Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
the role of SII in meeting social needs, and thus the extent to which it should be supported through policy
incentives. The first area is the development of relevant social outcome measures, that capture quality of
life measures and their changes in both in the population (to identify need), and amongst recipients of the
social intervention (to identify effectiveness). Second, contextual data, including general socio-economic
conditions in households and communities and the levels and nature of general and specific social
interventions, is required to develop appropriate controls for evaluation models. Third, robust and timesensitive
evaluations of policies, and/or aspects of policy innovation to more broadly inform
implementation decisions, are needed (OECD, 2014f).
7.29 Some suggested steps to build this evidence base include:
Broader social outcomes of each intervention should be defined, including expected spill-over
effects.
These social outcomes should be measurable independently of the policies’ target measures, and
include at least one distributional measure to retain a check on the ‘inclusivity’ of the intervention
effect (see 7.4.2).
Compulsory evaluations should be incorporated into the publicly funded interventions, publically
incentivised forms of SII, or as part of formal regulation practices; and encouraged in independent
forms of SII (this may require the development of a business case).
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Evaluations need to be methodologically rigorous, and so support with the implementation
of or methods for evaluations should be available as part of the development of a SII
market, by sponsored independent researchers, or a formal regulatory body.
Timing of all social intervention evaluations should be predetermined and based on when
social returns to interventions can be expected. More than one evaluation might be needed,
as the same intervention may contribute to more than one outcome over time (see 7.4.3).
Data techniques, such as data matching to administrative sources and national surveys, could be
facilitated by governments and independent groups to provide access to contextual data in order to
and improve the quality and efficiency of evaluation processes.
7.30 It is worth noting at this stage, that there is a trade-off between the need for timely policy
interventions and the weight of - and wait for - the most rigorous evidence. Because it is important to act
on social need in a timely way, there should be an expectation for ‘learning on the job’. Risks associated
with such an expectation can be limited first and foremost by piloting social interventions, by undertaking
independent evaluations on untested aspects of the intervention, and preparing a recipient-focussed (pilot)
‘exit plan’ with appropriate funding in place (OECD, 2014f).
7.4.1 Evaluating cost effectiveness or cost-benefit ratios?
7.31 Many governments may not have capacity and systems in place to measure cost-effectiveness of
public service delivery, however, social impact investment can present a strategic opportunity for initiating
the collection of such data. Clearly, these types of approaches would need to build over time with a balance
being found between effective measurement and effective market development.7.32 Two types of
evaluation methods are potentially relevant for assessing SII interventions: cost-benefit analysis (CBA) and
cost-effectiveness analysis (CEA) (see OECD 2014f for a more detailed discussion of these methods).
Cost-benefit analysis (CBA) enables evaluators to compare the costs of a policy or intervention with its
118 © OECD 2015