Editor’s Note
This article was adapted by EUVC from an original insight published by Better Society Capital.
How to measure social investment’s impact on resilience and growth
Understanding the impact of social investment requires looking beyond what happens to end users. Investors also need to understand what the investment changes inside the organisation receiving it: whether the enterprise becomes more financially resilient and whether it can grow its impact.
Better Society Capital’s enterprise-level impact framework provides a structured way to assess those effects. It combines the purpose of an investment, how the proceeds are used, and evidence of subsequent changes in resilience and impact growth.
Key takeaways
Enterprise-level impact measures what investment changes inside an organisation. It complements, rather than replaces, assessment of outcomes for end users.
Intent and execution both matter. The framework records why the organisation raised investment and how it used the proceeds.
Evidence should come from several sources. Better Society Capital’s pilot combined fund manager data, borrower surveys and public financial records.
A standard framework can improve comparability. It gives fund managers a clearer portfolio snapshot and a shared language for discussing resilience and impact growth.
What is enterprise-level impact?
Enterprise-level impact is the effect an investment has on the organisation receiving it. The focus is the enterprise itself: its operations, financial resilience and capacity to grow its impact.
This is distinct from the ultimate impact on the people an organisation serves. Better Society Capital presents the two as complementary. A stronger enterprise may be better placed to deliver outcomes, but measuring organisational resilience and growth does not replace measuring what changes for end users.
What the framework measures
The framework follows the investment from intent to organisational outcome through four connected questions:
What was the purpose of the investment? This captures why the organisation sought finance.
How were the proceeds used? This records how the capital was deployed.
Did the organisation become more resilient? This considers changes in the enterprise’s ability to sustain its operations.
Did the organisation grow its impact? This considers whether it increased its capacity to create impact.
Separating purpose from use of proceeds is important: the reason for raising capital is not the same as the way the money is spent. Keeping both visible makes it easier to assess whether the investment supported the outcome the organisation intended.
How the pilot tested the framework
Better Society Capital and Access – The Foundation for Social Investment piloted the methodology with five fund managers: Key Fund, GMCVO, Northstar Ventures, Big Issue Invest and Social Investment Scotland.
The pilot brought together three evidence sources:
fund manager data on the purpose of each investment and the use of proceeds;
survey responses from borrowers on how the investment affected their operations; and
publicly available financial data.
This combination allowed the pilot to compare organisations’ reported experience with changes visible in their financial records.
What the pilot found
On average, borrowers reported strong resilience and impact growth and generally attributed that growth to social investment. Better Society Capital also observed positive trends in borrower financials.
The methodology provided a clear, standardised snapshot of the participating portfolios. Fund managers said the framework was useful even when the findings did not surprise them: it helped them articulate what they had already observed in practice.
These findings reflect the pilot described by Better Society Capital. They are not presented as a substitute for assessing end-user impact or as proof that every social investment will produce the same results.
How fund managers can apply the framework
Better Society Capital outlined three practical steps for investors in charities and social enterprises:
Share enterprise-level data for each investment. Record the primary and secondary purpose, use of proceeds, the investee’s company or charity number, and the year of the initial investment so public financial records can be located.
Survey investees annually. Ask clients how the investment has affected their operations.
Gather the fund manager’s view. Ask investment or relationship managers to assess their clients, then compare their responses with those of the investees.
Used consistently, this process can create comparable information across a portfolio while preserving the distinction between an organisation’s intentions, its use of capital and the outcomes that follow.
What the framework can enable
Better Society Capital’s aim was to use the framework to support better decision-making and improve practice and performance across the social investment sector over time. It also planned to publish aggregated portfolio and partner data as a public resource.
The broader value is a shared measurement language. A standard view of purpose, use of proceeds, resilience and impact growth can help investors compare experiences, identify patterns and discuss what appears to support stronger organisations.
For related reading on connecting impact goals with investment decisions, see how venture funds can embed impact across the investment cycle.
About the original author
Gabriel Ng is an Investment Director at Better Society Capital. He leads on special situations, investment underperformance and exits, oversees the organisation’s approach to fund managers, and has worked on impact frameworks since joining in 2019.
Better Society Capital is a UK social impact investor focused on increasing investment in solutions to social issues and inequalities. Learn more about Better Society Capital’s work connecting capital with organisations seeking social outcomes and financial returns.
Source
This article was adapted by EUVC from an original article published by Better Society Capital.
