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Devin D. Thorpe

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If You Aren’t Part of The Mainstream, How Do You Measure Impact?

Whether or not you agree with the investment blogs and financial publications that claim impact investing is about to change the world or think the jury’s still got some considering to do before delivering a verdict, all surely agree that measurement will play a critical role in the development – or otherwise – of the sector.

Investors, investees and practitioners need to be able to point to outcomes or, better still, societal impact if impact investing is going to live up to even half the claims for its transformative power.

There are plenty of guides and indicators to help mainstream impact investors compare like with like – if your goal is to create jobs or roll out microfinance, there are accepted ways to measure and compare what you’re doing – but what about non-mainstream sectors? And what about impact sectors where the ultimate goals are more intangible, like supporting human rights or democratic development?

For example, the organization I work for– Media Development Investment Fund – invests in independent media around the world that provide the news, information and debate that people need to create thriving, free societies. We provide capital and technical assistance to help independent news businesses become financially self-sustainable, strong enough to remain independent of powerful governments and oligarchs who want to trade cash for influence.

To evaluate our impact, we focus our assessment efforts on two broad areas: first, our direct impact on investees; and, second, our investees’ impacts on their societies.

Assessing the extent to which our support contributes to our investees’ sustainability is relatively straightforward; we evaluate how each media company’s reach, sales and viability (based on an assessment of a range of risk factors)change over the course of their involvement with us, all based on monitoring data we collect on a monthly basis.

But what about our impact on helping people build free societies? For practical – mainly resource – reasons, assessing impact at this level is less systematic. Even so, we think it’s important to do what we can and we conduct deep-dive studies on individual clients to understand the role they play in their societies. This can show whether a newspaper in Guatemala is a trusted source of investigative journalism, for example, or whether a news website in Malaysia provided important information to voters in national elections.

In 2014 we have supplemented this type of assessment by including portfolio-wide societal impact metrics in our annual Impact Dashboard. This year we focus on our clients’ efforts to hold leaders accountable for their actions through reporting on corruption and tracking policy promises. While this falls short of measuring our achievements in helping to create free, thriving societies, it takes us a step further than we have gone before and provides our investors with a better insight into the changes they are helping to create.

I would love to hear how other impact investors have developed impact measurement in non-mainstream sectors,as well as any feedback on our approach and suggestions for improving it.

You can take a look at an interactive Media Development Impact Dashboard 2014 here, where you’ll also find a link to a pdf.

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