Establishing an Impact Measurement and Management culture
Impact Measurement and Management (IMM) is defined as the process whereby impact investors understand the effects of their investments on people and the planet, and set goals to adapt processes and improve outcomes. IMM has gained wide traction in the impact investing space, as the sector has grown in sophistication and experience. Establishing a strong IMM culture not only allows an investor to measure financial and social return on investment, but more importantly to do so in a responsible manner.
IMM allows us to dig deeper into our social intentions, strategies, objectives and motivations thus allowing us to be accountable at an investee and investor level. It promotes accountability, measures change, allocates resources based on evidence and helps to adapt social investments. In this article, three approaches that can be used to strengthen IMM culture are discussed.
First, to strengthen IMM culture one must plan for evaluations as part of strategy development. Too often, evaluations are an afterthought to programme implementation and this usually results in underbudgeting, losing track of strategic objectives as well as inability to effectively measure impact. Evaluations are a key IMM element, and thus should be part of the IMM plan that is crafted at the strategy phase. This allows practitioners not only to rely on monitoring data, but also to learn lessons and measure impact at baseline, mid and end point. Although there are relatively few examples of rigorous evaluation in the impact investing space thus far (compared to the non-profit grantmaking sector), momentum is growing around its use and importance.
Second, IMM culture is strengthened through sharing lessons learned with key stakeholders, such as investees, investors, partners, relevant government departments and programme staff. Various platforms can be used to share lessons, including webinars, IMM roundtables, journals, Community of Practices, Conferences and failure fares. Failure fares are particularly powerful, as they put a spotlight on what hasn’t worked to ensure mistakes are not repeated. Sharing lessons widely allows people to learn from practical experience, while promoting accountability and transparency.
Third and finally, one must use IMM findings for adaptive management. Data from monitoring or evaluation – whether negative or positive – are of no use if they are not used to improve strategies. They can help you strengthen your impact thesis by asking questions relating to causal pathways, testing assumptions, challenging problem statements, reviewing resource allocation, as well as aligning your programmes to SDGs (or the National Development Plan in South Africa). Important questions around scalability, sustainability and replicability can only be made once IMM findings are interrogated and utilised. It is imperative that IMM is not practiced as a “tick box” exercise, but rather forms a critical pillar of any impact investors work.
While IMM is a relatively new phenomenon, its growing importance and sophistication is an exciting development. It bodes well for those of us who want to see impact investing grow, and impact returns taken as seriously as financial returns. Through our new impact investing partnership with African Alliance – Thrive Africa – we have deliberately created a joint venture where impact measurement and financial returns stand on equal footing. As Thrive Africa gets off the ground, we look forward to building and demonstrating the power of a strong IMM culture on the continent.