A summary of our approach
Impact measurement can help investors, funders, charities and social enterprises to understand if they are delivering their mission and making a difference to the people they serve. It enables organisations to improve, compare and learn and potentially raise investment or funding.
Our own approach to gathering impact data is to only ask charities and social enterprises to gather information which is useful for their own purposes and then share it with us so that we can build up an overall picture of impact and learning in different social issue areas. We have set out the following principles for good impact measurement:
At the social fund manager level, we have seen a significant improvement on the quality of impact measurement practice over the past year. Nearly all social fund managers have good processes in place but there is still some progress to be made in terms of being more transparency about success and failures and publishing impact assessment criteria so that applicants are more aware about what is involved in the process.
For charities and social enterprises, a recent survey from Pioneers Post about impact measurement in practice found that 81 per cent of respondents felt that it was ‘important to improving their business and services’ and 85 per cent found measurement ‘challenging but worthwhile’. This goes against the view that measurement is simply a top down tick box exercise and supports the view that the trend is now shifting to organisations gathering information which is useful and relevant for them. We know that more needs to be done to support better impact measurement so we are committed to continuing to work wish partners to provide accessible and useful resources.
Over the past five years we have made a diverse range of investments addressing social issues. Some of our investments have targeted specific social issues, others can cover a wide range of needs and some focus on a particular geographical area. Our three-year Social Impact Plan underpins our work and has four key areas including delivering impact, building evidence, sharing learning and provide impact measurement support. The plan reflects what we would like to see in place by 2019. We strive to be a learning organisation and welcome feedback about our impact approach and how we can continually improve.
As a market champion
Connect knowledge and networks
Communicate research and tools
Build broader supporting environment
We will take a lead role in developing theories of change and sets of metrics standardised by sector. We actively seeks out and supports ideas, innovations and organisations that deliver impact frameworks and services (in the UK).
We will use impact data to influence government, commissioners, investors, charities, social enterprises and the public to consider impact in their decision-making. Successful models have been replicated across the UK, and learning on what works is widely available.
As an investor
Find and develop new proposals
Assess and co-develop ideas
Portfolio performance management
Our investment approach is impact-driven: opportunities are prioritised based on need. We have has a clear understanding of impact risk and use evidence to originate and make better decisions
We support social fund managers with planning, measuring and reporting their impact. We track metrics standardised by sector for each investment. There is available comprehensive, transparent, comparable and validated data about the impact of our investments.
Highlights of progress to date
- Our Outcomes Matrix has 21,000 unique users.
- Supporting the Access Impact Management Programme, providing practical support to charities and social enterprises.
- Piloting shared measurement approaches in community energy
- Developed internal theories of change for outcome areas.
- Originating deals to tackle specific issues such as the ‘poverty premium’.
- Updated our Social Impact Tests for Assessing deals.
- Developing tech solutions to gather impact data from deals.
- Set minimum monitoring requirements in legal agreements with investees.
- Providing bespoke consultancy support to social fund managers to refine their impact approach.
- Publishing case studies of social investment in action.
- Publishing examples of impact measurement in practice.
- Writing top tips blogs about impact measurement.
Our impact approach for investments
We actively seek partners to develop or co-design proposals which address specific social issues and fill gaps where social investment is not available.
All proposals for investment are assessed against our Pre Due Diligence Screen and then our published Social Impact Tests which look at key areas including mission, governance, risk and potential impact. We balance social impact, financial return and market development considerations in all our investment decisions.
Evidence and learning
We gather impact evidence from all our deals to build up a picture of the social change through monitoring the investments. Evidence and learning is shared publicly to help raise awareness about the potential of repayable finance.
How social investors assess impact
Impact assessment is a key part of the due diligence process and should have parity with financial assessment. Most investors have their own impact assessment approach to reflect the specific aims and objectives of their capital but there is common ground across them all. In short, social impact assessment is mainly focused on what you intend to change and how will you deliver it. Here is a summary of the 10 critical questions used by us and other social investors to assess impact:
- Does the organisation have a strategy for creating impact which details activities, outputs, outcomes and indicators and how revenue will be generated?
- Who are the people that will benefit from the organisation’s work? How are they involved in developing and shaping services? Are the services inclusive?
- What is the depth or breadth of impact that will be delivered?
- What evidence does the organisation have about the effectiveness of its work? How does the organisation measure impact and use the evidence to learn, improve or influence?
- What is the level of impact risk? Does the organisation have a track record or is it new?
- What external factors could have an impact on its work or what negative impact could occur?
- Are the services provided additional? Would the outcomes happen anyway if the services were not delivered? Will the service displace the work of other organisations?
- How does the work of the organisation compare or complement to what is already available?
- Does the organisation have the right team and skills in place and appropriate governance? How are service users involved in decision making?
- What will happen when the investment ends? How will outcomes continue to be delivered?
Our own impact reporting requirements have changed over time so our earlier deals did not specify a minimum level of impact reporting. This means that the quality of impact information from them is variable.
It can make a real difference to have a dedicated person that can help investees to develop and refine their measurement approach and be a champion for impact.
At the moment only some fund managers publish impact evidence externally. We would like to see more impact information available publicly in an accessible format so that more people can learn about the potential of repayable finance.
It is just as important to share learning about failure as it is about success so that other organisations can learn from it. We need to do more to showcase failure from our portfolio.
Organisations value the opportunity to network and learn from one another. We are trying to do more to support learning to promote good practice and share ideas.
It is relatively easy to aggregate contextual data about investments but more challenging to add together impact indicators. We invest in organisations that work across a complex range of social issues and believe that it is important for them to measure what it useful for their own work. This means that we cannot simply add all impact indicators together as there is not always a common ground. We are developing the concept of shared measurement approaches to help resolve this challenge and are piloting it in some areas including community energy.