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Report

IDS Evidence Report 222

Evaluation and Impact Investing: A Review of Methodologies to Assess Social Impact

Published on 1 February 2017

This report highlights the paradox within impact investing: the prioritisation of ‘social impact’ without prioritising ‘impact evidence’. The growth of metrics, ratings and certification-based approaches has sought to address this gap but this only goes so far, and there is a need for a more evaluative approach to assessing impact.

Drawing on the field of development evaluation, the report sets out five criteria for a ‘more evaluative’ way of assessing impact (impact, differential impact, plausible causality, aggregation, and accountability). The report then reviews a subset of more than 100 resources against these criteria and concludes that while there are some promising methods, each has different strengths and limitations in providing a more robust assessment of impact.

As such, the report warns that trade-offs need to be carefully considered, for instance between different methods that provide greater standardisation versus those that provide greater specificity – and the cost/benefit trade-offs for investors in using each approach. Furthermore, just one method is unlikely to be sufficient by itself and there is a need for more guidance, innovation and learning for investors on methodological choices and how best to combine and complement different approaches for assessing impact in a cost-effective manner. Without such innovations it will become harder for impact investors to differentiate themselves from the more orthodox investment industry.

Cite this publication

O'Flynn, P. and Barnett, C. (2017) Evaluation and Impact Investing: A Review of Methodologies to Assess Social Impact, IDS Evidence Report 222, Brighton: IDS

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Authors

Image of Peter O’Flynn
Peter O’Flynn

Research Officer

Image of Chris Barnett
Chris Barnett

Honorary Associate

Publication details

published by
IDS
authors
O'Flynn, P. and Barnett, C.
journal
IDS Evidence Report, issue 222
language
English

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Research themes
Inclusive Economies

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