Impact Ventures UK (IVUK) is a social investment fund focused on supporting social enterprises working with disadvantaged communities in the UK. IVUK’s methodology to assess potential investment opportunities has been evolving since the creation of the fund in 2012.
Investors invest into companies and organisations with the intention to generate measurable social impact alongside a financial return, need to pay attention to both financial and social outcomes; and the investor’s ability to make rational and well-informed decisions rests upon their knowledge across these two fronts.
As IVUK grew, it developed procedures and analytical tools to assess both the financial and impact qualities of investment opportunities. As the processes to capture the impact side are generally less established than the financial ones, IVUK decided to review its own impact assessment methodology through an Impact Audit.
In the spring of 2017, Investing for Good performed an impact audit, based on our proprietary methodology, to establish how well IVUK was performing against best practice, and to provide concrete recommendations of how to improve their processes to grow their impact.
What we did
Based on our Good Investor guidelines and following established auditing principles, Investing for Good :
- Studied the fund’s internal investment processes (based on The Good Investor investment steps), rating them against best practice and set criteria
- Verified the application of those processes in practice, focusing on an internal review of documents and staff interviews, as well as a validation of these with a sample of existing investees.
- Provided concrete recommendations on how to improve IVUK’s investment process
After a detailed review, we produced a comprehensive report, outlining areas that IVUK excelled at and identifying areas for improvements. Through our concrete and practical recommendations, IVUK now has a clear set of actions and a plan to further improve its impact investment process, as well as guidelines on how to better support investees measure their own impact. These will enable the IVUK team to have more rigorous tools and guidelines to evaluate impact when making investments and to better measure the impact of its investment in the long-run, helping them become best-in-class in the sector.