I have this nagging feeling of an elephant in the room – in the room of impact investing, I mean.

On the one hand, we’ve made tons of progress.  I don’t just mean progress in terms of more funds being raised and more mainstream attention – though those are both good things.  I mean that it’s become increasingly accepted, conceptually at least, that for an investor to be an impact investor, she must actively intend to create impact, and she must actively measure the impact she is creating.

(E.g. the World Economic Forum report’s recent definition of impact investing as “an investment approach that intentionally seeks to create both financial return and positive social or environmental impact that is actively measured.”)

While we’ve made progress on the language, I’m not sure how far we’ve come on the “actively measured” bit – mostly because it’s really, really hard to measure impact.

Let’s not forget what’s at stake here though. We value what we measure.  And what we are able to measure today is financial return.

Think about it:  we have hard, objective measures on the financial side – or we will, as soon as more impact funds realize their returns.

And we have a framework for measuring impact (in the IRIS standards, and in GIIRS ratings) but no agreed-upon standard of what social impact data should be collected and shared by impact funds.  This means that, despite the incredible work of building IRIS and GIIRS, we continue to build an impact investing sector without agreement on what constitutes impact and what minimal data should be collected by impact funds.  If we continue to walk this path, my fear is that (say what we might to the contrary) we’ll inevitably end up ranking and sorting impact funds by the only thing they can be ranked and sorted by – their financial returns.

It strikes me that part of the way forward is by constraining our path.  What if what’s holding us back is too many options, if the Achilles heel of the 400+ IRIS indicators is that they leave even the most well-intentioned impact investor overwhelmed and a bit mystified?  What if part of the way forward is to narrow our search to the most important, most universal, most quantifiable data we can find that will give us one-level-deeper insights into what’s going on underneath the hood.  Quantifiable because this is the only thing that might start to balance the scales and be weighed equally with the financial returns we hope to realize.

For example, wouldn’t it be nice to understand who impact investors are actually serving?  To understand who the end customers are for the companies that make up various impact portfolios?  If this could be objectively assessed, and if we could gather this data easily, this data might start to tell us something beyond what we can find in the glossy prospectuses of impact funds.  We know, of course, that reaching the emerging middle class in urban sub-Saharan Africa and reaching the poor in rural sub-Saharan Africa are two completely different balls of wax, yet gathering data on who a given fund is actually serving has been, so far, nearly impossible.  And until we gather this data, we’ll never begin to properly understand how far market-based solutions can go to reach poor and underserved populations.

This is just one of the areas I’m excited to be exploring with our impact team led by Tom Adams at Acumen – using cellphones and text messages to quickly and reliably understand who end customers are, so that we’ll have the real data capturing who is actually being served across different geographies and sectors.  We successfully piloted this work last year with a Kenyan firm called Echomobile, and we’re rolling it out more broadly across the full Acumen portfolio.  The idea is to use technology, married with smart frameworks like the progress out of poverty index, to make it easier to get data and insights about real impacts on the ground.

I don’t know what these data will tell us, but I do know that the pursuit of easy-to-collect, quantitative data will be a first step towards differentiating the social impact strategies of the myriad impact investors in the marketplace.  And I think this will be part of the way forward.

This video of a talk I recently gave at Acumen’s Investor Gathering explored this idea in more detail, and it starts to outline what the end state of impact investing might be.  Let me know what you think!