Social Impact Bond (SIB) that launched in
2010 as a new approach to address recidivism in the UK (see Chapter 3 for further background). The
Peterborough SIB, developed and launched by Social Finance (SIB intermediary), provides pre- and post-
120 © OECD 2015