An approach to social investment: from design to governance, investing and measuring

social-investment

Nikki Griffiths – COO, Tshikululu Social Investments

At Tshikululu we manage and advise on social investment funds to achieve a positive social impact. We are clear on our purpose and the power of social investment in making a positive contribution to a just and thriving society.

We view social investment in a holistic manner. Currently, there is no standard definition for social investment across the sector. At Tshikululu, social investment is defined as any financial commitment from grant-making to investing impact that seeks to drive and measure positive social impact.

What do we need to do to ensure every rand invested in social change has a positive impact? There is no easy answer to this. It is the question we ask ourselves every day. In a society characterised by high levels of inequality and poverty, as social investment managers we believe there is no money more important than money earmarked for positive social change. The central purpose of social investment is a transformational one. It is based on changing society and the human experience. And yet it is done through an often analytical and systematic process.

It is a complex process that requires a meaningful strategy, a robust governance framework, active management as well as the commitment and willingness to measure the outcomes of the investment. 

The first step is having a clear vision of why you are investing. As with all strategies and traditional investments, there is always a choice. It is a choice influenced by data, current priorities, the impact that one is aiming to achieve and time frames. It is this vision that drives the decision making around capital allocation by boards and investment committees.

At Tshikululu, the process of crafting the vision and strategy that guides social investment for funds under management is known as Designing for Impact. It is the phase that sets the course that will guide all the decision making and it is against this vision or strategy that ultimate success will be judged.

Designing for impact is a combination of analytical processes that include research, data analysis and engagement with stakeholders envisaged to be most affected by investment decisions. The aim is to develop a fundamental understanding of the context within which the social investment will take place. It is also a phase that includes dreaming and re-imagining a better society as a result of the proposed investment. The best strategies and, ultimately, investments are those that are not only data driven but also inspired by the investors’ values.

It is not enough to have the perfect well-crafted strategy and vision. The execution of the strategy has to be grounded on a foundation of robust governance.

Governing for impact is the phase that underpins the process and ensures the decision-making process is transparent and fair. The governance structure and processes need to be impact-focused. The governance structures must aim to promote fair decision making, transparency in intention and ensure accountability of all stakeholders.

Investing for impact is the execution phase of the social investment – the disbursement of the funding and the programme management of investments. It is where the vision and intention of the strategy are given life. It is the phase that requires hands-on management and constant monitoring.

Social investment over the past decade has shifted to a more quantifiable, results-based and data[1]driven approach to development. As a consequence, measuring for impact becomes central to any social investment activity – taking the time to understand what was achieved, how appropriate the strategy was and whether the social investment had a positive social impact. It is also the phase where there is time for reflection, learning and improvement. In development the emphasis on monitoring and evaluation is vital.

In all this complexity it is easy to lose sight of why we invest for impact. In the context of increasing compliance and rigorousness in measuring impact, there is the very real risk that the focus on the people affected by the change could get lost. In every phase, there is a challenge to keep the people impacted by the investment at the centre of each decision. Every one of us wants to live in a just society in which every individual has the opportunity to thrive and to reach their potential. For social investment to continue to make a meaningful contribution to this vision it needs both our heads and our hearts.

Nikki Griffiths – COO, Tshikululu Social Investments.

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