This article was originally published in the October 2012 issue of Alliance magazine. The original article can be found here. For more information about subscribing to Alliance, please visit www.alliancemagazine.org/subscribe.
Good data for big capital
By Sarah Gelfand
Last month’s issue of Alliance Magazine included thoughtful pieces that discussed both the promise and the limitations of data for philanthropy. We read the contributions with great interest at the Global Impact Investing Network (GIIN), a non-profit dedicated to increasing the scale and effectiveness of impact investing, and would like to add our observations on the key role that data can play in mobilizing additional resources for the solution of social and environmental problems.
At the GIIN, we believe that data collection and reporting is essential to a successful impact investing field, and that foundations have a valuable role to play in nurturing this.
Impact investments are made with the intention to generate positive social and environmental impact alongside a financial return. The burgeoning impact investing market has the potential to steer significant capital to complement philanthropic grant funding. It is already putting capital to work in sustainable agriculture, affordable housing, affordable and accessible healthcare, clean technology and financial services for the poor, among other areas.
As Larry McGill noted in ‘Data for Good’, traditional for-profit investors are deep in the age of ‘Big Data’. These investors are accustomed to widely available data on financial performance. If we expect them to meaningfully integrate social and environmental considerations in their investment decisions, they must be able to similarly access data on the non-financial performance of impact investments.
Further, in order for these data to be useful, they need to be reliable and comparable. Many investors are prone to discount the integrity and credibility of social and environmental performance data – in large part because such data have, up to now, generally used customized, and therefore non-comparable, metrics.
Sarah Gelfand is Director, GIIN. Email SGelfand@thegiin.org. Melody Meyer also contributed to this article.