Evaluating Impact Investing

The Centre for Learning, Evaluation. Assessment and Results (CLEAR) in partnership with E.T Jackson Associates, the Rockefeller Foundation and the Wits School of Governance facilitated a workshop on the Evaluation of Impact Investing from October 26th – 27th, 2015.  This event centred on how to measure and manage impact investments such that investors, impact investees and other ecosystem actors can assess the true value created by investments.  Given that impact and impact measurement are fundamental to the definition and practice of impact investing, the workshop also highlighted lessons, along with practical tips and methods, and raised key questions on whether the industry has been true to the promise to deliver social and financial value.

Beginning with opening remarks on the role impact investment can play in Africa’s growth, the workshop’s first day focused on introducing the concept of impact investment and the varying mechanisms through which impact investment capital can be deployed. Global and South African trends in impact investment, as well as examples from the mining sector, and Enterprise Development funds, were explored. These highlighted how a “social” due diligence can be structured and used with financial criteria to select investments fitting the mandates of investors in the mining and SME sectors.  The first day’s discussions also raised overarching questions on the role of social enterprises in complementing the government’s provision of basic services in Africa, and how Trusts and NGOs can participate in impact investing, either as investors or recipients of funding.

The workshop’s second day focused entirely on approaches and methodologies for monitoring and evaluating impact investment.  Case studies on measuring the outcomes of impact investments illustrated that while the impact investment industry may have achieved a level of consolidation of impact measurement frameworks and defined indicators including the IRIS catalogue, there is still much to be done to improve measurement practice in the industry.  Among the challenges raised in discussion was firstly the need to acknowledge that most impact measurement in fact measures outputs rather than outcomes, or even impact of an intervention; that measurement needs to ultimately benefit both investors and investees in order for it to be valuable and sustainable; that skills in measurement are needed both within investment teams, but also that there may be a need for external evaluators to create a market for their skill set, leading to innovative solutions such as an exchange of best practice amongst more traditional development evaluators and impact monitoring and measurement specialists.

Overall the workshop raised pertinent questions about impact measurement in impact investment, which is not often discussed amongst evaluation specialists.  Consensus that impact measurement is at the core of the impact investment practice will need to be followed up by actions to improve the industry’s knowledge – and therefore valuing – of impact measurement.

By Refilwe Mokoena

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