Impact Capital Measurement

Approaches to Measuring the Social Impact of Program‑Related Investments

A report commissioned by the Impact Capital committee at the Robert Wood Johnson Foundation shares approaches from some leading foundations for measuring social impact of program-related investments (PRIs) in the social sector. The Monitor Institute’s 2009 report predicted that in the next five to 10 years, assets invested for social impact could grow to $500 billion, representing almost twice the total annual philanthropic dollars given away in the United States. Considering this large allocation of funding, as well as the intention for impact investing to advance a philanthropy’s mission while generating social and/or environmental good—more than ever, foundations are interested in measuring the social impact of investments.

There are several challenges associated with measuring the social impact of PRIs, including inconsistent use of language; lack of common measures in the social sector; and lack of quality data. Using information from a literature scan and interviews with leading experts on PRI investing, the report recommends the philanthropic sector take the following steps when considering how to measure the social impact of its mission investments:

  1. Identify and review the leading and promising approaches to measuring the social impact of PRIs;
  2. Analyze the relative strengths and weaknesses of these approaches and identify any cross-cutting issues; and
  3. Understand how these examples and insights can inform the philanthropic sector’s explorations about measuring the social impact of PRIs.

Impact investing is in its early stages, and as such, is still developing approaches for measuring its social impact. Rather than helping to choose a nonexistent perfect methodology, the author illustrates possibilities and limitations for the philanthropic sector to create their own approaches to measuring impact, and hopes to generate future discussions within the field.