Idea in Brief
The Problem
Although the business world has universally accepted tools for estimating a potential investment’s financial yields, no analogue exists for evaluating hoped-for social and environmental rewards in dollar terms.
The Solution
The Rise Fund and the Bridgespan Group have developed a methodology for estimating the financial value of the social or environmental good generated by impact investments.
How It Works
The six-step process culminates in a number—called the impact multiple of money, or IMM—that expresses social value as a multiple of the investment.
As concerns about scarcity and inequality become increasingly urgent, many investors are eager to generate both business and social returns—to “do well by doing good.” One avenue is impact investing: directing capital to ventures that are expected to yield social and environmental benefits as well as profits. But there’s a problem: Although the business world has several universally accepted tools, such as the internal rate of return, for estimating a potential investment’s financial yields, no analogue exists for evaluating hoped-for social and environmental rewards in dollar terms. Forecasting gains is too often a matter of guesswork.