Opinion: We Need to Prove Impact Investing Makes a Difference – The Chronicle of Philanthropy.
By William Burckart
In a new report I wrote for the Money Management Institute titled “Bringing Impact Investing Down to Earth: Insights for Making Sense, Managing Outcomes, and Meeting Client Demand,” we argue that it’s time for people interested in impact investing to adopt the ideas nonprofits are using to track progress.
Many of the venture philanthropists who started making grants in the 1990s and early 2000s understood the limitations of simple measures like the number of houses built. They focused instead on what they wanted to achieve, such as helping low-income people achieve the financial stability they needed to stay in those houses for a long time.
…There are some tools to help impact investors measure the non-financial performance of their investments and even compare investments by the social good they achieve. Among them are sustainability-reporting guidelines like the Global Reporting Initiative; impact and sustainability metrics like the Impact Reporting and Investment Standards; and the Sustainability Accounting Standards Board.
There are also ratings and analytical tools like the Global Impact Investing Rating System, B Impact Assessments, B Analytics, and B Corporation certification. But these systems still don’t take into account things like place, organizational performance, or type and timing of capital deployed. Instead, they still focus on numbers, devoid of context.