An impact measurement framework to improve investment decisions

16th Nov 2019

An impact measurement framework to improve investment decisions

An impact measurement framework to improve investment decisions

Make improved and informed investment decisions with the Investment Impact Index™ – An impact measurement framework that makes investment visions a reality.

Historically the volume of data when measuring and managing impact has been a challenging, time consuming and expensive task.

Philanthropists and social impact investors alike have strived to make better investment and development decisions. With the aim of creating greater positive impact and ROI; however, they have been unsure of how to both measure and verify their true impact difference.

The goal of understanding what difference specific portfolio investments have truly made has always been present but the methodology didn’t exist, until now.

The importance of impact assessment, management and measurement

It comes as no surprise; social and impact investment have become a vital component for investors around the globe.

With that, it has become important that investors are able to qualify and quantify the social, economic and environmental changes that have occurred over a certain period as a result of their investments.

The difference a social or impact investment has made i.t.o. impact and return has been a challenge to measure but impact, whether intended or unintended, positive or negative must be measured and managed to confirm the value created for all intended stakeholders – specifically in terms of shared value and other forms of capital created, whether social, economic or environmental.

To effectively measure change and impact, investors need to make use of impact assessment methodologies and processes that allow them to;

  • Keep track of their investments, investment activities, outputs and outcomes
  • Assess actual vs. planned performance against specific investment objectives and targets
  • Confirm the viability, feasibility, effectiveness and materiality of their investment intent, mandate and strategy
  • Report on and against agreed and identified investment indicators
  • Articulate the changes that have occurred whether intended or unintended, positive or negative, for the intended stakeholders including the scale, depth and duration of the impact achieved
  • Identify what outcomes and impacts the investor are contributing to and how important the outcomes are to stakeholders, how many stakeholders experienced the outcome, what degree of change they experienced, and how long they experienced the outcome for.
  • Whether an investor’s efforts resulted in outcomes and impacts that were likely better than what would have occurred otherwise.
  • The likelihood and risk that impact will be different than expected.

Without a basic measurement framework and process, investments, investment portfolios and programmes will remain unsustainable and investors will have no insight into the value or impact (including the ROI) that resulted from their investments made.

Without effectively assessing, measuring and managing these investments, future decisions will have no set direction and no guarantee that impact and return will occur.

The solution to effectively managing and measuring impact 

To effectively address the lack of universal or standard impact assessment frameworks Next Generation developed a proprietary impact assessment, measurement and management methodology and framework, and supporting impact data reporting tool where impact data can be easily be uploaded, accessed, analysed and reported on.

By visualizing your impact data, through our reporting solution, built on our tested impact assessment methodology and framework, social and impact investors are capable of measuring the total extent of impact and return resulting from investments.

The Investment Impact Index™ (III™) is our trademarked impact assessment methodology and technology solution that has identified more than 25 dimensions of impact and 25 dimensions of return. The total return on investment achieved is calculated by effectively recording and verifying dimensions of impact.

The reason the Investment Impact Index™ (III™) was developed

The Investment Impact Index™ (III™) is an impact management and measurement methodology and framework and impact analysis and reporting tool. It is aligned to existing global standards, principles and frameworks to assist social and impact investors to better understand the real difference their investments made, while clearly identifying ROI.

It was developed over a period of ten years and extensively tested by investors and is based on a global need for:

  • A comparative impact assessment methodology that benchmarks and compares investment portfolios, focus areas and programmes
  • Supports feasible impact investment strategies and contributes to strategic investment decisions
  • Enhances and ensures efficient and transparent impact reporting
  • Contributes to effective impact due diligence, performance, management and measurement

By addressing the above and enabling investors to understand the real difference that their investments made, it unlocks the ability for investors to improve the way that they invest by making better, more informed, investment decisions going forward.

Improved and informed future decisions

The Investment Impact Index™ (III™) is a credible impact measurement framework. It provides an independent verification of impact and ROI achieved, while removing bias from assessments.

Through visualised data dashboards and reports, based on Next Generation’s impact assessment methodology and framework built over the last decade, our insights and analysis of impact will increase your stakeholder and investor buy-in by helping you to quantify, qualify and verify true impact and return on investment.

The Investment Impact Index™, structures impact data according to dimensions of impact, across investment themes and portfolios, providing a comprehensive overview and picture of impact achieved. This in turn allows the creation of organisational memory and baselines for future performance management by providing you with;

  • Supporting evidence
  • Insights into the effectiveness and relevance of investments
  • A cost benefit analysis of impact and ROI
  • Stakeholder impact visualization
  • An in-depth understanding of impact and return value chain

The Investment Impact Index™ (III™) confirms investment effectiveness which allows investors to have an overview of their entire impact portfolio as well as visualization of their efforts. In addition, investors have access to predictive future impact information.

The Investment Impact Index™ (III™), provides investors with actionable insights for the development of future sustainable investment strategies by providing valuable impact and return on investment data, documentation, reports and performance indicators, to effectively measure and manage past and future impacts.

Start making improved future impact decisions today

Our impact measurement framework and assessment methodology, the Investment Impact Index™ (III™), was developed and designed to address the lack of evidence that underwrites accountability for investments and the deficiency of regular and clear feedback.

With the use and implementation of the Investment Impact Index™ (III™), evaluating, measuring and managing the depth, breadth and scale of impact is now easier, more efficient, feasible and effective than ever.

It speaks to the commitment of investors to not only measure and report on social and environmental performance but to also be accountable through managing true future impact and ROI on investments made.

With this in mind; social and impact investors, donors, grantmakers, humanitarian aid agencies, social purpose organisations and philanthropists alike can start making their impact vision a reality and create future decisions that will have positive impact while creating shared value.