Over the years, impact investors, incubators, accelerators and facilitators, collectively referred to as Social Enterprise Support Organizations (SESOs), have met with challenges pertaining to measuring their social impact and aligning their impact parameters to their organizational goals. Part of the difficulty is the fact that a majority of the players, especially incubators and accelerators (I&A) deal with early-stage enterprises. As a result, I&A must be dynamic about their metric expectations for different stages of innovations, because, in most cases the intended impact of an innovator begins to reflect only after years of scaling.
Villgro, as an incubator of social enterprises, faces similar challenges. In 2014, Villgro began piloting frameworks by aligning enterprise level information around definitions used in core IRIS metrics, as recommended by ANDE. We spoke to other SESOs in India, and findings are presented in a white paper, specifically shedding light on processes and activities centered on social impact related information exchange between SESOs and corresponding enterprises.
1) Integration of ‘Impact’ and investment/portfolio management
For most impact investors and facilitators, the social impact person or team works very closely with the investment or portfolio team. Such instances are not to be seen in most I&A, although they are beginning to recognise and fix the lack of organisational structure in this regard.
2) Streamlining exchanges for measurement
In SESOs with fairly efficient information management systems, frequency of information exchange is streamlined and agreed upon. Expectations of specific metrics are usually penned down at the outset of the association, as part of the investment / incubation agreement.
3) Standardisation of metrics
Across the board, financial and operational metrics are standardised, whereas SESOs unanimously acknowledge that social impact metrics have to be dealt with on a case by case basis. Critical qualitative metrics on the lines of ‘Theory of Change’ are also promptly collected by most SESOs.
4) Donor reporting and confidentiality
Information assimilation and donor reporting in general is not a challenge because metric expectations are set beforehand and agreed upon with funders. In addition, all the enterprise-specific information that goes public is done so only after consent of the enterprise/investee concerned.
Apart from a conclusion that impact investors/funds and facilitators are more proficient in managing their data than incubators and accelerators, this white paper makes some key recommendations and presents what could be a future direction for impact measurement by SESOs in India.