Assessing the impact practices of impact investments

If you’re an impact investor, how do you compare the impact of a fund restoring land in the US with a social business providing affordable healthcare in Kenya?

It might not be possible to compare which has the ‘most impact’, but it is possible to compare their approaches to measuring impact. By understanding this you can reach a more informed opinion on the risk of each organisation achieving (or not) their stated or intended impact.

The NPC’s Impact Risk Classification (IRC) is a light-touch and practical framework for comparing an organisation’s approach to impact against best practice, where an organisation could be any enterprise or fund with some degree of impact focus.

This framework encourages more methodological transparency of impact reporting to enable meaningful analysis of reported impact.

Investors can use the IRC to compare impact practice between investees and encourage improvement and greater transparency.

Investees (funds or enterprises) can use the IRC as a framework for improvement and to assess how close they are to best impact practice.

The benefits are:

• It can be completed in 1-2 hours per organisation.
• It can be based on public information (eg, website, annual reports), combined with investor updates or other impact data where available.

We hope it proves useful for a range of organisations and investors. Let us know what you think on Twitter @NPCthinks, or get in touch via info@thinkNPC.org.

The IRC was created by NPC in response to a commission from the KL Felicitas Foundation (KLF) to assess their broad impact investment portfolio.

KLF is a US-based foundation, set up by Charly & Lisa Kleissner in 2000, that has invested 100% of its $10m of assets in positive social and environmental impact investments.

This document illustrates how the IRC is applied to a number of KLF investees. A full report detailing the impact of KLF’s whole investment portfolio and broader activities will be published in early 2018.