The call for more thoughtful evidence-use has recently hit a crescendo in impact investing, with high-profile actors showcasing methods for incorporating secondary research into due diligence.
This attention to research speaks partly to a growing awareness that much of the data that companies generate on their own fail to pass muster as impact evidence. As Jane Reisman, Veronica Olazabal, and Shawna Hoffman conclude in a recent analysis of impact investing trends, a review of impact measurement practices “finds that most are more akin to monitoring than the robust assessment of outcomes and impact.”
Information on service volume, customer demographics, hiring policies, and sourcing standards may be valuable for understanding how an organization works, but collecting and analyzing rigorous evidence of impact (i.e. the actual changes in people’s lives that are attributable to specific products and services) requires a degree of resourcing and expertise that few enterprises command.
This limitation is perfectly understandable — the businesses that impact investors support are not trying to be academic departments or think tanks, so it doesn’t make sense for them to attempt randomized controlled trials and meta-analyses. Consulting the findings that professional researchers have already published is often a far more logical and efficient approach to developing an evidence-based strategy.
Of course, drawing on published evidence does not provide the “after the fact” evaluation that financial indicators offer in commercial investing and business management. But, an impact management strategy that is informed by good research, feedback loops, and continuous improvement of impact-relevant company processes can be more useful than a retrospective assessment based on insufficient or irrelevant data.