Note: This is an abridged version for ImpactAlpha. For all 10 tips, please visit this article on Medium.com.
At the end of 2022, our impact investment firm Candide Group celebrated moving over $200 million of client capital into more than 110 social justice-focused companies, funds, and organizations since our inception. But what was the actual impact of those impact investments? That’s the question my team and I spent more than two years seeking out answers to, culminating in our first-ever comprehensive public Impact Report.
As Director of Impact, here are my top three tips for designing meaningful impact measurement and reporting processes that serve all stakeholders — not just those providing financial capital.
Tip 1: Embrace messiness
Honestly, I don’t particularly love the oversimplification inherent in the term “impact measurement” because it brings to mind a yardstick in which one length may be objectively longer (i.e., better) than another. As an RIA that works across industries, sectors, geographies, asset classes, and cultures, we know there is no “one size fits all” approach to impact measurement and management.
No single investee solution is “better” than another. Bringing solar power and energy to Indian Country, expanding homeownership to build generational wealth, building worker-owner opportunities for those creating healthy meals in urban food deserts, reclaiming land for stability and healing… all are needed to transform our society into one that provides dignity, opportunity, and safety for all communities.
So, rather than leaning on a single existing impact metric framework to externally “rate” the companies and funds we have investment relationships with (and set siloed goals around certain metrics), we created a custom survey that gave respondents the agency to identify the dimensions of impact unique to them: capturing the nuances and potential opportunities to deepen impact in its many flavors.
Our ethos at Candide is that those most proximate to the communities they serve and the issues they work to solve are also most likely to make a real, lasting impact. They know their impact best; we’re just here to bring visibility to it and support when called upon. So, the work of listening, researching, and experimenting with the amalgamation of data points we call impact metrics throughout the social investing field is both art and science to us. And that’s what makes it particularly worthwhile: the constant opportunity to learn and grow from the ingenuity of impact makers and the communities they serve beyond neat boxes to tick.
Tip 2: Center mutuality
Data is a powerful tool that can be used as a vehicle to help our investees advance their goals and increase their impact. As the intermediary between investors and investees, we want to challenge the traditional power dynamics and false binaries of “giver” and “receiver” often assumed in investment relationships.
Finance has been a tool of pain, oppression, and trauma to poor and working-class people as well as Black, Indigenous, and other racialized communities in the US and the Global South. Impact measurement is an opportunity to interrogate impact investing practices from all angles and is critical to how we hold ourselves accountable to communities. For example, does how we collect data reinforce historical power dynamics between financiers and entrepreneurs, or does it build bridges for more equitable, dynamic relationships? Are we sharing impact insights as marketing materials for financial intermediaries or as evidence of what’s possible when we center the frontline communities driving social change?
We want to contribute to a new reality where all communities can thrive, sustain, and innovate — leveraging finance as a tool of empowerment rather than a weapon of extraction. We deeply trust the people we direct investments towards and want to always be conscious of not overburdening investees with irrelevant/mundane/excessive reporting requirements. They’re busy doing more important work in the world.
That’s why, in the past, we simply collected updates verbally and did our best to support impact where we could. At the same time, with clarity from an intentional J.E.D.I. (justice, equity, diversity, and inclusion) strategic planning process, we concluded that as Candide’s portfolio grew, so did our role in the ecosystem to continue unlocking capital from the field to the investees we believe in.
In impact data collection and reporting, centering mutuality means working to transform investor and intermediary practices to be more transparent and less extractive. This data collection has been an experiment that we approached with curiosity and openness, creating space to learn where we can concretely help investees deepen their impact when that support is requested.
As a token of gratitude and acknowledgment of the time and effort for participating in our survey, I created and sent a tailored 1-page impact synopsis to each investee, which they were then welcome to use in their data rooms, with other investors, or wherever they might find it useful.
Tip 3: Align methodology with your core values
We decided it was time to pilot a comprehensive impact measurement project with this primary goal: stay accountable to our investees with internal impact indicators we can track and support over time. As a full team, we went through a year-long strategic planning journey that helped articulate our core values. Here’s how we thought about each value in the context of an impact measurement process.
|Values||How this value shows up in our day-to-day work||How we wanted to embody this value in the context of impact measurement|
|SHIFTING INVESTOR PRACTICES||Challenging shareholder primacy and conventional definitions of “risk” and “return” in finance, as well as promoting alternative multi-stakeholder models. Re-imagining the tools of finance that were designed to support extraction. Structuring investments to promote increased community wealth-building and self-determination.||Striving to be non-extractive (i.e. provide more value than we take).Steering clear from “impact-washing:” (i.e., not just characterizing every investee with one person of color on their leadership team as “diverse” Being specific and intentional.)Providing something uniquely valuable to respondents in return (i.e., creating custom impact 1-pagers for them to share with other prospective investors).Embodying collaboration over competition (i.e., sharing the process and methodology with the field instead of making it “proprietary.”)|
|UNLOCKING & DIRECTING THE FLOW OF RESOURCES||Facilitating the flow of capital from wealth holders toward BIPOC communities and climate solutions.Ensuring that investors who share our values can express them through action.Sourcing and researching social impact investments that meet investor goals and real community needs.Providing in-depth diligence memos in accessible language highlighting impact storytelling as seriously as financial data presentation.Striving to ensure all stakeholders involved in our investment processes have a positive experience from start to finish.||Asking respondents explicitly: what are your impact goals? How might we support you in achieving those goals?Linking to free resources, like HR policy templates, in the survey itself. Providing respondents with impact collateral they can use in their marketing materials.Making custom impact presentations for investor clients who may want to reinvest.|
|COLLABORATING WITH COMMUNITY STAKEHOLDERS||Designing for community engagement and accountability in decision-making.Using media access to tell the finance story of a community stakeholder advocacy issue (with consent).When called upon, collaborating with movements to make the tools of finance more accessible to social change actors.||Prioritizing self-reporting, where participants have the agency to name the identities and experiences that matter most to them. Clarify terminology in both the survey and report to ensure it’s accessible (i.e., including gender non-confirming as an identity and a link to educational resources for those who may be unfamiliar.)Accurately showcasing the community stories participants want to tell, not just what we’re excited about.|
Methodology matters, especially in the context of a growing field like impact measurement and management. With the increased attention to DEI, one important point we want to draw attention to is the lack of clear standards in the field around labeling a company or fund as “BIPOC-” or “women-led.”
To our disappointment, the bar is generally low. While some firms may choose to consider any team with at least 30% underrepresented individuals “diverse” (in our view, inflating the appearance of real diversity, equity, and inclusion in impact reporting,) we made the decision to get granular, asking for and sharing out exact percentages from our survey.
Remember, values represent intentions. Operationalizing these intentions is a practice that takes experimentation and grace. Aim for integrity and progress, not perfection.
Again — an impact report is more than a marketing and communications asset: it’s a portal for accountability and building relationships (see, for context, “Accounting for impact at Candide, MicroVest, Echoing Green and other investment managers“). This is true with our respondents (investees) and our internal full team, clients, and external ecosystem partners.
Broadly speaking, “impact” refers to the tangible and intangible contributions to improved realities on the ground for people and the planet. For us, this means approaching impact as a journey rather than a destination — embracing what emerges rather than just settling for a goal that may have been set under an outdated context.
While we’re proud of and humbled by this journey so far, what fuels us each day is the possibility of learning, experimenting, and modeling even deeper impact at all levels… right alongside the organizations we proudly support. We‘re excited to keep experimenting with others in the ecosystem.
Jasmine Rashid is director of impact at Candide Group.
Disclosure: The information contained in this document is intended for educational and information purposes only and should not be considered investment tax or legal advice or a recommendation to buy or sell any particular security. Certain information has been provided by third-party sources, and, although believed to be reliable, it has not been independently verified, and its accuracy or completeness cannot be guaranteed. Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this document and are subject to change. The views and opinions are those of the author as of the date of publication and are subject to change at any time. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Candide Group is under no obligation to update this information after the date of this publication. An investor should consider the investment objectives, risks, charges and expenses of any financial product carefully before investing. Investing involves various risks, including loss of principal. Charts and graphs provided herein are for illustrative purposes only. For more information about Candide, please see our Form ADV, Part 2A. For your convenience, this post may contain hyperlinks to websites and servers maintained by third parties. Candide Group does not control, evaluate, endorse or guarantee content found in those sites. We do not assume any responsibility or liability for the actions, products, services and content of these sites or the parties that operate them. Your use of such sites is entirely at your own risk.