This OECD report focuses on Social Impact Investing, a nascent but high-potential market aimed at generating measurable social benefits in tandem with investor returns.
“Social Impact Investment: Building the Evidence Base” uses data on social needs and spending in eight countries (the G7 countries plus Australia) to illustrate the gap social impact investing could fill in areas such as healthcare for the elderly, social housing or programmes to reduce recidivism.
The report sets out ideas for an international framework for defining and assessing social impact investment and discusses other elements that would be needed to further develop the market. As well as the scope for institutional investors to invest in social programmes in developed countries, the report examines how impact investing might leverage more resources for development in poor countries.
The report addresses some long-standing and widely recognised issues. Amongst them, is the need for properly defining and assessing the social impact investment markket and building a suitable evidence base to communicate its value:
- The social impact investment market is in the early stages of development and it is essential to work towards a precise common understanding of what is meant by social impact investment. This is important for policy makers, researchers and practitioners as well as for the overall development of the market
- Social needs have been increasing in many countries requiring both more efficient and more effective social service delivery. The extent to which any investment can make a social impact will rely on the type and extent of need across an array of social outcomes.
- A stronger evidence base is critical to increasing engagement in the social impact investment market and encouraging a global market to develop. However, the specific data requirements for each of the relevant players can differ. It is important to clarify these needs before embarking on a data collection exercise, especially given the challenges in collecting social impact investment data.
- It is important that the policy interventions are well targeted, transparent and well-coordinated with existing policies as well as with the market. Policies should also be consistent so that market players both understand the implications of the policies and have some visibility in terms of how long the policies might be in place.
- Social impact investment can potentially provide new ways to more efficiently and effectively allocate public and private capital to address social and economic challenges at the global, national and local levels. While these innovative new approaches will not replace the core role of the public sector or the need for philanthropy, they can provide models for leveraging existing capital using market-based approaches with potential to have greater impact. However, given that social impact investment is a nascent field, concrete evidence is needed in terms of its impact to date.
You can read the report in full here: www.oecd.org/industry/social-impact-investment.htm