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Friday, May 27, 2011

SOCAP/Europe Preview: Measuring What Matters

By Diana Hollmann

Over the past several years, the impact investment sector has made significant strides in developing and standardizing metrics and measurement mechanisms. Those mechanisms make up the trio: “Pulse” (data management tool), “IRIS” (metric taxonomy) and “GIIRS” (rating system) have become part of impact investors’ core vocabulary. At SOCAP/Europe taking place next week in Amsterdam, the panel “Measuring what Matters” moderated by Ben Metz of ImpactAssets will shed light on measurement challenges, opportunities and latest developments in the metrics and measurement space.

Stephanie Nieman of B Lab will give us an update on the latest developments at GIIRS and share her insights from the comprehensive, on-the-ground testing of the GIIRS emerging markets impact assessment tool (the developed markets assessment has already been used by over 6,000 companies to date). Over the past several months, GIIRS staff visited nine countries around the world for tool's Private Beta Tour – 25 pioneer funds and their 200 portfolio companies from 28 countries participated in the first round of ratings, laying the groundwork for the official GIIRS launch in July. By then, any fund or company will be able to receive a GIIRS rating.

Supplementary to the trio Pulse, IRIS and GIIRS, David Bonbright of Keystone Accountability will introduce a potential addition to expand the trio to a quartet. Applying customer satisfaction principles to the social change sector, David developed the “Keystone Performance Survey: Social Investment” – a performance measurement tool collecting anonymous feedback from investees about how they view the performance of their social investor. (Full disclosure: I used to work at Keystone, and was responsible for the implementation of the survey and assessment of results).

Since its infancy in the 1960s, the customer satisfaction community has grown into a sophisticated industry. Today it is common practice that companies carefully listen to client feedback in order to continuously improve and stay competitive. While it has become common for social purpose organizations to also collect feedback from their constituents, it is often limited to data on social, environmental and/or financial indicators. Rarely do social purpose organizations collect performance feedback and less so in a standardized way so as to realize valid comparisons – either against themselves over time or against other like organizations. This despite the rigor of comparative data closely associated with effective performance management enabling learning and improvement in real time.

The “Keystone Performance Survey: Social Investment” builds on a field-tested questionnaire designed to collect investee feedback on the main areas of the investor-investee relationship including: the application and due diligence process, financial investment and non-financial support offered by the investor, the quality of communications and interactions, reporting, as well as general perceptions. Using a standardized questionnaire enables comparison over time for a single investor and – maybe even more importantly - comparison across a number of investors. This is an important prerequisite for gaining a better understanding of “industry standards” and for pinpointing areas of outstanding achievement and room for improvement.

At SOCAP/Europe, David will provide insight into the concept behind the Keystone Performance Survey as well as a first glance at the results of the inaugural run. More than 200 investees of seven pioneering investors (namely Acumen Fund, E+Co, Grassroots Business Fund, Grey Ghost, IGNIA, Root Capital and Venturesome) provided valuable feedback into how they view their investors’ performance. Venturesome opted to publish its individual survey results along with a comprehensive response how the data is used to draw lessons for improvements. Similarly, Acumen Fund and Grassroots Business Fund published results from individual pilot surveys they ran prior to the benchmarked version. They have converted feedback data into insights and have taken corrective action. Moreover, the survey triggered several of their investees to establish feedback mechanisms with their respective beneficiaries, which created a new feedback loop from beneficiary to investee to complement the communication between investee to investor.

As you can tell, some exciting developments are under way in the metrics and measurement space! The “Measuring what matters” panel is one among the more than 60 sessions at the first SOCAP/Europe taking place next week in Amsterdam. NextBillion will provide live coverage of the conference – so stay tuned!

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