2 Analysis

2.0 About Impact Analysis

Impact analysis is critical to being able to make good investment decisions. The analysis is considerably enhanced when backed up by an explicit methodology that adopts standard, objective processes where possible, and produces evaluative results.

The details of any particular methodology, including its scope and emphasis, will be determined by the individual investor, and will reflect that investor’s aims and strategy. However the key areas for attention when devising a methodology, and performing analysis, are a systematic attention to the impact plan, an assessment of impact risk and impact generation, and due attention to process.

2.1 Impact Plan

Work through the organisation’s impact plan. It is an integral part of the business plan, and must be conceived and articulated by the organisation as fully as any financial projections.

2.2 Impact Risk

Impact risk is a measure of the certainty that an organisation will deliver on its proposed impact (as detailed in the impact plan). The question implied is: How sure is the impact plan to work, and what is the risk that the impact won’t be generated? Assessment focuses on:

  • 2.2.1 Explicit

    Is the impact plan explicit in all particulars?

  • 2.2.2 Reasoned

    Does the impact plan present a compelling and well-reasoned theory of change?

  • 2.2.4 Integral

    Is the generation of impact integral to the organisation’s business and operations?

  • 2.2.4 Feasible

    Is the impact plan feasible?

  • 2.2.5 Evidenced

    Is there evidence to support the impact plan’s approach to impact generation?

  • 2.2.6 Evidenceable

    Will the impact be evidenced by carrying out the impact plan?

2.3 Impact Generation

Impact generation addresses the potential for real change that the organisation and the investment opportunity together present. Essentially: if the investment is made and the impact plan proves to be successful, how much impact stands to be generated as a result?

2.4 Managing the Analysis Process

Ensure analysis is well-managed, and that a designated “Head of Impact” is responsible for overseeing the process and results. Management includes attention to:

  • 2.4.1 Transparency

    Is there transparency toward investees regarding the analysis? Do investees know: what to expect; how and on what grounds they will be analysed; and how the process can be of use to them?

  • 2.4.2 Quality Control

    Are there procedures in place to review and improve the consistency of results? Is the system itself subject to regular review?

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