Measuring Matters: Impact Investing
To convey my initial dominant feelings on the subject, if it can be measured, it should be measured. In particular, I am thinking about this and the future of impact investing.
We know how well the business system inspires investment. Numbers mean everything. Numbers create competition for dollars and ideally result in greater progress. People naturally are seeking returns, either at a low risk, low return rate or a high risk, high return rate, depending on what kind of person they are. They WANT to invest! They must have a way to compare the companies to each other, and project what they believe will be a success. These businesses NEED the equity that outside people provide. Otherwise, financing would be almost entirely through debt, a burdensome dilemma. Thus, as the necessary incentive so that they can reach their greatest potential, their one way to market themselves is to measure themselves… in unique ways, showing their strengths, highlighting the milestones, listing their accomplishments, emphasizing the problems overcome along the way, acknowledging the market of the future, and projecting their future contributions.
Impact investing is still in its nascent stages. But how well the ball gets rolling depends upon how well we can develop systems to measure (and if possible, standardize measurement of) social impact. We need to match this NEED (funding for social solutions) and this WANT (desire of people to invest for both monetary returns and social returns). People want to do this. If the investment system of the business world is at all indicative, even in a small part, of what this system could do, can you imagine the potential?
I know it is difficult, and I know there comes the question of when over-measuring may become more of a problem than a help. I also know that some things really cannot be measured realistically in the here and now, and that describing quality vs. quantity is a perpetual thought provoker in this field of work. But, for the sake of this system which gets me so excited, impact investing, I believe we need to concentrate our efforts at creating a measurable world of social progress. Once impact investing becomes an attractive, reliable place to put our money, organizations the world over will be so much more enabled and we will be able to reach places before beyond our reach.