Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
Cost-Efficiency Analysis (CEA)
Cost-effectiveness analysis is an alternative to cost-benefit analysis (CBA). The technique compares
the relative costs to the outcomes (effects) of two or more courses of action. (Better Evaluation, 2014b)
Impact Investing
Impact investments are investments made into companies, organizations, and funds with the intention
to generate social and environmental impact alongside a financial return. Impact investments can be made
in both emerging and developed markets, and target a range of returns from below market to market rate,
depending upon the circumstances. The practice of impact investing is further defined by the following
four core characteristics: i) Intentionality; ii) Investment with return expectations; iii) Range of return
expectations and asset classes; and iv) Impact measurement. (Source: GIIN website)
Market failure
Market failure is a general term describing situations in which market outcomes are not Pareto
efficient. Market failures provide a rationale for government intervention. (OECD Glossary of Statistical
Terms)
Mission-Driven Investing (MRI)
MRI is a term used to describe mission-related investments that are market-rate investments of
endowment funds that align with the social or environmental mission of a foundation. MRI can include the
use of social investing tools and sometimes including shareholder advocacy and positive and negative
screening. (Source: Rangan et al., 2011)
Non-profit institutions (NPI)
Non-profit institutions are legal or social entities created for the purpose of producing goods and
services whose status does not permit them to be a source of income, profit, or other financial gain for the
units that establish, control or finance them. In practice their productive activities are bound to generate
either surpluses or deficits but any surpluses they happen to make cannot be appropriated by other
institutional units. (UN, 1993)
Program Related Investments (PRIs)
Investments, which often take the form of loans, loan guarantees, or equity investments that are
derived from a foundation’s assets but count toward its charitable distribution requirement. Generally,
these investments yield below-market-rate returns for the foundation. (Source: INSEAD based on
Lawrence and Mukai, 2011)
Sample size
The number of sampling units which are to be included in the sample. In the case of a multi-stage
sample this number refers to the number of units at the final stage in the sampling. (OECD Glossary of
Statistical Terms)
Sample survey
A sample survey is a survey which is carried out using a sampling method, i.e. in which a portion
only, and not the whole population is surveyed. (OECD Glossary of Statistical Terms)
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