Innovations in Impact Measurement

Impact investing is booming. The sector is attracting greater attention and more capital than ever, with an estimated USD 60 billion under management in 2015.

Yet as impact investing grows, quality data collection on social performance remains the exception rather than the norm. While nearly all impact investors — 95% — say that they measure and report on impact, current practice is, on the whole, limited to output measures of scale: number of people reached, number of jobs created. While this is disappointing, it is also understandable. The prevailing wisdom within the sector is that collecting data about social performance is burdensome and expensive, and some impact investors and social entrepreneurs would assert that it is a distraction from the ‘core’ work of building a financially sustainable social enterprise.

Practitioners believe this because we’ve allowed ourselves to be convinced, incorrectly, that the tools we inherited from traditional monitoring and evaluation (M&E) methodologies are the only way to gather social performance data. This is no longer the case.

Thanks to the ubiquity of cellphones and dramatic improvements in technology – inexpensive text messaging, efficient tablet based data collection and technologies like interactive voice response – we are in the position to quickly and inexpensively gather meaningful data directly from end customers of social enterprises. Moreover we can collect this data in ways that delight and engage customers and provide the information social enterprises need to optimize their businesses. Used with care and creativity these tools can open up new channels for investors and enterprises to cost-effectively ask questions at the core of social performance measurement, such as the poverty profile of customers and changes in their wellbeing.