Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
Figure 7.1. WGIM Guidelines for impact measurement
Source: WGIM (2014)
7.26 The measurement of primary social impact is important for the market functioning (so demand
and supply can more effectively communicate about return expectation and results) and has been the focus
on impact measurement efforts to date. However, a better understanding of the broader or “secondary”
social outcomes (spillover effects and positive externalities) and how social goods are delivered is also
needed to fully determine the impact of social impact investment and assist policy decision making. As
highlighted in Chapter 3, social outcomes can range from an individual to a society level. Also, the
efficiency of interventions can either be at the individual level or more systemic. In addition, as discussed
in Chapter 5, actions in one social area can have positive or negative spillovers in others and therefore need
to be taken into account in a systemic approach. The next section addresses this broader approach.
7.4. Evaluation of Broader Social Impact Investment Outcomes
7.27 The need for better evaluations of social impact investment outcomes for informing decisions in
the area of SII, and its regulation, cannot be understated. What works can have long lasting effects on
people’s lives, and is part of the picture that determines the need for costly future social interventions. Yet,
there are too few good quality evaluations suitable for informing market participants and policy makers
about ‘what works’, and most importantly ‘how’ new policies and social innovations might be
implemented.
7.28 While the context in each country is different and therefore the approaches will vary, we have
outlined three key areas which might both make the market function more efficiently and help to evaluate
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