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How much do you love your children?  

How big an impact has the arrival of wifi had on your life?  

Can you tell whether your current city councilor is better or worse than your previous representative?

I am sure you could answer these questions with conviction.  I am also pretty sure there would not be too many numbers or graphs in your answers.  For example, in telling me how much you love your children, you would not start by telling me about their grades at school if they are young, or about how much they earn if they are adults.  Those are important pieces of information in the arc of our lives, but they are not essential to our relationships. You would certainly not want to use such information to compare between two different children, or between your children and your neighbours’ children.

Most of the things we truly value cannot be measured or counted or weighed.  I cannot tell you whether the effect that Yeats poetry has on me is output or outcome. I can describe it and discuss it and value it highly. But I can’t put a number or a label on it.

The things of greatest value do not sit still for us to determine their length and breadth.  They are never finished, and they are extremely complicated – like love and freedom and courage.  They can’t be accounted for by a balance sheet or described in a log frame.

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Because we call ourselves investors, we want to do what investors and accountants do with their generally accepted accounting practice, and their internal rate of return calculations. We want to say: “look we can also count and measure our achievements and compare them with others.”  We are as good as you, let us into your world. 

The discourse around impact measurement is pretty universal. “Understanding how to effectively measure and manage impact is critical to ensuring impact investors are achieving their desired impact results to address the world’s most pressing social and environmental challenges.” Accordingly, each investment should set out its intended impact, and these should be measured and reported.

I understand this: If you are investing in a company delivering primary health care, you want to know about the number of children vaccinated and maternal mortality rates and patient visits per day.   If you are an investor in micro finance you need to know about average loan size, and default rates and the gender of your borrowers and what they are using the money for.  These things are extremely important, - both to the sustainability and growth of the company, and to assure investors that their funds are being efficiently used for the intended purpose. 

 I am not opposed to measurement, but I do want to ask: what really counts?  It is perhaps only in this 21st century, when all value has been financialized, that we would want to pin down and measure our contribution to changing the world.

Someone said to me recently.  If you have to measure the impact of each investment, then you will only ever invest in things that can be measured.  That is both true and sad.  It’s like saying you will gauge your love for your children by their grades at school.

When the abolitionists sets out to abolish slavery, or the suffragettes to get voting rights for women; when trade unions emerged from a series of strikes in South Africa in 1973 and gave the anti- Apartheid movement and the struggle for workers’ rights new momentum: You can be sure that in none  of these cases was there a theory of change, a set of measurable targets or the pre-Windows version of a reporting template.

You can also be sure that in most cases the leaders had a plan; that they met regularly to discuss  progress And if my experience of political organisation is anything to go by, you can be sure that there was robust and sometimes angry discussion. 

The impact investing movement also has its roots in a great and worthwhile ambition:  to mobilise capital to (help) address the scourges of inequality, poverty, poor infrastructure, health, education and unemployment.  And in doing so to change the very nature of the financial system.  In its own sphere, it should be as insurgent as trade unions or the suffragette movement have been in theirs.  By focusing only on the projects whose out comes can be measured, the vision is curtailed, and the ambition is lost.   

I would like to see impact investors setting themselves goals like: 

We are going to disrupt global corporations’ dominance of food supply chains and retain vastly more value in the developing countries.

We are going to successfully develop forms of corporate ownership and control that directly challenge the “maximizing shareholder value” concept as the norm for successful business. 

We are going to reverse the trend of tech investors investing almost exclusively in expatriate owned businesses in Africa.

Then the evaluation process would be much more like the suffragettes and the trade unionists.  Investors would be asking themselves these questions:

What did we set out to do?

What happened?

What lessons have we learnt?

How can we do it better next time?

Yes, it will be necessary to run the numbers on individual investments. And yes, it is necessary to show value for money.  But asking the question: “We are trying to change the world. How are we doing?”  requires that we look up from those tables and engage with the nuts and bolts and levers of social change. It is messy and difficult, and much more exciting.

By all means let us measure what can be measured. But let us not be ruled by it.

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This is the third in a series of impact investing provocations. You can find the others at the links below

Here https://www.linkedin.com/pulse/impact-investing-provocations-cedric-de-beer/

And https://www.linkedin.com/pulse/mind-sdg-funding-gap-cedric-de-beer/