That was the central question of last weeks Round Table we co-organized with Deloitte. Together with 25 professionals from different sectors – impact investors, philanthropists, social enterprises and NGO’s- we shared experiences on the topic of impact measurement and how to account for it.
The Round Table started with a presentation by Pieter Oostlander, chairman of the European Venture Philanthropy Association (EVPA), partner of Shaerpa, a service provider for family offices and a fund manager of SI2, a new fund that invests in social enterprises in the Benelux. Pieter shared insights from the latest EVPA Industry Survey: 50% of their members (family offices, corporate foundations and impact investors) say that social performance almost always unlocks new funds, which is a sign that Venture Philanthropy Organizations (VPOs) are managing for impact. Although most of these VPOs still measure social performance in terms of outputs, the amount that is including outcome metrics and trying to capture the total impact is increasing. In order to leverage this movement, EVPA developed a guide for measuring and managing impact in which 5 steps are defined:
- Setting objectives
- Analysing stakeholders
- Measuring results
- Verifying and valuing
- Monitoring and reporting
In addition to more VPOs measuring outcomes and impact, an increasing amount is shifting more focus to step 2: analysing the stakeholders of the investees. Pieter explained that these 5 steps are similar to the Social Return on Investment (SROI) framework, a framework he is currently implementing for the SI2 fund. By placing emphasis on stakeholders, the SROI framework helps to understand which changes are created for whom. This knowledge helps Pieter set material metrics taking into account a broader concept of value creation. Pieter is using the expertise of the Social Value International network and uses the Sinzer platform to embed SROI in their organization.
Eric Buckens, director of the ABN AMRO Social Impact Fund, thereafter shared his views on measuring social impact in light of his investments in 8 Dutch social enterprises. He stated it is a “learning by doing experience” during which he experienced SROI as a suitable framework for the (social) due diligence phase of potential investees. Adding to Pieter’s opinion, the main benefit of SROI is that it helps you understand what changes and select the right KPI’s. A downfall however is the amount of time SROI requires from both investee as investor, in comparison to simply focussing on measuring a few KPI’s that are aligned with the investees mission and Theory of Change, instead of looking to all stakeholders.
Despite challenges in using SROI, Eric stressed that ABN AMRO is very keen to work towards one ratio and will therefore not give up on SROI, which can be used to in the future to benchmark investees. Since each investee is different however, ABN AMRO is additionally developing their own framework, which includes the following:
- The mission and desired impact of the investee
- The Theory of Change to substantiate the desired impact
- A selection of both output and outcome metrics from the Theory of Change to measure the performance of the investee of time
ABN AMRO Social Impact Fund has their own community at the Sinzer platform in which they plan to digitalise this new framework.
Last but not least the floor was for Tim Dolman, investment manager at Noaber Ventures, focused on building a sustainable health care industry with the objective to create healthy aging through (information technology driven) innovations. Noaber Foundation was one of the first in the Netherlands to start working with the SROI framework, they have chosen a different approach for measuring impact. In consultation with several researchers, Noaber Foundation built a consistent and strategic impact framework that facilitates them to realise their mission efficiently. Sinzer has recently developed this framework into software on the Sinzer platform, which allows Noaber to set targets, collect actual data via surveys from investees, manage the results through a dashboard and automatically reports these at investee and fund level.
Marlon van Dijk, Managing DIrector from Sinzer, ended the Round Table with a presentation about how impact measurement should be used: to make better investment decisions in order to maximise social impact. In a commercial setting that’s what we strive for, to maximize financial value. If we claim to be impact investors, we should therefore strive to maximize social impact too. That is the main objective to measure it: to improve it. The quality of your impact-related information needs to be sufficient enough to make better investment decisions to maximise your social impact. Assurance is of relevant importance if impact measurement is used in this way. The due diligence and monitoring of results in order to maximize financial value that is a standard procedure when it comes to financial results, is lacking with regard to creating social impact. While huge sums of money are being spent on creating social impact, much more impact could be reached if social accounting became a standard as financial accounting currently is.
Interested to learn how SROI can serve as a method of social accounting for your organisation? Download the guide.
Do you want to learn more about how to build your own strategic impact framework on our platform? Download the Noaber Case Study.