Collaborative Approaches to Impact Measurement and Management
By Madeline Moerk, Member Experience Coordinator, Mission Investors Exchange
As the use of mission investing tools has increased in private foundations, principals are increasingly measuring the social and environmental benefit of their investments in addition to their grants. At Mission Investors Exchange (MIE), Impact Measurement and Management (IMM) has consistently been one of the most in-demand program topics for mission-driven asset owners as they seek to optimize for impact performance in addition to financial returns. Led by a team of foundation IMM executives and industry experts, MIE hosts regular informal conversations to coalesce the ideas, goals, standards, and best practices of IMM capital allocators, field builders, and consultants. These IMM gatherings act to elevate the visibility and expand the use of impact measurement and management practices, integrate IMM across foundation portfolios, and scale the practice of IMM across the impact investing landscape.
MIE recently convened its members to discuss the importance of field-wide collaboration through showcasing three leading IMM organizations and initiatives, Impact Frontiers, the Operating Principles of Impact Measurement, and BlueMark.
Mike McCreless, Executive Director of Impact Frontiers, a peer-learning and market-building collaboration that supports impact management, described its free, do-it-yourself style curriculum for foundations as well as a more extensive cohort experience. In these small groups, participants learn a practical methodology to build their own robust impact scorecard and rating system that aligns with their theory of change. The framework does not stop with impact. It integrates the developed impact rating system with financial ratings to optimize current and future portfolio decision-making.
Impact Frontiers also stewards the norms and consensus-building practices pioneered by the Impact Management Project (IMP), such as the 5 Dimensions of Impact (i.e., What, Who, How Much, Contribution, and Risk). Mike McCreless spoke to Impact Frontiers’ current focus on building field-wide buy-in for the new Impact Performance Reporting Norms, which he hopes will reduce the burden on impact report preparers and users through the creation of a standard reporting methodology.
During the gathering, Eliisa Frazier, Vice President of Impact Capital Initiatives at Low Income Investment Fund (LIIF), and an Impact Frontiers cohort participant, described how she was inspired to develop LIIF’s Impact-Risk-Profitability (IRP) Framework that centers impact in LIIF’s daily lending decisions. Eliisa emphasized that the IRP Framework is one tool to inform decision making and yet the real challenge is cultivating an organizational culture that understands how to prioritize impact and act on it.
Joohee Rand, the Global Impact Investing Network’s Head of Secretariat and Director for the Impact Principles, emphasized that impact investing is now a mainstream market – $1.571 trillion USD as of 2024 – and, as the field continues to scale, practitioners must come together to elevate standard processes for impact management and adopt common practice to ensure that it maintains its integrity.
Furthermore, Joohee encouraged impact investors to build their own IMM practice in alignment with the Operating Principles of Impact Management (the Impact Principles or OPIM), an end-to-end framework of industry best practice, sign on as a Signatory and then advocate for others to commit. Impact Principles Signatories publicly join the global community working together to improve investor confidence and the field’s integrity for impact management practice. The hope is that over time more foundations will sign onto OPIM or support asset managers that they invest in to align. The nine principles of OPIM span the entire investment process from strategic intent through exit, and also require periodic independent verification, by firms such as BlueMark, to promote impact transparency and credibility in the growing market.
Sarah Gelfand, President of BlueMark, described how BlueMark helps organizations objectively assess their IMM practice and offers tailored recommendations to improve and align with industry-wide best practice. While it can be intimidating, independent verification is crucial in order to maintain the integrity of the field as it scales, preventing impact washing, while simultaneously working to create more information transparency and comparability in the market.
With ample endowment resources and the privilege to ably consider impact risk, foundations are uniquely positioned to be early adopters of IMM, advocating for stronger, more effective, and transparent impact measurement and management practices within their own organizations, and in the field at large. The hope is that if foundations test, iterate, and prove the benefits of IMM, retail investors will see the benefits of measuring and verifying their social and environmental impact and follow on in broadly adopting IMM practices.
Join the conversation with fellow MIE members and IMM experts at our next IMM gathering, July 23, where the group will take a look at IMM with a thematic focus on Ownership Lens Investing. Register here.
