From traditional philanthropy to venture philanthropy

Moving Toward “Impact-Adjusted” Financial Returns

“…Measures imposed by funders add another level of bureaucracy and require effort and cost from the perspective of the social organization—without necessarily helping them achieve better or greater impact. Our recommendation in the Practical Guide we developed (Hehenberger, Harling, & Scholten, 2015) was precisely to develop indicators at the level of the social organization (investee) to measure its success in achieving the social change it aimed for. The investor can and should provide financial and nonfinancial resources to assist the investee in the effort to develop an impact measurement system and indicators but must not impose indicators unilaterally.…”

“…The work of the European Venture Philanthropy Association has been pioneering in terms of building both a body of knowledge and a community of practice for venture philanthropy and impact investment and the measurement thereof. A core conclusion of that work is that the goal of impact measurement is to manage and control the process of creating social impact in order to maximize or optimize it (relative to costs; Hehenberger et al, 2015). For impact investors, this means that the aim should not be merely to use impact to screen out potential sectors and then determine that all sectors then targeted, for example, health or education, are impactful.…”

“… 1. We developed an important guide on impact measurement for the impact investment community in Europe (Hehenberger, Harling, & Scholten, 2015) that was the cornerstone of the European Standard on Social Impact Measurement, and provided important input for the G8 Taskforce on Social Impact Investment working paper on Measuring Impact (Social Impact Investment Taskforce, 2014). …”