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Books and Guides

This Introduction to Social Finance edited by the Sodalitas Foundation is the first Italian Guide to Social Finance and Social Impact Investment. The guide covers social finance tools available to date from Social Impact Bonds to Microfinance and Microcredit.

Measuring Impact: Guidelines for Good Impact Practice was developed by the Impact Measurement Working Group (IMWG) of the Social Impact Investment Taskforce established by the G8. This work elevates existing best practices and aligns with the European Standard for Social Impact Measurement (developed by GECES). The IMWG was established in June 2013 at the G8 Social Impact Investment Forum in London to develop measurement guidelines for impact investors as well as a vision for impact measurement in the years ahead.

HM Revenue & Customs (HMRC) provides a guides for Social Investment Tax Relief. It includes:

– Guidance for social enterprises
– Guidance for investors
– Get approval if you’re a social enterprise
– How to claim tax relief if you’re an investor
– Form: SITR Compliance Statement
– Policy on Social Investment Tax Relief

This report, Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing – and Why It’s Urgent (June 2014), by the US National Advisory Board on Impact Investing (NAB) provides a framework for federal policy action in support of impact investing. Simply put, impact investing generates measurable, beneficial social or environmental impacts alongside financial returns. The proposals in this report—some near-term and concrete, others longer-term and more ambitious—have the power to unlock dramatic economic activity and immense positive impact. Ultimately, they may serve as a catalyst to help change the way investors think about long-term risks and returns.

This report by Lizzie Trotter, Jim Vine, Matt Leach and Daniel Fujiwara from HACT, produced in conjunction with Value Calculator, places robust values on the social impact of community investment activities. It includes values as well as practical guidance on how to apply them to achieve a basic assessment of social value using the Well-being Valuation approach.

This is an except from Measuring and Improving Social Impacts: A Guide for nonprofits, companies, and impact investors by Marc J. Epstein and Kristi Yuthas. All organisations have social impacts: some are positive and some negative. Measuring and Improving Social Impacts is about how you can learn to make decisions that will improve the positive social impact of companies, foundations, nonprofits, and impact investors.

This book addresses the five most fundamental questions faced by companies, and nonprofits, and investors seeking to maximise their social impact:

– What Will You Invest?
– What Problem Will You Address?
– What Steps Will You Take?
– How Will You Measure Success?
– How Can You Increase Impact?

The Social Investment Roadmap from the Cabinet Office UK sets out the steps that the UK government is taking to ensure that there are the right conditions for social enterprises to thrive in the UK through tax relief.

Fundamentals of Modern Philanthropy provides new perspectives on the broad variety of impacts that
charitable foundations can make, by both applying and acquiring funds.

This document from PwC in the Netherlands provides information for social entrepreneurs on how to turn your ambition to have a positive impact on the world into a business case and offers four guiding principles on what ‘social’ investors want.

The Practical Guide is a resource that distills best practice in impact measurement into five easy-to-understand steps and provides practical tips and recommendations for how to implement impact measurement at the level of the social investor and in the social sector organisations that they support.

The Good Investor, authored by Adrian Hornsby and Gabi Blumberg, is a guide for investors who make investments into companies, organisations and funds to generate measurable social and environmental impact. This guide is structured around incorporating impact assessment into the various stages of the investment process, progressing from the investors’ initial exposure to investment opportunities, through the screening and analysis, and onto making investment decisions, monitoring and evaluating, and reporting on the impact achieved.

This literature review by Ingrid Burkett, Knode explores the potential for a new approach to investment that focuses on revitalising communities, creating jobs and building economic opportunity. Similar approaches have been used widely in the US and the UK. Investors ranging from banks and superannuation funds to foundations and individuals have invested in funds that are creating quality jobs and economic opportunities in underserved and under-invested communities and generating a viable financial return. The thesis of this work is that similar funds could also provide new opportunities for investment and community regeneration in Australia.

This CAF Venturesome handbook provides a roadmap for both policy-makers and impact investors for catalysing a robust social investment market, drawing lessons from 30 years of microfinance industry development.

This report convened by Rockefeller Foundation examines the different types of approaches to impact measurement, and how each is applicable to the various perspectives from which impact investors approach investment. The report explores answers to several questions, such as:
• How can investors know whether they are in fact helping or hindering progress toward the goal of an environmentally sustainable, healthy, dignified economy?
• How does a portfolio company’s pursuit of this goal affect risk and financial returns?
• If there is an added cost associated with pursuing this goal, what approach can be used to assess whether it is “worth it”?

Case Studies

EVPA, the membership body for European organisations engaged in social impact investment or venture philanthropy, release two in depth case studies investigating impact measurement in funding organisations.

This document from the Social Impact Investment Taskforce presents five case studies to demonstrate how a diverse group of organizations have developed sound impact measurement practices, including how the seven guidelines for good impact practice are being applied in the organization, as well as the organization’s impact measurement practices, the contextual factors that shaped their impact measurement approach, how they involved key stakeholders along the way, and key “impact measurement lessons.”

‘Exceeding Expectations’ is a report by Kevin Gulliver and Dawn Prentice from Human City institute (HCi) for Trident Social Investment Group on a comprehensive set of social accounts. The report tracks the community impact of Trident using a triangulated approach to evaluation of economic and social value based on HCI’s ‘Measuring-Up’ methodology. It shows how social landlords can measure their wider impact beyond the bottom line. More importantly, the report clearly illustrates how economic and social value can be measured and presented in a highly collaborative way with extensive involvement of stakeholders, including partners and residents. It also represents as case study of a major social landlord group that includes housing associations, charities and social enterprises. The results fed into the development of Trident’s Social Investment Strategy.

To provide a model of IRIS adoption by impact investors, the KL Felicitas (KLF) Foundation and the Global Impact Investing Network jointly released this case study which explains KLF’s motivation for IRIS adoption and details the Foundation’s application of IRIS across its active investment portfolio.

This report from Bridges Ventures aims to contribute to the greater understanding within the investment community of the opportunities offered by Impact Investment and to promote the flourishing of further investments that can make a difference as well as making financial returns. The Impact Investment sector and case studies are mapped along the traditional asset classes, resulting in an Impact Investment Asset Allocation Framework (AAF). This Framework aims to combine the traditional asset classes with the specificities inherent in Impact Investment.

Event Reports

This paper from Cabinet Office outlines some of the ideas and themes from the discussions held at the G8 Social Impact Investment Forum on 6 June 2013. It sets out:

– the perspectives shared
– the challenges identified
– the actions agreed which will help build an international market

External Databases and Resources

TIME is part of Trinity College Dublin, The University of Dublin. The unit will bring together researchers in economics working on micro-economic impact evaluations, development practitioners, and policy makers in a collective effort to estimate and understand the impact of development aid and investments. TIME will contribute to the global debate on the economic development process and the underlying mechanisms at work. Their vision is to provide strong evidence of what works, so that better investments that have real impact on the development process can be made.

Money for Good from Hope Consulting has resources on impact investing and charitable giving.

Big Society Capital provides guidance, best practice advice and an outcomes matrix for social impact measurement for investors and social sector organisations.

Impact in Motion mobilisiert Investmentkapital zur Lösung gesellschaftlicher Herausforderungen. Wir sind Impact Investing Denkfabrik und Beratungsunternehmen unter einem Dach.

MaRS Centre For Impact Investing’s Knowledge Hub shares tools and resources on impact investing. It includes presentations, webinars and resources for getting started, a sector map to connect with other people, organisations and initiatives, a guide to social finance, tools and methods for social impact measurement, and a space to access and share resources and find funding sources.

Venture Philanthropy and Impact Investing from the European Venture Philanthropy Association (EVPA) is a compilation of resources on venture philanthropy, grant philanthropy, social investment and impact investing.

This is a beta website to help improve access to information on investment and finance for charities and social enterprises. In its first phase you can explore information about social investment, social impact measurement and the project itself. As the website grows we will include broader information on wider finance and investment for charities and social enterprises.

The resources centre from the Global Impact Investing Network (GIIN) provides information on impact investing. The site includes news, research, events, impact investing profiles, GIIN publications, investor spotlight, useful links and career centre.

The following table illustrates the full tests that thresholds that we used to assess the social impact performance of social investment finance
intermediaries (SIFIs) and upon which SIFIs will assess the performance of the frontline organisations that receive BSC’s money.

The Big Society Capital social impact resources include their approach to establishing best practice among social investment finance intermediaries (SIFIs) as well as providing a standardised taxonomy and set of definitions for outcomes based investing. These best practice guides are aimed at the SIFI model and will therefore not necessarily apply to all investors. They do not include environmental outcomes.

Impact Reports

EVPA, the membership body for European organisations engaged in social impact investment or venture philanthropy, release two in depth case studies investigating impact measurement in funding organisations.

Calvert Foundation’s 2013 Social Impact Report explores the impact that investors, funders, supporters, portfolio partners, and advisors have empowered them to create in 2012. Calvert Foundation works at the nexus of communities and capital, meaning their impact is both the outcomes of our lending – affordable housing units built, jobs created, etc. – and the ways that they enable people to invest in the causes that inspire them.

This is a summary of the research report by Vanessa Wilkes and Professor David Mullins from Third Sector Research Centre at the University of Birmingham was commissioned by HACT. It provides an up-to-date picture of the measurement tools being used by housing organisations to measure the social impact of community investment activities, showing wide variation in the approaches used.

While there is general recognition of the importance of measuring impact, there are also concerns about cost, approach and potential duplication. The report will enable more sharing of evidence about different approaches to impact measurement and what works in terms of community investment.

This research report by Vanessa Wilkes and Professor David Mullins from Third Sector Research Centre at the University of Birmingham was commissioned by HACT. It provides an up-to-date picture of the measurement tools being used by housing organisations to measure the social impact of community investment activities, showing wide variation in the approaches used.

While there is general recognition of the importance of measuring impact, there are also concerns about cost, approach and potential duplication. The report will enable more sharing of evidence about different approaches to impact measurement and what works in terms of community investment.

Opinion and Comment

This report by Paul Brest and Kelly Born for The Conference Board Initiative on Corporate Philanthropy, was originally published in the Stanford Social Innovation Review. In corporate philanthropy, the focus is shifting from counting inputs to measuring social impact. Yet there is considerable confusion about the meaning of social impact. And the concept is even more complex in the emerging practice of impact investing. This report, which inaugurates The Conference Board Giving Thoughts series, sheds light on the concepts of enterprise, investment, nonmonetary impact, and the key requirement of “additionality.” By carefully examining the parameters and assumptions underlying the “impact” in impact investments, this edition of the series lays the foundation for a more focused discussion of assessing philanthropic and impact investing outcomes.

Hilary Best, Analyst at Purpose Capital, blogs about investor challenges with impact measurement, touching on the published Guidebook for Impact Investors: Impact Measurement and report Social Impact Measurement Use Among Canadian Impact Investors.

Tools

The outcomes matrix is a tool to help social investment financial intermediaries (SIFI’s) and social sector organisations to plan, measure and learn about their social impact. It aims to develop common ground and language for social investment and impact assessment in the social sector. The outcomes and measures are not intended to be prescriptive or exhaustive but should provide a helpful starting point for organisations to consider their social impact.

Training and Courses

Cass Business School at City University London offers PGCert/PGDip/MSc in Grantmaking, Philanthropy & Social Investment. There is a growing recognition, that in addition to a common body of knowledge all managers need in order to succeed, there are critical specialist areas for managers which provide a sound understanding of all aspects of their work and a springboard for further career progression.

This charity degree course is the first of its kind in the UK and Europe and reflects the increasing interest in funding and the need for transparency and accountability. Students will develop a clear understanding of the practices and principles of funding.

Working Papers and Research

If the purpose of social investment is to use capital in order to effect positive social change, then delivering and evidencing that positive change must be at the core of what social investors do.

This report by Investing for Good, reports on how 10 UK leading social investors incorporate social impact in screening and assessing investments as well as how transactions are priced and structured and investment decisions made. It also provides a useful overview of the current state of impact measurement practices in the social finance sector and the practical challenges that investors are facing. There was variance amongst the approaches taken by the 10 investors with some taking a “system-driven” approach and others a less formal one; reliant on discussions, narratives and a deep understanding of the risks in the market.

This research report by EVPA, is a collection of experiences and lessons from twelve organisations within venture philanthropy and social investment. It aims to share their learnings from failure with other practitioners.

Smart social investment can bring money to address some of our most enduring social problems. But the pressure is on to prove that these results are achieved. This paper by Iona Joy from NPC shares lessons learnt so far and builds on NPC’s experience in the social sector to suggest how we might achieve better impact measurement for social investment in the future.

The world is on the brink of a revolution in how we solve society’s toughest problems. The force driving this revolution is “impact investing”, which harnesses entrepreneurship, innovation and capital to power social progress. This report from the Social Impact Investment Taskforce, Impact Investing: The Invisible Heart of Markets – Harnessing the power of entrepreneurship, innovation and capital for public good, examines what is needed to catalyse the growth of a global market for impact investment. It makes recommendations that can be implemented across Taskforce countries and beyond to deliver better social outcomes and improve millions of lives across the world.

The Social Impact Investment Taskforce established under the UK’s presidency of the G8 have produced subject papers related to the report “Impact Investment: The invisible heart of markets”. Supplementary reports are available on:

– Policy Levers and Objective report
– Asset Allocation
– Measuring Impact
– International Development
– Mission Alignment
– “Impact Investing for Everyone” – A Triodos Bank report produced for the Social Impact Investment Taskforce established under the UK’s presidency of the G8

Building the Capacity for Impact is a report from Impetus-The Private Equity Foundation (PEF) on the capacities needed by the social sector to deliver the aims of the social investment market.

The MaRS Centre for Impact Investing and Deloitte worked together in the autumn and winter of 2013 to collect Canadian investor perspectives on Social Impact Bonds (SIBs). They conducted a series of 18 in-person consultations (“interview
respondents”) and collected responses from 62 additional online surveys for a total of 80 potential Canadian SIB investors (“respondents”). This report presents the aggregate findings and insights related to this sample of investor viewpoints.

This research paper by Neil Reeder, Gemma Rocyn Jones, John Loder and Andrea Colantonio (LSE) is the second in the Measuring impact beyond financial return series and follows on from Measuring impact and non-financial returns in impact investing: A critical overview of concepts and practice. It draws out points of convergence and divergence in approaches to impact measurement.

Testing out hypotheses set out in the first research paper described above, it is based on information derived from a series of interviews with established impact investors in the fields of the environment; social enterprise; microfinance; and social impact bonds.

This publication from the European Venture Philanthropy Association (EVPA), written by Dr Leonora Buckland and with the support of the London Business School, explores how European banks can use their core strengths –financial acumen, investment skills, capital and networks– to actively generate social impact by engaging in venture philanthropy and social investment. It is a compilation of numerous interviews with executives at banks, as well as archival research.

This report provides a summary of the findings and activity from the first year of the Impact Programme. It provides an insight into the operations of the programme and the progress that has been made in that time. The report draws together material from all of the programme partners and highlights the main findings that have come out of their initial work – from CDC’s interaction with the market, the GIIN’s most up to date research and the PCU’s (PwC) baseline work. It will be of particular interest to donors, members of the investment community and Fund Managers.

Philanthropic institutions have been instrumental in helping to launch the Social Impact Bond (SIB) market both in the US and abroad. To explore this work, Social Finance US has released a White Paper which draws on existing research and Social Finance’s on-the-ground experience, as well as interviews with numerous foundation staff and thought leaders. They assessed the role that philanthropy has played and will continue to play in developing the SIB market in the US.

From Ideas to Practice, Pilots to Strategy is a report from the World Economic Forum which aims to show how challenged in the impact investment sector have been overcome by mainstream investors and intermediaries. It also intends to democratise the insights and expertise for anyone interested in the field. It is divided into four main sections, and contains lessons learned from practitioner’s experience, and showcases best practices, organisational structures and innovative instruments that asset owners, asset managers, financial institutions and impact investors have successfully implemented.

This report from Social Finance UK and the Centre for Global Development presents the findings from the Development Impact Bond (DIB) Working Group. The report explains how DIBs can enable more impact investment in development, by providing a shared platform for governments, donors, investors, firms and civil society to work together to achieve more.

Stephanie Petrick from Impact in Motion, on behalf of the Social Venture Funds, analyses investment opportunities for impact investors in the integration of the long-term unemployed. This study gives a detailed insight into the situation in the UK, German, French and Swiss market.

Developing and maintaining a social licence to operate is rapidly becoming core business for resource companies. KPMG has developed 4-step continuum for measuring the value of direct corporate investments in local communities, drawing on social evaluation and engagement methodologies, as well as economic valuation techniques. This publication discusses the methodologies, challenges and considerations for resources companies and government when valuing community investments.

In early 2013, the Big Lottery Fund and Big Society Capital came together, encouraged by John Kingston, to commission this research by Dan Gregory, Common Capital, into the future of social investment, with particular regard to the infrastructure that supports the market. This research outlines a vision for the social investment market and the ‘infrastructure’ required to deliver it by taking stock of the current state of the market and to making recommendations for the future.

This report is from the Social Market Foundation (SMF), by Nigel Keohane, Ian Mulheirn and Ryan Shorthouse. Social Impact Bonds (SIBs) are an innovative way of commissioning public services. Private or philanthropic investors provide the upfront finance, with government only paying them a return if and once social outcomes are achieved. However, the number of SIBs currently underway is small, and our analysis finds that they are unlikely to appeal to mainstream investors unless some major hurdles can be overcome.

This report explores the variety of payment-by-results (PbR) approaches, what is standing in the way of SIBs and how to help the market promote SIBs.

Social impact bonds have attracted much attention in recent years. But there is a concern that there is a limited number of investors prepared to supply the capital for future bonds. Allia developed its Future for Children (FfC) bond to test the retail market’s appetite for investing in a social impact bond. The bond was structured around a social programme to help children on the edge of care. NPC evaluated the bond, and the results of the evaluation are detailed in this report.

This working paper from Impact Economy is by Maximilian Martin and is Volume 4 in the Impact Economy Working Papers series. Impact Economy has worked on impact investing with a number of clients and partners since the inception of the firm. Over more than a decade, the author of the study has been involved in a variety of senior roles in the pioneering efforts that have led to the creation of the concept of “impact investing” in 2007-2008, investment ideas such as contingent return models that link a financial return to a social outcome, and in their mainstreaming.

This paper from the UK Cabinet Office provides an update on the social investment market. They seek to support the growth of the market so that social enterprises can achieve more. They will do this by
– increasing the amount of money available for social investment
– increasing the demand for social investment
– creating an environment that encourages social investment opportunities

This report by Eibhlin Ni Ogain, Sarah Hedley and Tris Lumley presents the new suite of tools to help social investors, and those seeking social investment, that Big Society Capital commissioned using a team comprising NPC, the SROI Network and Investing for Good with the aim to embed a robust approach to impact in their work.

The tools presented here are:

– An outcomes matrix, which segments outcomes within the social welfare and environment arenas into 13 outcome areas.
– Outcomes maps, which drill into the detail of the outcomes matrix, providing overviews of the key outcomes, indicators and data sources commonly used in each of the 13 areas.
– Guidance on investor best practice.

The Impact Investor Project was established in 2012 as a two-year research partnership between InSight at Pacific Community Ventures, CASE at Duke University, and ImpactAssets. The goal was simple: supplant the guesswork and conjecture in impact investing with solid evidence of high performance and, in the process, expose the concrete practices of outstanding funds for use as the foundation for a more sophisticated and successful market.

Impact Investing 2.0 profiles twelve funds who work in vastly different sectors, from microfinance in India to sustainable property in the UK, and have accordingly pursued very different investment strategies and approaches to social impact.Their success across such a broad set of parameters offers many lessons for the industry and beyond.

This working paper from Neil Reeder and Andrea Colantonio (LSE) provides an overview of the underlying concepts of impact investing as a form of socially responsible investment. Drawing on relevant literature, this paper casts a critical eye on the roles and responsibilities within measurement, making more explicit the subjective interpretation of social and environmental return (SER) by investors, and the clash of suppositions taken from other older measurement traditions.

This paper by Ruth Puttick and Joe Ludlow introduces the Nesta Impact Investments Fund and the standards of evidence they use to ensure their investments make a positive social impact.

E.T. Jackson and Associates Ltd prepared Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry for The Rockefeller Foundation in 2012. It includes sections on Impact Investing: What It Is and Why It Matters, Achievements and Challenges: What’s Happened So Far, and What Hasn’t, Opportunities and Directions: What’s Next?

This document by Ingrid Burkett, Knode, outlines the building blocks for Place-based Impact Investment in Australia, including possibilities for some early funds. The intent is both to illustrate the potential and also to serve as a call to action to explore and develop the opportunities for this type of approach to produce genuine financial, economic and social outcomes. The approach deliberately provides both a financial perspective and the conditions for successfully achieving impact in communities.

This briefing from the Audit Commission considers the potential benefits for local authorities of using payment by results (PbR), the risks involved and how to mitigate them.

At a time when PbR is high on the political agenda, the briefing sets out to help councils understand what it entails, and whether it is right for their circumstances. As most schemes are at an early stage, the Commission has examined the issues that local commissioners should consider if they are to use PbR successfully, drawing on some national and international examples.

The briefing suggests that there are five principles that any PbR scheme needs to meet if it is likely to succeed. These are:

– a clear purpose;
– a full understanding of the risks;
– a well-designed payment and reward structure;
– sound financing; and
– effective management and evaluation.

This Talking Points publication, from PwC’s Public Sector Research Centre, provides an approach to measuring social impacts and looks at practical steps to achieve wider adoption of Payment by Results (PbR) schemes across government and the public sector.

Deepening spending cuts and sluggish economic growth is driving Government to do things differently. Engaging and incentivising voluntary and social enterprises to tackle social issues and improve outcomes for vulnerable groups is a key part of the Big Society programme.

Government has embarked on a number of pilot PbR programmes. The expectation is that PbR will deliver new and enhanced services to address social needs that, in turn, will lead to better outcomes and consequently reduce public exchequer costs.

In order to understand whether these outcomes are achievable it is important to understand how social impacts can be measured, monetised and traced to actual reductions in public sector activities and/or expenditure.

The 2012 study reports from Eurosif (the European Sustainable Investment Forum) detailed figures against the most common sustainable and responsible investment strategies adopted by European investors and shows that each of these has outgrown the overall market since 2009.

This paper by Uli Grabenwarter and Heinrich Liechtenstein summarises the main findings from research supported by IESE Business School and the Family Office Circle Foundation, based on interviews with more than 60 impact investors. The paper defines impact investing, identifies the diverse investors and how they have succeeded or failed and explains why the popular assumption that impact investing involves a trade off between financial gain and social impact is wrong.

A growing group of investors around the world is seeking to make investments that generate social and environmental value as well as financial return. This emerging industry of impact investing has the potential to become a potent force for addressing global challenges. But how might it succeed or fail? Will it take the next five to 10 years? 25 years? Or will it not happen at all?

This report by Jessica Freireich and Katherine Fulton for Monitor Institute examines impact investing and how leaders could accelerate the industry’s evolution and increase its ultimate impact in the world. It explores how impact investing has emerged and how it might evolve, including profiles of a wide range of impact investors. The report also provides a blueprint of initiatives to catalyze the industry.

The strategy was completed in January 2009 with lead funding and support from the Rockefeller Foundation. Funding was also provided by the Annie E. Casey Foundation, W.K. Kellogg Foundation, and JPMorgan Chase Foundation.