News & Insights
Five Lessons on Investing for Impact
Tara Murphy Forde, Vice President of Impact and Strategic Initiatives at Global Partnerships, shares her view on the importance of industry engagement and highlights some of her high level takeaways from the Aspen Network of Development Entrepreneurs (ANDE) Metrics from the Ground Up conference.
By Tara Murphy Forde, Vice President for Impact and Strategic Initiatives
“As we approach nearly a decade of using the term ‘impact investing,’ what can the industry learn from microfinance, particularly when it comes to impact measurement, evidence, and expectations?” For those of you who are familiar with Aspen Network of Development Entrepreneurs (ANDE), it won’t surprise you to know that this was one of the questions posed during last week’s Metrics from the Ground Up Conference in Washington, D.C. It is this type of honest, critical, and forward-looking dialogue that motivates Global Partnerships’ (GP) participation in the network.
As a nonprofit impact investor, GP has been providing working capital loans to social enterprises for over 20 years. We got our start in microfinance, which taught us a thing or two about what it means to pivot and refine an investment strategy based on emerging results, evidence, and insights. We have called on that experience, and the experience of others, as we’ve refined our impact methodology and expanded into new sectors and geographies. In turn, it was a pleasure to sit on a panel at last week’s event with Kelly McCarthy from the Global Impact Investing Network and Laura Foose from the Social Performance Task Force to share learnings and discuss implications.
Two issues we discussed on the panel were alignment and transparency. Given the varied and complex nature of the problems we look to address, and the often nascent stage of the solutions we support, it is understandable that impact investors and practitioners alike will rely on “theories of change” versus clear and decisive evidence. That being said, we need to be honest about what we know and don’t know, and find strategic partners who share our desire to learn and improve over time. We also shared some concrete lessons about what impact investors can do better moving forward. We can:
Get clearer on what we can measure (often outputs), but not stop there. We need to define the outcomes and impacts we look to deliver and strive to measure them, even if only via directional data at first.
Be careful not to get too narrow, too fast. While definition is important, we need to remain open to, and employ methods for, capturing unintended and longer term outcomes.
Develop a deeper understanding of context, so when we analyze data, and evidence begins to emerge, we can interpret relevance and better understand outcomes.
Invest in the talent, systems, and practices that will increase our capacity to deliver the desired impact.
Remember to always keep the client at the center. If we use data to better understand client needs, behaviors, and motivations, we can protect against certain risks while gaining valuable insight into key impact and business drivers.