Based on our extensive engagement with other impact measurement and management (IMM) practitioners over the years, most of the impact data being collected is not actually informing decisions. It tends to be gathered mainly to satisfy investors’ requirements, and often ends up gathering digital dust. This is because IMM infrastructure was built for the investors that own or manage the capital, rather than the enterprises and non-profits that do the work. Indeed, those organizations often find that arduous reporting requirements can actually constrain their ability to create the impact they’re expected to measure. Too often, this reporting does not benefit them, or the communities and individuals they serve.
When organizations fail to manage their impact, they miss opportunities to increase the breadth and depth of this impact, weakening the performance of impact investing as a sector.
In March, almost 100 advanced IMM experts — including asset owners, asset managers, standard setters and measurement experts — gathered in Montreal. During a breakout session facilitated by the authors of this piece, we asked ourselves three questions which led to the five takeaways in this article:
- How can we help investors make more informed and intentional decisions to improve impact?
- How can we support business and non-profit leaders in their value creation processes by integrating impact decision-making throughout their strategy and operations?
- How can we more closely align IMM with investee processes, capacity and operations to inform improvements in practices that enhance impact?
In the article below we’ll highlight several actions we can take today, as asset owners, asset managers, measurement experts or impact-producing entities, to right-size IMM and make it fit for investees.
1: Treat investees as drivers of impact, not just data sources
Business and non-profit leaders building products and services that benefit people and planet got into this work to address real challenges. They don’t need others to convince them that impact matters. In fact, by the time they receive IMM mandates from an investor, they are often already measuring and managing for impact, through models designed around the needs of the communities they serve. They see firsthand how their work interacts with the wider systems around them. Imagine what becomes possible when asset owners and managers consult their investees, and adapt their frameworks accordingly. Investees often care more about impact than anyone else, and IMM can be a resource that supports that commitment rather than a tax on their time.
The current system extracts from these organizations: their time, their staff capacity, their goodwill. And it too rarely gives anything back. Sometimes an investee receives a benchmark they can use, a helpful peer insight, or a reflection on how they are doing compared to others. But more often, their data simply goes into a report that feeds into a fund’s portfolio management system, never to surface again.
This is not only extractive, it’s also inefficient and redundant.
IMM could instead treat investees as the core partners and drivers of impact that they are, not just as data sources. When IMM professionals and investors close the feedback loop and co-create IMM metrics and data collection systems with these organizations, they target the type of data that can help them make better-informed decisions about how to deliver broader, deeper and more equitable impact. This kind of data collection can actively enhance impact, building on what is already working in an organization’s core model to unlock greater depth and scale. Investors are well placed to encourage and enable this collaboration.
2: Reduce the burden of data collection
More data does not equal more impact. This seems obvious, yet the default mode of impact investing has long been accumulation: more indicators, more frameworks, more reporting cycles. The implicit logic was that rigor required volume, and that volume meant credibility. In fact, the opposite is true; we risk drowning in data and losing relevance.
IMM is at its most powerful when it is driven by the decisions an organization needs to make, rather than by pre-defined indicators or reporting templates. When every data point traces back to a question that impacts the investee’s operations, the surveys and data forms get shorter and the data actually gets used.
It also helps to be clear about which decision the data serves. For instance, the information an investor needs to decide whether to invest (e.g., the depth and credibility of the impact thesis, who the investee serves, and the risks that could threaten its impact) is a larger, one-time ask which fits naturally in due diligence. Ongoing monitoring can then be lighter: a small set of indicators tied to decisions the investor and investee will actually make together during the investment, such as where to focus support, when to adjust strategy, or whether the impact thesis is holding up.
Too often, the depth of due diligence carries over into quarterly reporting, and that is where the burden builds up. It is important to be clear about the tradeoffs (costs and benefits) of capturing and using the associated data. In practical terms: Apply a utilization screen to IMM by identifying the question/s you are trying to answer, and what a “good enough” level of evidence looks like. Map your IMM metrics to the decisions they will inform and to what is actually being used. Letting go of data that isn’t used frees up the investee’s time and attention to sharpen its remaining indicators, so each one is key to improving understanding and informing decisions.
3: Align data requests with investees’ capacity, maturity — and limitations
A seed-stage venture working with its first 50 customers or a non-profit with a staff of three people is not in the same place as a growth-stage company or large non-profit with a proven model and significant human and financial resources available. Expecting the same data sophistication from both doesn’t make the seed-stage company or small non-profit more rigorous; it distracts them from core operations and likely reduces the impact they can create.
But right-sizing is not only about volume: It is also about asking for the right kind of data. A seed-stage venture or small non-profit can tell you who it is reaching, share what customers or beneficiaries say about the product, and assess early signals of whether its model is working. It usually cannot tell you about long-term outcomes or impact it can clearly attribute to its work, because that evidence does not exist yet. Asking for it produces hypotheses dressed up as evidence. IMM at small non-profits or early-stage companies should instead aim to be a fast-learning engine, testing key assumptions and generating quick feedback, with more rigorous outcome measurement growing alongside the model.
Guidance calibrated by stage of growth and type of capital would encourage a data collection process better aligned to investees’ realities and limitations. Investees should be empowered to advocate for IMM approaches that evolve with their model. That starts with involving them in selecting metrics and co-creating data collection approaches that align with their reality. It also means lowering the cost of collecting data. Before building new portals or bespoke reporting systems, leverage the operational software, native workflows and lightweight tools investees already use to automate data capture and analysis. For early- and growth-stage teams, integrating data collection into existing processes can help make IMM practices sustainable.
4: Raise awareness of IMM requirements that don’t improve impact
Where there is money, there is power — and there are also demands. IMM requirements should be open to negotiation, and funding conversations are an opportunity to co-create shared expectations on impact.
Asset owners answer to trustees and public bodies, and they carry the reputational risk if their investment decisions lead to harmful or disappointing outcomes. Asset managers answer to their own reporting obligations. Donors operate within frameworks set by their boards and funding priorities. Under current practices, the path of least resistance has been to accept whatever IMM requirements come attached to a check. This has shaped a generation of impact measurement standards and systems that serve capital providers more than they serve enterprises, non-profits or communities.
IMM practitioners often work in this chain, setting and serving IMM requirements. In solidarity with those delivering the impact, we can thoughtfully push back on IMM requirements that don’t improve impact, by educating and influencing capital providers and standard setters. When a requirement doesn’t add value, we can and should say so. When a framework doesn’t fit the stage or sector of portfolio investees, we can propose one that does. And when we’re building IMM systems, we should ask ourselves: Does this serve the people closest to the problem, or does it serve the people furthest away?
That said, the institutions with the most leverage in this system (asset owners, asset managers and other standard setters) have the greatest opportunity to model right-sized IMM, and the most power to shift practices in that direction.
5: Pay for the full IMM system while demonstrating its value
IMM isn’t free, but many investors have been pretending it is.
Investees are expected to collect data, report on it, and continuously refine their approaches with little or no additional resourcing. Technical assistance is offered intermittently, if at all. The “data pipeline” from collection to reporting and action requires sustainable investment, in people, systems and time.
When the time investees spend on IMM is funded, it opens the door to capacity building, hands-on support and learning — including learning from failure. Learning is not just a byproduct of IMM, it is an outcome worth funding in its own right. Learning means making sense of what the data shows, including the parts that reveal that a strategy isn’t working, and using that understanding to change what happens next. It comes from structured reflection, honest documentation of what failed and why, and time set aside to synthesize patterns across a portfolio, not simply from collecting more numbers. Without it, IMM produces reports but doesn’t change decisions, and investees end up repeating mistakes that could have been avoided if they had captured and responded to these learnings in the first place.
Asking investees to measure their impact should also involve an offer to help them do it well, financially and technically. Smaller companies and non-profits will likely need more support, while larger, more established companies and non-profit organizations may have systems and resources already in place.
IMM is not free, especially at the early stages, but it has value — as we learned in the Founders in Focus survey. Done well, demonstrating impact can create real value for the investee itself, providing a market opportunity, not merely a reporting burden. It’s time for investors and IMM practitioners to understand investee needs more deeply than we currently do. That starts with understanding what they already do, then asking how demonstrating impact can support them directly: Does it build more loyal customers, reach more beneficiaries equitably, help attract further investment, sharpen understanding of client/beneficiary and market needs and context, or reveal potential for product or market expansion? The strongest IMM is tied directly to the investee’s underlying economics and core drivers, so that performance and impact reinforce one another rather than compete. Approached this way, IMM stops competing with the investee’s other needs for time and resources, and becomes part of how it evolves to achieve its mission.
Evolving toward IMM that works — a call for action
The convening last March that led to these takeaways generated both honest assessments of the shortcomings of current IMM practices, and a drive to right-size them. It was clear to all of us that our systems have too often rewarded compliance over impact, extracting more from investees than they’ve given back. And we all shared the conviction that when IMM is designed for real-world use — aligned to actual decisions, and integrated into core operations rather than bolted on as a reporting layer — it sharpens strategy, improves outcomes and unlocks funding.
Looking ahead, we see an opportunity for IMM to go further still: not just making non-profit and business models work, but helping them evolve. IMM rooted in systems and equity asks who gains and who bears the costs. It can help investees use resources more efficiently, share value more fairly across their supply chains, and collaborate with peers and communities rather than compete with them. This wasn’t part of the Montreal conversation, but we believe it’s the next question the field needs to take on.
Good IMM is one of the sector’s most powerful levers — not because it produces more data, but because it produces sharper understanding, better-informed decisions, and a clear view of an organization’s impact and financial performance, even when the data is imperfect. Done right, it creates value, drives collaboration among investees, investors and communities, and is worth the effort and money it requires. That’s why we’re calling on investors and other funders to empower IMM professionals to measure what matters, collaborate, innovate and lead.
Who’s with us? Click here to register your interest in following and informing the ongoing conversation on right-sizing IMM.
These takeaways represent a synthesis of perspectives from the breakout session at the inaugural IMM Convening for Advanced Practitioners, and continued collaboration after the event, including feedback from Laura Budzyna (Beyond Measure), Catherine Dun Rappaport (Social Finance), Kusi Hornberger (IDB-Lab), Luan Mans (while at Acumen, now at BII), C. Sara Minard (Columbia University, Manarine LLC), Belissa Rojas (Fondaction Asset Management), and Dan Waldron (Acumen).
Additional contributors to the session in Montreal include: Lillian Alexander (Prosper Global Ventures), Malika Anand (Community Investment Management), Thomas Hannaford (Power Sustainable), Laura Hollod (Hollod Impact), Marie-Josée Parent (Raven Impact Foundation), Laurentia Perrin (Common Approach to Impact Measurement), Kate Ruff (Common Approach to Impact Measurement), Luba Shabal, Ember Infrastructure, and Becca Shepherd (Independent Consultant).
Julia Mensink is Director of Impact at Acumen; Heather Esper is Director of Performance Measurement and Improvement at the William Davidson Institute at the University of Michigan.
Photo credit: AndreyPopov
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