Understanding Impact in Social Investments 7
Understanding the impact of our portfolio As well as using outcomes to help us understand the impact of an individual investment, we have started to use outcomes to help us understand the impact of our portfolio. We do this in four steps.
1. Categorising outcomes
2. Tracking progress
4. Creating feedback loops
We tag outcomes according to whether they are:
We track progress against these outcomes at least annually. Social Investment Managers use the existing reporting arrangements and schedule to consider the extent to which the outcomes are on track to be achieved by the end of the investment. We don’t ask for any additional reporting or information.
The data is useful at spotting trends in the portfolio, but it doesn’t tell us why those trends are happening. So a crucial final step is to use this data to prompt conversations among the social investment team, the wider organisation and externally to understand why we might be seeing differences and consider what this means for us as a social investor, in terms of:
• Social: the social or environmental impact created by the investee. • Organisational: impact on the resilience of the organisation working for social or environmental change. • Market: wider and structural impact on the market. These categories are useful in distinguishing between outcomes with different levels of ambition, timescales and, often, the influence that the investee has in achieving them. Organisational outcomes are more likely to be short-term and more within the control of the investee to achieve. By contrast, a market outcome is likely to be longer-term and the investee may have limited influence over whether it is achieved, being just one actor within a complex system. Progress score -2
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Introduction
Our approach
3. Analysis Progress is translated into a score (-2 to +2 based on alignment to progress) that allows us to analyse progress across the whole portfolio, or sub-portfolios. While the average progress scores are not particularly meaningful in themselves, what is interesting is to compare them over time, or to other parts of the portfolio. This allows us to understand which parts of the portfolio are seeing more progress relative to others.
• Our practice and whether we are setting outcomes appropriately and using the most appropriate investment structure.
It is also useful to overlay financial risk – generated by the aforementioned risk assessment matrix – and investment financial performance at exit.
• Generating learning which we can share internally and/or externally.
-1
Off track
Somewhat off track
How we’re doing this
Understanding the impact of our portfolio
0 Unknown/NA What we’ve done so far
• Opportunities for support through Funding Plus and other support. • Common external challenges where additional grant or social investment could help.
1 Mostly on track Looking ahead
2 On track
