This guidance helps charities and social enterprises understand the key ingredients that a social investor will look for in a good impact plan.
All charities and social enterprises organisations seeking investment will need to provide an impact plan that is either integral to their business plan or sits alongside it. This guidance helps you understand the key ingredients that a social investor will look for in a good impact plan.
1. The change you want to make
An investor will want you to be able to very clearly articulate the change that you intend to make with the capital that you are asking for. Your mission statement should capture the vision for your organisation, the difference you want to make, and the overall purpose of your work. It is not just a summary of activities or charitable objectives.
You also need to show that you can identify the problem, its causes, consequences and costs and that you have a sense of priority where there are multiple and linked problems. You should show that you are clear about how the scale and spread of your work will add impact.
You also need to show that you understand the policy and regulatory environment in which you are operating and, where relevant, explain why your approach is different, or better or innovative.
Some organisations find it useful to complete a theory of change exercise at this stage.
2. Who will benefit
An investor will want to see that you can define your main beneficiaries (for example by their particular needs or where they live) and the number of people you are seeking to help. You should show how you have assessed and listened to their needs and expectations and how what you are doing will generate change and make an impact. You should show that you also know how wider conditions and circumstances may affect your beneficiaries and that you have a baseline for measuring progress.
Your impact plan shows how activities will be inclusive, so that beneficiaries are aware of your organisation and the support it provides and can gain access. Can they gain access to your products and services without barriers such as language, affordability or transport, for example? It shows how your beneficiaries are representative of the group you are targeting and that you have thought about how to reach those most excluded.
3. Linking activities and revenue
An investor will want to see how your products, services and interventions are intrinsically linked to your ability to generate revenue from the social activities that you deliver. Your impact plan not only shows how your activities respond to the beneficiary needs identified but how this links into your fundamental business success and growth.
This can be through trading activities, delivery of contracts, revenue fees from consultancy or delivery of advice and services. However, you need make sure that these activities are congruent with your mission as a social purpose organisation.
4. Measuring and reporting
There are many systems for measuring and reporting impact. Charities and social enterprises are often in the best position to identify and select the things that are most important for tracking and evidencing their own impact.
There is no universal standard. However investors look at the commitment that you have for evidencing your social impact and the quality of your measurement system so that it provides meaningful and reliable information to support their investment strategies. Investors want to see:
You should show that you have an “indicator set”, which taken as a whole tracks information about outputs and outcomes, and includes quantitative and qualitative data. The indicators address the things that are most important to your organisation. Your indicators are specific, simple and practical and show changes over time. They should be consistent and use established standard indicators where possible.
An investor will want to know that your targets are realistic and set explicit goals (how many, how much, who for, how good, desired quality, linked to revenues), link back to your mission as well as beneficiary needs and expectations. They are timed against your outputs and outcomes, making it apparent when you expect them to be reached.
The level and detail of reporting should reflect the size and complexity of your organization and a good investor should not burden you with reporting requirements that detract from your core purpose and mission. You should work with your investor to plan how you plan to develop your measurement, reporting and evidence as you mature and grow.
Our Outcomes Matrix and resources pages provide useful information to help you with measuring impact.
5. Learning, improving and moving forward
A good impact plan will give you and your investor essential information for performance managing, learning and improving. Bad results as well as good are a crucial part of the learning process. You can draw lessons to improve and develop your future strategy together with your investor.