Social Finance Topical Interest Group

The Social Finance Topical Interest Group (TIG), established in 2016, is part of the American Evaluation Association (AEA). It brings together evaluators, investors, and organisations interested in linking financial returns with social and environmental impact. Its aims are to enhance awareness of social finance evaluation, develop tools for assessing social returns, and strengthen evaluation capacity across sectors. Members promote evaluative thinking in social finance and advocate for rigorous, evidence-based approaches to assess social outcomes of investments.

Purpose and audience

This guide targets evaluators new to social finance, providing an introduction to its principles, tools, and evolving role. It highlights how evaluation can help measure and understand the social and environmental outcomes of investments. Since the 2022 AEA conference themed “New Actors in Evaluation”, progress has been made in integrating evaluation into investment analysis. The report serves as a foundational resource for evaluators and practitioners seeking to connect measurement with impact-oriented finance.

What is impact investing?

Impact investing involves investments made with the intention of achieving measurable positive social and environmental outcomes alongside financial returns—the “double bottom line”. The Global Impact Investing Network (GIIN) defines it through three criteria: intentionality, positive social returns, and measurable outcomes. The United Nations Development Programme (UNDP) links these investments to the Sustainable Development Goals (SDGs). The global market for impact investing exceeds US$1 trillion, reflecting growing institutional and individual investor engagement.

Social impact ecosystem

The ecosystem comprises investors, investees, intermediaries, regulators, and support organisations. Investors include development finance institutions, foundations, pension funds, and private investors. Investees are mission-driven enterprises using market-based solutions to address social or environmental issues. Intermediaries such as investment banks and advisory firms bridge the gap between investors and investees, facilitating transactions and structuring deals. Regulators, including the European Commission, are increasingly formalising standards and disclosure requirements. Supporting organisations such as the UNDP, OECD, GIIN, and the European Venture Philanthropy Association (EVPA) contribute through standard setting, research, and capacity building.

How is impact investing different from ESG and CSR?

Impact investing focuses on achieving measurable, positive outcomes. In contrast, Environmental, Social, and Governance (ESG) investing integrates these factors into business models to manage risk, while Corporate Social Responsibility (CSR) encompasses philanthropic and ethical practices within companies.

What is impact measurement and management (IMM)?

IMM identifies and manages both positive and negative effects of business activities on people and the environment. GIIN emphasises aligning measurement with an organisation’s goals to maximise social benefits. While financial measurement is standardised, social outcome evaluation remains less developed, requiring evolving methodologies.

Terminology and history of impact measurement

Social impact measurement overlaps with evaluation but uses different terms—such as IMM in finance and Monitoring and Evaluation (M&E) in development. The field emerged from responsible investment practices of the 1970s–1990s and grew rapidly after the Rockefeller Foundation coined “impact investing” in 2007 and established the GIIN in 2009. Since 2016, frameworks like the Impact Management Project and SDG Impact Standards have shaped the discipline, with growing engagement from foundations and development institutions.

Impact investing principles and decision-making frameworks

Key frameworks include the International Finance Corporation’s Operating Principles for Impact Management, UNDP’s SDG Impact Standards, and the Impact Management Project’s Five Dimensions of Impact (what, who, how much, contribution, and risk). These tools help investors align strategy, governance, and transparency with measurable outcomes. Standards remain largely voluntary but are increasingly referenced across global markets.

Measurement approaches

Theories of change and logic models underpin social finance design. The IRIS+ system, managed by GIIN, provides standardised metrics to promote comparability and transparency. The Harmonised Indicators for Private Sector Operations (HIPSO) and Joint Impact Indicators (JII) align measures on jobs, gender, and climate. Lean data methods, such as those developed by Acumen, use mobile technology to collect stakeholder feedback. Challenges include attribution, data quality, and cost relative to investment size.

Impact valuation

Impact valuation translates social and environmental outcomes into financial terms. Methods such as Social Return on Investment (SROI), Return on Sustainability Investment (ROSI), and Impact Weighted Accounts (IWA) assess the monetary value of social benefits relative to costs. These help investors quantify broader externalities and integrate impact into financial decision-making.

Verification/Certification

Verification provides assurance of adherence to recognised standards. Firms like BlueMark and The Good Economy assess alignment with frameworks such as the IFC Principles and the SDGs. Certification systems, including the B Impact Assessment and 2X Global’s gender-focused criteria, enhance credibility and accountability in impact claims.

Intersection of evaluation and social impact measurement

Evaluation complements social finance by introducing systematic approaches to determine value and effectiveness. Since 2016, collaboration between evaluators and investors has strengthened the use of theories of change, developmental evaluation, and systems thinking. Evaluators contribute through stakeholder engagement, identifying material outcomes, and assessing unintended effects. Integrating evaluation principles supports evidence-based decision-making and enhances impact accountability.

Additional resources

Key resources include Impact Frontiers, the Impact Management Platform, and the Oxford Impact Measurement Program. Academic and training institutions such as Wharton, Duke University, and the BEAM Exchange provide further education and research. The AEA’s Social Finance TIG offers ongoing learning materials, webinars, and community connections to advance evaluative practices in social finance.