In 2018, the impact investing sector roughly doubled in size. The Sustainable Development Goals continue to emerge as a preferred framework for entrepreneurs, investors, governments and others.
Other emerging trends include the interest in Opportunity Zones as affordable housing investment opportunities. Place-based impact investing and Social Impact Incubators are are becoming popular too.
So, where and how do you start in this fluid sector? You have come to the right place.
What is Social Impact Strategy
Social Impact Strategy
Designing a systematic impact strategy, and a sound social impact measurement framework, from the outset is a must. Any impact-focused organization benefits from having this clearly defined, especially the following organizations;
Regardless of the impact segment that you represent, it is important to develop an investment strategy, target smart capital and interact with investors/funders. And our view is that to be successful in executing that funding journey, you must first have a well-defined impact management strategy, which includes developing an effective social impact measurement framework.
What Impact Management Strategy is NOT
Stay away from impact washing
It used to be that you collected aggregated portfolio composition or created a GIIRS rating, and made your investors happy. Gone are the days where new impact investors buy that argument.
As impact investment grows, investors want to understand what impact is actually created and the evidence of impact. They want to be sure impact washing is not occurring. New impact class classifications are emerging which allow investors to differentiate between:
Impact Management is a process of driving social change based on an evidence-based data gathering process, impact learning, and iterative impact improvement processes. Impact Management shouldn't be equated with impact measurement or monitoring & evaluation, which tends to assess specific programs or projects.
Instead it is a methodology similar to businesses with a lean enterprise approach to social change. Impact Management must have the following fundamental success criteria:
TOC lead Impact Management Lifecycle: While most organizations have theory of change or a logic model as a starting point, they fundamentally do not connect outcomes of theory of change (TOC) or logic models with their key indicators, data strategy and reporting. This creates a massive disconnect between their actual mission & social change results.
Smart Capital through Trustable Outcome from Funded Programs: An Impact Thesis must be well-aligned between Investors and Entrepreneurs (grantees, investees, development agencies etc). The fundamental breakdown in high impact philanthropy, impact investment and sustainable development is that often investors are different from social good entities working close to the beneficiaries and stakeholders. However, often they simply do not speak the same impact language. This is a primary hinderance to the systemic change sought by the investors.
Impact Knowledge Graph: There are hundreds of impact standards, frameworks and tools out there, such as well-known initiatives in impact investing like GIIN's IRIS, or in philanthropy the Impact Genome Project. So why are we not able to measure and manage im pact effectively? What's hindering progress?
Fundamental to social impact is context sensitivity. If there are three healthcare programs for child immunization in northern India, Afghanistan or region of Africa, you cannot have common metrics to compare social impact. In the next section, you will learn that Impact Knowledge Graph is a flexible approach that allows any mission-driven organization to start an impact journey with a structured approach to start their impact strategy, helping the organization get closer to a data-driven journey.
Impact Knowledge Graph is NOT proprietary approach. In fact, it flexibly uses all well known standards, frameworks and tools.
Quantifying or Benchmarking - You Are Not on the Right Path: If you are an impact investor trying to rate or quantify investments, chances are that you are coming at it with a finance background and with good intentions, but do not have real, hands-on understanding of social impact. Social impact is a process in which mission-driven organization understand their social impact using theory of change driven processes with lean data, and continue to improve their social impact!
Impact Data: Rapid way of managing commonly known impact data for lean data measurement
Benefits of Impact Knowledge Graph™
In the article "Why do these Knowledge Graphs need 10,000 pairs of hands?", Dr. Amit Sheth explains knowledge graph needs a lots of working heads besides schema creation. Thanks for leading organizations such as GIIN, EVPA, SVI and many more this knowledge is already existing in the social impact investing and social impact assessment domain. SoPact is working on building a structured metadata for over four years to simplify the knowledge, so that ultimately it can help organization create an effective impact strategy.
Rapidly create impact strategy
Reduce time for impact measurement & management
Provide detailed insight by understanding sentiment analysis, qualitative analysis and understanding complete social impact context
Rapid, Flexible and Comprehensive
Fastest way to start an impact management journey
Social impact measurement doesn't have to be complex, expensive or time consuming. Welcome to impact knowledge graph!
Impact Knowledge graph is a publicly available resource (designed with freemium Impact Cloud ) that allows you to search and modify your entire impact management strategy with structured knowledge and unique impact for each initiative or program.
Impact knowledge graph helps you build your Impact management strategy through the following steps:
Impact Statement & Impact Map Creation
Smart indicator alignment
Impact data strategy
Impact thesis alignment
External impact evidence alignment
Benefits of Impact Knowledge Graph in Impact Strategy:
Shareable: Start from a large repository of impact knowledge graphs and a comprehensive global metrics catalog, and align with your custom metrics - saving months or years worth of effort of aligning your impact ecosystem. Social impact practitioners can build a public or privately owned impact knowledge graph based on their domain expertise.
Helps build clear Impact Statement: A well-structured impact statement that clearly identifies mission, timeline and medium and long term impact. Designed to clearly understand mission of a program or project.
Helps develop Theory Of Change, quickly: Wizard driven theory of change process that allows rapid development of impact mapping for a better understanding.
Ease of understanding through Impact Map: Smart Impact Map allows you to classify and connect impact maps based on short, medium, long, or any other kind of classification for a better understanding.
Risk, Assumption & Other: Add Impact Map specific risk, assumption and other statements.
Alignment with Standards and Organizations
SoPact Impact Cloud is the most innovative and transforming platform that aligns and transforms many leading bodies of standards, organizations and metrics catalog and transforms them and easy to use impact knowledge graph. The real value is going to be even higher when impact investors and entrepreneurs can transform that into actionable form.
GIIN has been working on IRIS+ and Navigating Impact. This is a significant Impact Knowledge collaboration with over 100+ impact strategist globally. New release of Impact Cloud will include all the Navigating Impact Impact Themes.
Impact Management Project (IMP): The IMP is a forum for building global consensus on how to measure, manage and report impact. Impact Cloud is perhaps the first impact measurement & management platform to support IMP.
EVPA: EVPA is building a community of organizations interested in or practicing venture philanthropy (VP) and social investment (SI) across Europe. EVPA has recently published Impact Strategy journey which very well aligns with SoPact’s Actionable Impact Strategy approach.
TONIIC T-100: TONIIC is the global action community of impact investors. Their vision is a global financial ecosystem which operates to create positive social and environmental impact. TONIIC T100 Project is a multi-year study of the portfolios of over 75 Toniic 100% Impact Network members. It reveals new insights about the various paths towards and feasibility of 100% impact investing (impact first approach). Impact Cloud integrates mapping of TONIIC portfolio definition and SDG-IRIS Impact Map.
Smart Indicator Alignment
TOC Aligned Impact Search Use intelligent global impact search engine to find any context sensitive metrics based on standards, area of impact, theory of change based on state of the art search engine.
Align Sustainable Development Goals or Custom Goals: Start with a Sustainable Development Goal (SDG) or Goals and quickly align with SDG Target(s). If not aligning with SDGs, define internal custom goals and targets.
Align with Sector specific Indicator Sets: Align with a most flexible, comprehensive global impact metrics set in business, philanthropy, impact investments and international development programs. This strategy is often useful when aligning entrepreneur's impact thesis with investors.
Enrich with custom metrics: Refine global impact indicators to make it more specific or create custom indicator(s) to measure operational, finance and other internal social performance objectives.
Impact Data Strategy
This is where most get stuck!
Many organization may have developed a good theory of change and indicators, however, their ability to develop a system that allows them to collect the right kind of data based on activities, outputs and outcomes remains limited. This data is typically collected in different kinds of data collection systems. While certain data collection systems are suitable to collect those results, how do we improve data collection for better results and higher integrity?
Good Impact Data Strategy Provides:
Robust alignment with data sources, whether this involves data collected on paper, excel/google spreadsheets, in custom databases, using salesforce or finance systems, or other online and offline survey tools.
Collect results in languages where partner(s) reside.
Build robust reporting formats and data validation to save data cleaning time for each partner.
Rapidly test results from existing data.
Identify data gaps.
Develop surveys or outcome management strategies.
Program Evidence Development
Early stage startups & business
Early stage social start up do not have a historic data, nor a good budget to measure outcome - neither investor nor entrepreneurs feel strong necessity to fund social impact outcome measurement. On the other hand well funded RCT can provide a better evidence but time, cost and quality of outcome tends to be questionable. In the absence robust evidence based results, how can you demonstrate anticipated positive or negative outcome?
Following guide provides best way to build a robust case without a formal, longitudinal study and save tremendous research money!
How effective is the investment?
What outcomes does it generate?
Which impact map will generate the best results?
What are the core characteristics to drive impact?
Raising impact capital is a daunting task for most enterprises, especially those who mostly rely on good pitch decks but have no real evidence of impact. How can they convince impact investors that the social initiatives should be funded? This is an often overlooked process, but every entrepreneur can align their impact thesis with investors in following way.
Sustainable Businesses, B-Corps & Social Enterprises & Nonprofits
Project & Programs
Challenges with data collection, aggregation and tacking
Lean Data Management
Stakeholder Outcome Improvement
Aligning with grants reporting requirement
Impact Measurement Frameworks
Tuning to the Social Impact Ecosystem
Impact Strategy tools at Sopact help practitioners define the impact management framework that is right for their impact ecosystem. It delivers impact practitioners of mission driven social businesses, and mission driven organizations a unique platform-based approach to create a step-by step strategy, conduct data management and refine impact communication.
Hands-on, co-designed with Impact Cloud to rapidly design, test, implement and improve.
Social impact ecosystem capital flows from Impact Funders (Asset Owners), Impact Managers ( Asset Managers) and Impact Makers (Assets). As we improve the flow of impact data from beneficiary to funders, more capital flows towards social impact.
SoPact has developed a consistent social impact framework that can be consistently applied across different types of organizations. Our goal is to give you a deep dive into a consistent process across all the sustainable organization types. The second part includes unique and advanced processes specific to different entities such as Impact Funds, Incubators, Asset Owners, Foundations, Businesses and Mission Driven Organization.
Impact Ecosystem Strategy - Sector By Sector
Impact Due Diligence to Impact Reporting
Impact Investors would follow the same process described in the Impact Strategy. However, depending on the type of funds (asset owners vs asset managers), the size of funds, and focus of the impact theme, the following advance discussions are warranted.
New philanthropy aligned with impact-first thinking
While foundations are historically impact first, their processes are still evolving. Many young and innovative foundations, especially certain corporate, community and family funds, are rethinking allocation of their funds from 100% negative return to a less negative one.
Many of them start with a community and job creation approach, and grow into a much more sustainable strategy aligned toward their mission. How should they go about realigning and how should they measure their success? It depends on what their long-term goals are.
Foundations with focus on the below seems to be building sustainable impact strategies:
PRI and Impact Investment
Unique Impact Strategy Requirements
Foundations' Impact Strategy is not unique from what's described in the general section. However, there are few unique elements that they must consider.
Due Diligence Process
Theory Of Change for Foundations
Theory Of Change and Data Capacity for Grantees
Application Process for Grantees
Granularity of Metrics
Custom Goals vs Sustainable Development Goals
Strong focus on knowledge and impact learning
Aggregating data from grant management system
Aggregation results from 3rd party, external, or country specific results
Unique metrics focus with specific baseline & target values
Social Venture Networks, Incubators and Accelerators play a very important role in growing social entrepreneurs and local businesses. While many of these ecosystem businesses, just have the intention to do social good, they do not have systematic experience with theory of change (what social change they are aiming to create).
Hence these network organizations play a key role in making them understand their theory of change, key data collection processes, etc., so that they have an evidence-based approach from the start. A good evidence-based approach ultimately helps them raise smart impact capital from an impact investor aligned with their impact thesis.
Impact Cloud is the most comprehensive platform that provides out-of-box theory of change, indicators & reporting. Just select theory of change unique to your need, remove indicators not relevant to your need and add key standard and custom indicators. You are ready to build out-of-box impact reporting for your context
Community Investing: Aeris
Healthy Communities: Build Healthy Places Network
Community Banking: National Community Investment Fund (NCIF)
Corporate Sustainability Reporting: The Global Reporting Initiative (GRI)
Water Stewardship: Alliance for Water Stewardship
Early-Stage Enterprises: Toniic
Gender Lens (Financial Inclusion): Women's World Banking
Financial Inclusion: CERISE and the Social Performance Task Force (SPTF)
Healthcare Delivery: Center for Health Market Innovations (CHMI)
Sustainable Development Goals (SDGs): The UN Sustainable Development Goals
Impact Employment: The Impact Sourcing Metrics Working Group
International Financial Institution (IFI) Private Sector Operations: IFI Working Group on Development Results Indicators Harmonization
Land Conservation: The David and Lucile Packard Foundation
Microinsurance: Microinsurance Network
Off-Grid Energy: The Global Off-Grid Lighting Association (GOGLA)
Smallholder Agricultural Finance: Council on Smallholder Agricultural Finance
Small and Growing Business (SGB): Aspen Network of Development Entrepreneurs
Social Performance for Microfinance: Microfinance Information Exchange (MIX) and Social Performance Task Force (SPTF)
Demonstrating success of a program or evidence of key indicators are best way to achieve success
If your nonprofits are relying on public funding or grants, you're likely facing stiff competition. Chances are you will hire grant writers or consultants to raise grants.
But are they really familiar with your impact? Are you just reporting activities or outputs? Make sure they are familiar with the following (as they relate to your organization) so that they (and you) can ensure you are building a robust strategy.
Projects & Programs
Challenges with data collection, aggregation and tacking
Social impact measurement frameworkallows a mission-driven organization a logical and step by step path to a clear impact thesis, creation of an impact map between partners, better data collection processes, and to demonstrate impact effectively.
Theory Of Change & Groundwork:Theory of Change, and Metrics Integration for enterprises, grant makers, and impact investments.
Social Impact Metrics:Search & Assign metrics to your enterprise, grant makers, and impact investments from the largest metric repository on the internet!
Data Strategy: Step by step guide to improve data collection for an outcome, survey and application.
Reports & Storytelling:Seamlessly aggregate and report outcomes to your investors monthly, quarterly, or annually.
Social Impact Strategy Consulting
How do you certify for social impact measurement?
Social impact consulting practitioners work with sustainability, impact investment, philanthropy and international development to systematically design impact frameworks that suit unique client needs.
Impact Cloud is a unique platform driven approach that helps practitioners build strategic practices in more domain specific expertise through a better streamlining.