The ‘yin and yang’ of impact analysis practice
This blog is taken from a recent publication Influencing Impact: Understanding impact measurement in social investment by the Social Investment Working Group.
The SIAA study presents an intriguing snapshot of an emerging profession – one that’s tiny in comparison with the behemoth of the accountancy field, but still has a perceptible influence on impact investors, social enterprises and local authorities as to how services are delivered and what gets funded. And it’s interesting to see the blend of methodologies by which that influence gets disseminated. It’s probably no coincidence that the usage of a blend of qualitative and quantitative approaches is matched by a low proportion of impact analysts with backgrounds in maths, statistics or engineering. That’s because impact analysts on the whole are fully aware of a messy reality, in which there are multiple outcomes, multiple stakeholders, multiple influences, and multiple timescales at which those influences take effect.
So if, as seems very likely, these reports are reflecting a reasonably accurate portrayal of the characteristics of the current blend of analysts, and the current blend of impact analyst practice, then a key question is what happens next for impact analysis.
Methods which have attempted to blend different strands of value into a single measure have been slow to advance because of the technical difficulties. Some of those barriers will weaken as impact investors look for better perspectives on what their investments are achieving for society, as computer power continues its advances, and as the profession becomes more experienced and more joined up. But this will create a tension – since the current blend of relatively simple methods are much more transparent to observers and allow for more stakeholder participation, than methods which gain authority from the sophistication of analysis and/or peer-tested standards.
Impact analysis will be likely therefore to continue to adopt a blend of (a) insights from a local perspective of what’s happening to a given enterprise at a given time and place, and (b) wider peer group perspectives on what groups of outcomes seem most appropriate, and what methodologies best able to handle attribution problems. Or, to use an analogy which hopefully is not too fanciful, good practice in impact analysis needs to continue to contain both ‘yin’ and ‘yang’ elements.
Neil Reeder, Director Head and Heart Economics, UK, is the co-author of the 2013 LSE working paper Measuring Impact and Non-financial Returns in Impact Investing: a Critical Overview of Concepts and Practice.