Impact Investors ‘In the Dark’ on Impact - Report

Meaningful evidence of impact has eluded impact investors and their investees, according to an analysis by global social purpose development Not for Profit, Keystone Accountability.

The study called What Investees Think found that investees, those who receive the funds, report not really knowing their impact, which in turn suggests that investors are also ‘in the dark’.

The survey of 330 investees provided anonymous feedback on seven leading impact investors.

The survey respondents said that they don’t really know what their social and environmental results may be, that they have no idea what investors do with the reports that they prepare for them and note that investors do not provide sufficient resources or expertise to enable investees to meet their reporting requirements.

Other findings include:

• The weakest areas have to do with value adding through non-financial support and transparency, while the strongest areas are investor’s technical competence, efficiency and credibility
• While investees indicate inadequacies in current non-financial support, they also express a strong demand for it
• Across the board, respondents allege that impact investors would benefit from being more proactive in soliciting advice and guidance from their investees

“Their feedback is frank, accurate and – as participating investors all testify – can prove effective in driving improvement,” the Finance and Operations Manager with Keystone Accountability Kai Hopkins said.

“Creating an authentic and constructive discourse about the investor-investee relationship in this emerging field needs investee feedback, not just industry-agreed standards and external rating systems.”

The Forward to the report is delivered by Jed Emerson who is widely recognized as an international thought leader on impact investing, performance metrics and sustainable finance.

He is co-author of the book, Impact Investing: Transforming How We Make Money While Making A Difference, the first book published on the topic of impact investing.

In his Foreword to the Keystone report Emerson described it as the first effort to bring such a perspective to the emerging field of impact investing.

“What lies ahead of us is to build upon this initial work, to follow the lead of those seven funds that committed to this first process of professional reflection and inquiry, in order to improve their own activities as well as those of the field.

“This first report is no doubt the first of many and it is welcome in that only by providing a consistent mechanism for investees to be heard will our efforts attain the depth of impact and generate the full, blended value they have the potential to create. And we will only be able to attain this goal – to generate that value—when the power of the investor is complemented with the perspective of the investee,” Emerson said.

Click here to access the full report.

Click here to access the Executive Summary.