Impact Investment Data ‘Woeful’

Not for Profits and government agencies that provide social services have been accused of failing to collect adequate data, which is creating problems for impact investment measurement.

Board Director of Big Society Capital and Triodos Bank in the United Kingdom, David Carrington, told the inaugural Impact Investment Summit that without base figures it’s difficult to measure impact.

“One of the things which we found in the UK, and I know we’re not alone in this, is that the quality of data available about existing services… or existing needs, is pretty woeful,” Carrington said.

“And therefore if we’re trying to demonstrate the huge positive outcomes of impact, your baseline is very often pretty rotten in terms of data.

“We’ve had one or two examples where the aspirations have been very clear, the outcomes have been well defined, you’re asked ‘what’s the present situation you’re comparing with’, and you look at it and you find the data has been assembled badly, the systems are not talking to each other.”

Carrington said that data was the number one area where impact investment could be improved through technology, in response to a question in a Summit plenary session.

“Until we’ve got better focussed data, both about what we’re trying to change and what we’re trying to achieve, then ok we can rely on my storytelling but eventually you’ve got to have some evidence, and we won’t have any evidence until we have data,” he said.

Social Impact Investment Designer, Andrew Tyndale, told Pro Bono Australia News that the lack of data makes it difficult to determine financial returns for investors.

“Primarily the data is lacking in the [government] agencies and the Not for Profits who are currently providing social services and social activities,” Tyndale said.

“So when an impact investing intervention comes along and it’s seeking to improve the outcomes, it’s very difficult to demonstrate a change if you don’t have a quality data baseline.

“The intervention itself is likely to be well-managed and well-funded for measurement but… often the impact investing interventions are paid on a success basis where it’s compared to say a 15 per cent increase or a 7 per cent decrease against the baseline.

“And if the baseline data is inaccurate then it’s very difficult to establish the outcomes.”

Tyndale said the lack of data will impact social benefit or impact bonds, such as the Newpin Bond, most significantly as they are pay-for-success contracts.

“[They] are a relatively small part of the impact investing space… but increasingly these methods of procurement by government are going to become one of the primary tools within impact investing,” he said.

“And unless government starts collecting data straight away, it’s going to be very difficult or very expensive for them to create data which provides a baseline, which then in turn can be used to compare how the new interventions are succeeding or not.

“So it’s not so much a problem now but it’s going to become a problem as more and more of these social investment bonds are created.”

The inaugural  Impact Investment Summit in Sydney was hosted by Impact Investing Australia which brought international keynote speakers and Australian experts together.