Impact Investing is on the rise and here’s why. As the growth of Impact Investing continues to flourish, one prominent challenge that is crucial to the success of any socially impactful project, is finding capital. In order to do this, it is essential to find an investor that understands the impact you want to make and is willing to commit capital to your project. On that premise, showing impactful results to investors is substantial to fuel your company’s sustainability action.
First Things First
“Social Impact Metrics are a defined system or standard of measurement to track progress of change by your organization.” – Sopact
Chris Gaines, a lead trainer at Sopact explains that evidence is key in raising smart capital for your project and notes the importance of creating an effective impact strategy, which all starts with identifying your organization’s goals and expectations.
In creating a blueprint for your organization, the Global Impact Investing Network (GIIN) developed a Roadmap for the Future of Impact Investing which highlights six categories of action namely: Identity, Behavior and Expectations, Products, Tools and Services, Education and Training, Policy and Regulation – of which has specific actions noted in each area.
Theory of Change as a Foundation
Next is to align your Investment Design with the Theory of Change and the Sustainable Development Goals, which has become the global and international standard on alleviating today’s global issues.
The theory of change is an effective component that aids organizations in establishing the evidence of impact that they are creating through impact statement that is derived from the organization’s mission and vision, but is more definitive and conclusive.
The design of the organization’s theory of change will help lead to finding the right impact metrics.
Examples of Impact Standard Metrics
There are different standard metrics that have been defined and developed by institutes such as the United Nations and GIIN, by dedicating time, resources and years of international business relations to cultivate and generate an effective metric for Impact Investors.
The GIIN launched the IRIS+ system to “help investors measure, manage, and optimize their impact. As such, IRIS+ provides the market with how to adhere to the Core Characteristics of Impact Investing”.
Meanwhile, the United Nations’ Sustainable Development Goals serves as a structure that provides goals, targets, and indicators to guide organizations’ impact goals and action.
Read more: The Best Practices on Measuring Social Impact.
The Importance of Measuring Impact
Impact Measurement is a practice that continues to grow and progress. Today, institutions such as the GIIN and UN are dedicated to improving practices and metrics that help organizations and investors create actions that will generate the most impact.
Enabling your organization to measure what is important creates opportunities to achieve credibility with investors and countless communities.