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How Impact Management is Now Within Reach for all Impact Investors?

Impact Management

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The founder of Ektta, and co-founder of SoPact, Hetal holds a deep passion for establishing enduring impact management practices in social sector to have a built in learning and accountability.

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Posted on 2017-07-26

"I want to learn from impact data but isn't  impact data collection and aggregation expensive?"

The answer? It doesn't need to be. Even though it is a common belief among mission-driven organisations that social impact measurement is too cost intensive, let us see why we can not get away from the need of impact data management tools and how instead of postponing it we can invest in it. And time is right now as finally, we can leverage new age technology.

 Impact investing has grown to $6.57 trillion in the U.S. While in any other industry such a large funding cannot skip measurement, we see little evidence of true impact measurement in impact investment today!

While the interest in impact investment is going mainstream, without a real understanding of impact we are likely to repeat the fiasco of Microfinance industry that took place a decade ago.

Though there is substantial evidence from international development agencies requiring to dedicate at least 5% of the budget towards Measurement & Evaluation (2011) and funders are asking for better impact evidence during their grant making process, a closer look at them shows a completely different picture. Aid agencies, foundations and impact funds define success metrics and receive regular Excel or PDF based results, but based on our interviews with different organizations we have found that many regulatory projects collect results from program agencies mostly for compliance reasons. Many of them simply don't have the tools to aggregate data in such a way that it can provide a comprehensive view. In fact, the situation is not any different for foundations or impact funds. Impact investing is still associated with financial return with a simple socially responsible label.

Also, while many corporates are starting to report sustainability through standards such as GRI, IRIS, GRESB, etc., their primary goal remains limited to a good PR instead of a systematic change. Most measurement in impact investment is limited to reporting for investors; in foundations, CSR programs, and international M&E projects it is still limited to reporting basic performance indicators.


Change is Emerging 

The biggest pushback comes from a common catchphrase used very liberally: "social impact measurement is expensive!". In spite of this common misbelief, there are thousands of social impact or M&E practitioners often building custom excel based frameworks again and again. Hiring such services has become an easy path for most organizations. But instead, they could invest in a system that can truly reduce the cost of measurement, since nowadays we have some fairly affordable technologies in the market.

However, due to lack of knowledge and evangelization of these new affordable tools, today's social sector is spending more than $230M (estimated considering US-based foundations and impact funds) plus over $1.5B (estimated considering US-based nonprofits) in impact measurement.

Even though cloud-based platform vendors such as Salesforce give away their technology in the social sector, most organizations do not have resources to successfully leverage power of the tool. 1.6 M of nonprofits need a more affordable and flexible data collection technology. The last five years have seen a massive amount of change with the potential to democratize or simplify data collection across the board. New age impact cloud solution can complete the data collection cycle with clean, constant, and integrated data pipeline to save time and money. To see other data collection tools review Is Impact Data Collection Changing?


Collective Impact 

Based on our personal journey we see that social development starts with an individual donor, impact investment or philanthropic organization. So, money for impact measurement and management should also come from the same source. In other words, if they are interested in moving the needle, they must have the ability to understand collective impact - whether they are foundations, impact funds, high impact non-profits, or international development agencies. Some of the private capital and foundation are investing in civic technology like Nextdoor, Change.org, Waze, etc is a good start for civic engagement. However, none of these Impact Investing have invested in the tools that allow them to share their goals systematically, collect their results and drive change. 

See How to Leverage SaaS Technology for Social Good

We have invested in research to develop great methodologies and standards of metrics (like SDGS, IRIS, GRI, ESG, etc), now is the time to leverage new age technology to define, collect, aggregate, measure and manage the change

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