Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
potential of the market. To develop a clearer view on the market, common definitions, language and
frameworks are necessary.
7.16 As outlined in Chapter 4, there is broad agreement in the market regarding the core
characteristics of SII, however, less agreement on the next level of detail, the key attributes of each of the
characteristics. More importantly, there has been little discussion to date of where to “draw the line” on SII
in terms of thresholds or eligibility of the various attributes. Chapter 4 of this paper makes some
recommendations but further discussion is needed, on an international level, to develop a common
agreement. To that end, international organisations, such as the OECD, can provide a continued forum for
debate.
7.3.2 Building the necessary data infrastructure
7.17 Policy makers can help in raising awareness and understanding about social impact investment
by supporting systematic research and data collection. However, while a growing number of industry
reports have been supported, not enough attention has been paid to date on supporting the necessary data
infrastructure needed to develop standardized data reporting and collection processes. These are critical for
building the evidence base for SII and the groundwork needs to be laid for this as early as possible.
7.18 More and coordinated data collection is needed to more effectively monitor developments in the
market. Data collection processes which allow for wider comparability, including across countries, would
also be useful (Addis et al, 2013). There are data collection efforts within individual organizations and
some broader pilot efforts but to date there has not been a forum for discussing how to standardize data
collection globally. The OECD expert meetings, which took place during 2014, were a start in this
direction as the meetings brought together people involved in data collection efforts from a number of
countries and focused on how to move the agenda forward in a coordinate manner.
7.19 As noted in the section above, consensus is first needed on definitions to enable the building of
an agreement on a common framework for data collection. A commitment of resources is then needed to
invest in the necessary infrastructure to collect transaction level data. Trusted intermediaries will play a
critical role in facilitating that data collection. The questions revolve around who should fund and also who
should manage that data infrastructure. Finally, models and systems will be needed to analyse the data to
provide the necessary evidence on what works.
7.20 It is however important to bear in mind that data collection should not become an end in itself
and the purposes for data collection need to be a priori clear. The bulk of systematic evidence on SII will
likely come from private data sources in earlier stages of market development. Fostering the collaboration
between the different organisations collecting SII data through in surveys, polls and other approaches is
important. While reaching a common understanding about definitions is vital, agreeing on a methodology
to collect comparable cross-country data could provide the evidence base for a better understanding of the
SII market. It can also help in the analysis of the role that policymaking can play in this area.
7.3.3 Primary impact measurement
7.21 SII targets the delivery of social outcomes at the same time as targeting financial returns (at least
a return on capital): one without the other does not qualify as SII. Therefore the need for effective, robust
and repeatable measurement of social outcomes is critical for social enterprises and investors. However
developing effective, robust and repeatable measurement of social outcomes is easier said than done, and is
certainly not as simple as calculating annual profits, especially when targets are part of the process (as in
the case of SIBs). The social outcomes selected, measured and evaluated affect how attractive the
enterprises is to financers, the business model used, how its practices encouraged or discouraged, internal
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