Moving Toward “Impact-Adjusted” Financial Returns

Abstract

This forum was developed in the spirit of building bridges between evaluation and impact measurement so that the two fields can learn from each other. In these concluding remarks, we aim to highlight and critique the main points exposed by the other contributors. In doing so, we include reflections from our own experience of working on impact measurement in a European and Global context and are thereby able to either validate or provide a better informed critique of the contributions. 1 Finally, we provide a vision for the impact investment field where the professionalization of impact measurement and evaluation offer the necessary tools to assess social impact-adjusted financial returns. Reisman, Olazabal, and Hoffman's contribution challenges the impact-investing sector to take measuring and managing impact seriously. Impact investing is a relatively recent phenomenon that has gained traction with the inflow of capital from foundations and high net-worth individuals and more recently from institutional investors and public administration. It is likely that impact investing continues to gain in importance, with over 40% of family offices planning to increase their allocations to impact investments in the next year (UBS & Campden Wealth, 2017). As with any new sector, efforts to collect data on its evolution and results have developed from sporadic to more systematic. However, academic studies are still lacking in both quantity and quality (Daggers & Nicholls, 2016), and industry surveys, although commendable attempts to increase transparency in this emergent sector have focused mostly on financial return data (Cambridge Associates & GIIN, 2015; Gray, Ashburn, Douglas, & Jeffers, 2016) as well as on the practices underlying the work (Boiardi & Gianoncelli, 2016). The authors highlight the need for studies that include both financial return and social impact data. Indeed, if impact investors are serious about impact (and not just investment), they need to work harder on measuring impact and collecting and reporting impact data. Reports that show financial data decoupled from social impact (and risk) fail to take into account the double-bottom line, complex reality of impact investors. Some of the pioneers of the impact investment sector, including Sir Ronald Cohen, have called for a new paradigm for investment that takes into consideration risk, return, and impact. Collaboration

A Gendered View of Risk Taking in Venture Philanthropy

“…Other work, such as Lumpkin and Bacq (2019), examines how societal impact can be generated. Hehenberger and Harling (2018) delve into how returns are measured in VP, acknowledging a lack of consideration of the risk component of VP investments. However, VP investors do implement business-oriented investing practices to deploy capital efficiently, making them subject to business risk.…”

Defining and Conceptualizing Impact Investing: Attractive Nuisance or Catalyst?

“…When assessing the impact of a specific (social) enterprise, the attribution would be measured in terms of how much of the outcome can be attributed to activities of that enterprise (Hehenberger & Harling, 2018).…”

Boosting social entrepreneurship and social enterprise development in Estonia

“…This framework offers an opportunity to introduce students to the concepts of social enterprise and social entrepreneurship. In 2011, the New National Curricula for Basic and Upper Secondary Schools recognised and defined entrepreneurship as a general competence for school students and set out goals, objectives and learning outcomes of entrepreneurship studies (Government of the Republic Regulation, 2011 [74]). In 2016, the Ministry of Education and Research went a step further and launched a nation-wide programme for "the systematic development of entrepreneurial spirit and entrepreneurship education at all levels of education" (Edu & Tegu)63, with the aim of supporting all students in primary, secondary, vocational and higher education to take part in activity-based entrepreneurship training.…”

“…Universities, such as Tartu, Tallinn and Taltech, have also established links with non-profit associations to help them measure their social impact. 74 Despite these initiatives, awareness of the importance of social impact measurement is low. Social enterprises and non-profit associations more generally do not systematically measure their social impact, which might be due to the lack of tools and methods to measure social impact measurement, and specific funding programmes to help social enterprises and non-profit associations in that endeavour do not exist.…”

“…Private limited companies on the other hand do not have access to support services that could help them develop and strengthen their social impact, understand the needs of their beneficiaries and/or work with public sector commissioners. 73 For more information, please see: https://www.maailmamuutjad.ee/ 74 OECD Study Visit, April 2019. 75 Ibid.…”