In the course of some recent work for a social investment intermediary, I had the opportunity to speak directly to charities and social enterprises about their current views on social investment: what did they like, what did they want to see, what didn’t they understand and so on. Amongst other aspects, one of the main things that emerged was that they didn’t know what was ‘social’ about the social investment. Was it a better understanding of who they were and the business model? Was it a more flexible relationship? And, underlying these all, did they take social impact seriously at all?

Others had been asking that last question for a while, most notably the Oranges & Lemons report by Investing For Good which looked at the current state of social impact measurement by the social investment community. At Social Enterprise UK, we are interested too: we want the value that social enterprises and charities to be recognised, factored in, and understood by those who are seeking to buy from, invest in or work for them. Most crucially, in the area of social investment, is impact being taken into account: in the pricing? In the due diligence? In the way the deal is constructed?

So how to move this forward? Well, for the last 18 months, working with Investing for Good (and supported by Big Society Capital and Esmee Fairbairn Foundation), we have been convening the impact leads of many of the main social investment intermediaries on a quarterly basis to share practice, raise standards and tackle collective challenges. In that series of meetings, we have looked at external reporting, support for (and demands on) investees, integration in processes, and being used in decision-making.

We have produced some guidance documents already, but here are my five main personal reflections on the work thus far:

1) One size doesn’t fit all – a fairly obvious point, perhaps, but it was noticeable throughout that some social investors have tens or hundreds of investments (and investees), whilst others have half a dozen or less. So while their approaches to impact may think about similar things, the depth and intensity of the process is significantly different, by necessity of capacity. And whilst those with many investments have to think about standardised processes and aggregation, those with fewer can design bespoke processes and undertake much more analysis of individual organisations.

2) Impact is taken seriously – I’ve been struck by the extent of thinking and work that the social investment leads on this topic have done and are doing. Of course, some are further along in their thinking than others, and some (as mentioned above) have more capacity than others, but there is a seriousness and dedication of intent which punctures any idea that these organisations don’t take social impact seriously.

3) Nuance doesn’t make headlines – the thoughtfulness of those leading on social impact means they have a keen understanding of what they can and can’t claim, or what is and isn’t a sensible number to report. One common challenge many of them faced was this depth of thinking or nuanced understanding being overruled or not represented in external communications. As is the case in the sector more broadly at times, for lots of reasons, what is reported doesn’t reflect the full picture.

4) Proportionality is the watchword – the whole impact picture feels like one of connected and balanced proportionality: depending on their number of investments and size, social investment intermediaries will ask for differing amounts (and types) of information from their investees; depending on those investees’ size in turn, they may or may not be in a position to do so (and the process might even help them do it better) or they may have given it much more through than the investor already; this relationship should also depend on the scale of (potential) impact, the risks of the people they work with, and so on and so forth. Sitting above all of this, wholesalers like Big Society Capital and Access are in turn asking things of the intermediaries – for understanding, for aggregation, for transparency and standardisation. Achieving and maintaining the right balance – from bottom-up and top-down, seems critical to developing this area of practice.

5) It’s getting more important – ‘social’ is the qualifier in social investment, and social impact and social value needs to be at the heart of what these organisations do; and that means it being factored into price, risk, deals, and processes in a more integrated way. Doing so also means being led more by the ‘demand’-side, and building this round the charities and social enterprises themselves. And for those pursuing investments with ‘profit-with-purpose’ or ‘mission-led businesses’, the expectations for demonstrating social impact will be higher still.

There are areas that are ripe for development: for example, feedback loops and better involvement of investees and beneficiaries in the process (an area being actively explored by some); and ensuring social impact is central to emerging data-led developments which aim to promote transparency and openness of how things are performing.

Finally, this work has also reinforced for me of the simple value of peers in similar roles across different organisations sharing and challenging and learning from each other – those in particular functions or roles meeting, rather than always the CEOs. It won’t be coming to a headline near you, and it might not be moving as quickly as people might want – but incrementally raising the standards of practice in this area can’t be a bad thing. More to do.

SEUK provides the co-ordination of the Social Investment Forum, of which this impact group is a sub-group. Intermediaries participating include: Big Issue Invest, Bridges Ventures, CAF Venturesome, Charity Bank, FSE Group, Impact Ventures UK, Key Fund, Nesta Impact Investments, Resonance, Social and Sustainable Capital, Social Investment Business Group, and Social Investment Scotland.