Establishing an Impact Investment Fund Evaluation Framework

Echoing Green and the Rockefeller Foundation have identified a capital gap between investors and early-stage social enterprises, in part, due to misaligned expectations on social impact and models to assess risk. Therefore, the Capstone team was tasked to develop an operational framework to guide impact-investing funds as they assess the social impact potential of a given investment opportunity. 

The team's final report views a theory of change, or as they term it, an Impact Blueprint, as essential in aligning investor and investee expectations around social impact and impact risk mitigation. An Impact Blueprint links an enterprise’s intentions, resources, and activities to defined and measurable outputs, outcomes, and impacts by understanding the causal relationships and assumptions embedded in each. In building and interrogating an Impact Blueprint, we believe early-stage impact investors can mitigate impact risk—the risk that an investment won’t achieve the intended social impact.

In the report, the students make the case that an investor’s pre-investment assessment of social impact potential must begin with the enterprise’s Impact Blueprint. Through an extensive literature review and numerous practitioner interviews, the team identified seven (7) elements that impact investors can assess in order to mitigate impact risk and increase the chance for successful implementation of the Impact Blueprint. While the seven elements represent common criteria used in assessing social impact potential, they are not intended to be as an exhaustive list. Further, these are factors that should be considered in addition to elements that a traditional venture capitalist would consider when assessing investments such as financial viability.

Press Release:

Echoing Green blog (http://www.echoinggreen.org/blog/impact-blueprint-building-tool-assess-potential-impact)