For those of you who know the Case Foundation, we’re bullish on the impact investing movement and the power of private capital for public good. While still a relatively small market, impact investments are surging, with some seeing a trillion-dollar market potential by 2020. Against that context, we do a lot of thinking about what is standing in the way of tipping significantly more interested investors to activated investors.
Education plays a key role in building momentum within any movement. And the Case Foundation has dedicated significant resources to shining a spotlight on the what, why, who and how of impact investing – check out the Short Guide! Over the course of the last year and a half, I have had the opportunity to deepen that work by helping to develop what we are calling the Impact Investing Network Map – a visualization of the relationships between investors, funds and companies in the field. As part of this effort, I have met with academic institutions, foundations and users and providers of data, all of whom are serious about scaling the impact investing ecosystem. And one barrier to scale rose quickly and consistently to the top – impact investing data is simply not accessible enough.
By data, I mean the details about who, what, where and how in impact investing. This information is essential to power tools, like the Network Map and other resources that can spur more investment and drive greater efficiency in the impact investing market. These details can be hard to locate if you’re not familiar with the space (to be fair, even if you are familiar with the space) because information is widely dispersed, when it is available it’s rarely transparent and it’s difficult to synthesize trends across the field because there’s no fully standardized language and metrics for reporting.
Alright, we know the data is an obstacle – let’s get real about solving it. From what I have seen and heard during the Network Map discovery process, the data exists and there is interest in improving accessibility – we just have to find the right levers to pull. Right now, we can find a good deal of information in reports from individual funds and investors like Unitus Seed Fund, K.L. Felicitas and F.B. Heron Foundation; from groups like ImpactSpace who are committed to greater public access to information; in press releases like this one announcing social enterprise, Workit Health raising $1.1 M; and even on Twitter – try searching “raised #socent #impinv.” Knowing that the data exists, how can we start to better put it in the hands of those we want to activate?
Let me posit three steps that will make data more accessible to significantly advance the movement:
Invest in Transparency as a Global Public Good
When discussing the challenges to making direct investments, interested investors, foundation and family office staff all shared an interest in knowing where and how peers were moving capital, with whom they were co-investing and what they could learn from that activity. Additionally, across the field there was a call for more specific and accurate transaction-level and performance data. Currently, large, well-vetted datasets cannot be accessed to this degree of granularity. There’s a gap in efforts to paint a complete picture of the impact investing field. The gap makes it more difficult to understand where the market is growing, who is active in that growth and where there’s a need for more support. For individuals and organizations thinking of throwing their hats in the ring, the opacity of information can pose a real barrier to understanding how their priorities fit within the current structures. We have an opportunity to build better onramps through improved transparency.
In addition to the institutions seeking tools, in speaking with organizations that maintain large datasets within the field, two keys to unlocking more transparency arose: The need for stronger technical capacity to create the tools necessary to get permissions from relevant parties to share more information. And the need to engender a broader sense of comfort and responsibility throughout the field to be more open about impact investments (while respecting legal obligations). I use the term responsibility because we are still in the early days of this investment field. Greater transparency into who is active, in what geographies and industries, deploying which forms of capital and achieving what type of impact and financial returns will greatly benefit the depth of the growing knowledge base and drive further improvements in the field’s infrastructure. Transparency itself – just committing to publishing and sharing data – is a public good that allows interested parties to have access to information that can inform decision-making.
Recognize that Transparency isn’t Enough; Accessibility of Data is Essential
If you think of a new entrant in the impact investing field as being on a journey, then a big part of the initial adventure is getting her bearings in a complicated network of corporate, academic, nonprofit, government and professional groups that each has a key role and a key set of priorities. Their distinct goals and perspectives on how impact investing plays into their communities can lend itself to silos of information that inevitably support their priorities spanning policy initiatives, financial performance targets, returns on investments, etc. What this means is that there is a good deal of analysis and reporting on impact investing trends to date, but that it is still difficult for new entrants to only access pieces of what is a much fuller picture.
Beyond reports and white papers, there are groups doing a fantastic job of aggregating investment data within their networks – providing a rich resource for their members. This data can include investor and enterprise characteristics in addition to a record of impact and transaction-level information. It is understandable that this data would be limited to members who are already connected to supporting networks. So the question I have is: How do we get better data to our new entrant who isn’t already tuned in to other resources? How do we expose her even earlier in the journey to a more complete story of the who, what and where of impact investing?
Commit to a Standardization Process
If we can both make the data in the field more transparent and make it more accessible, what next? From what I have learned through reviewing dozens of impact investing data-powered platforms and tools is that the next hurdle is standardization of language and metrics.
We know that individual organizations have unique priorities and interests and there is nuance in social impact objectives. For example, if two social enterprises work on building wells to provide easy access to clean drinking water for underserved communities they may describe their services in very different terms because while their primary output may be similar their missions may be different. One may seek to improve health and sanitation, while the other may work to educate women and girls by decreasing the time it takes to complete work primarily done by women. It’s important to capture these distinct missions; however, if one of these companies appears on multiple platforms collecting information on social enterprises and impact investing, they may be characterized differently on each platform due to disparities in terminology characterizing social impact – compounding the potential for confusion in understanding the basic similarities and differences in services provided by social enterprises.
To illustrate the point, here are three examples of data-backed platforms with unique value add to the field:
- iPar: a platform created by the Caprock Group designed to facilitate better reporting and analysis of impact investments.
- ImpactBase: a part of the GIIN, an online search tool designed to locate active impact investing funds.
What you’ll discover in looking at each site is that while the platforms overlap, they provide different services, and sometimes measure different things. Looking closely at the themes and building blocks, sectors and impact themes respectively, the language reflects a similar spirit in recording social and environmental impact, however their terminologies diverge. This lack of standardization can make it more difficult to share underlying data collaboratively. There are efforts to address this challenge; for example the Social Data Commons (SODA) a group launched at SOCAP, has contributors that are actively building better connective tissue between platforms using technology, and others are working to map platform taxonomies and metrics between tools. With better standardization, we can show that what appear to be attempts at comparing apples and oranges are actually more like comparing red delicious and granny smith.
Bank on Data-Informed Decision Making Being the Norm
As millennials we’ve lived most of our lives with information at our fingertips. From something as simple as picking a restaurant and deciding to bike, metro or Uber the distance, to something as complicated as searching for a new home, we expect all of our basic questions will be answered in a few clicks. And, I don’t think this expectation is unique to my generation. Just as Google, the Metro Transit Authority and Uber have taken steps to translate and aggregate portions of their unique datasets in one easily accessible location to better serve the end user, the impact investing field can empower our end users with better data.
As we move into the next few years, which many predict will bring further growth, we have the opportunity to pair that growth with greater accessibility to information, decreasing opacity around performance and coming together around standard language and metrics. We can help provide individuals and organizations with better onramps into impact investing through better education about the activity in the field, so they can more easily determine if and where they fit in. We can be smarter about using data to power the next stages of growth.
Article by Sean Tennerson, who started at the Case Foundation (www.casefoundation.org) in October 2012 after moving to D.C. from California where she graduated from UC Berkeley with a B.A. in Economics. Moving to D.C. was Sean’s first time ever on the East coast. She moved here to pursue her interest in domestic and international Economic development, and her love of moving to and seeing new places and people.
As the Program Officer Sean loves having the opportunity to contribute to the Foundation’s social innovation efforts. Her favorite thing about her position on the grant making team is the chance to work with and build relationships with the grantees by participating in their events and meeting their volunteers and the people they serve.
When not at work, Sean is usually out exploring D.C. She runs and does yoga, a hippy tendency she picked up at Cal. She also tries to flex her creativity muscles through drawing and crocheting, and is always working on improving her French skills.
