Impact investment thesis, strategy and portfolio management
Introduction
How to use these resources
Resources in this module
Glossary of terms
We have put together a glossary of terms for impact investing
Filter resources by level:
Development and interpretation of impact thesis
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Guide for Impact Investing Fund Managers: Creating an investment and impact thesis
Global Impact Investing Network
Reading time: 7 minutes
A concise summary of questions an aspiring fund manager should consider when developing an investment thesis. It covers everything from marketing to measuring impact. There are also links to specific resources for different asset classes and regions that a fund focuses on.
What the reviewer found helpful:“There are some great resources here for first-time fund managers and startup funds.”
Eilidh Anderson
Intermediate
✔ Recommended
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Theory of change: steering tool for effective impact investing
Triodos
Reading time: 3 minutes
This article is a summary of BrightTALK’s webinar on the Theory of Change framework. The article gives a high-level overview of the key components of a Theory of Change and its role in illustrating the process from impact goals to measurable impact results. Emphasis is given to the potential to use a Theory of Change framework in effectively measuring and managing impact investing.
What the reviewer found helpful:“A useful introduction to the Theory of Change and its use in impact investing”
Yinni Hu
Introductory
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Theory of change in 10 Steps
New Philanthropy Capital
Reading time: 7 minutes
Provides a helpful background on where and when theory of change should be used, as well as suggested approaches and what to consider before starting to create a theory of change. It sets out ten clear steps to follow/things to consider when creating a theory of change. It also includes a glossary of theory of change terms and their definitions.
What the reviewer found helpful:“Clearly explains what a theory of change is, when you might use it and how to create one.”
Mhairi Littlewood
Introductory
✔ Recommended
Impact investing goals
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Impact Investing Handbook (Chapter 3, pp 57-85)
Rockefeller Philanthropy Advisors
Reading time: 40 minutes
The report encourages separating the ‘why’ from your investment and impact goals and explains in detail how to develop a theory of change, the underlying components involved and their limits. It discusses aligning Impact Intention and Impact Measurement and Management and the support available to investees, investors and intermediaries. The report also highlights the difference between setting impact themes (i.e. climate change) versus lenses (i.e. investing with a gender lens).
What the reviewer found helpful:“The chapter ends with a practitioner exercise and example which is a great way of putting the reading into practice”
Eilidh Anderson
Advanced
Impact criteria, indicators and data
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Impact Investing Handbook (Chapter 3, pp 79-81
Rockefeller Philanthropy Advisors
Reading time: 5 minutes
This section gives a high-level explanation of how an investor’s theory of change can inform the design of their impact portfolio, be translated into impact criteria, and be integrated into the impact due diligence process. The Impact Management Project’s 5 dimensions of impact are suggested as a helpful framework when creating due diligence processes and performing post-investment impact monitoring and reporting.
What the reviewer found helpful:“A useful starting point for learning more about post-investment impact management”
Yinni Hu
Intermediate
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Five dimensions of impact
Impact Management Project
Reading time: 2 minutes
Explains the five dimensions to consider when measuring impact including: what, who, how much, contribution and risk. It sets out the impact questions to answer under each dimension.
What the reviewer found helpful:“Helpfully splits out bits of impact measurement into five categories and explains clearly what each of these covers”.
Mhairi Littlewood
Introductory
✔ Recommended
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Developing Indicators
Center for Theory of Change
Reading time: 2 minutes
This is a short summary on using indicators to focus on how to measure the implementation and effectiveness of the initiative. Each indicator has four parts: population, target, threshold and timeline.
What the reviewer found helpful:“The summary contains helpful examples of different indicators and how to measure them”
Eilidh Anderson
Intermediate
Investment decision-making processes based on impact analysis
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Risk, return and Impact:Understanding diversification and performance within an impact investing portfolio
Impact Assets
Reading time: 25 minutes
This paper considers the concepts of risk, return and impact within the context of impact investing, and presents a range of key considerations for investors when constructing an impact portfolio. The paper also explores the concept of the “New Efficient Frontier” – a three-dimensional framework within which to assess the performance of impact investments. Some deeply entrenched biases are addressed, and useful background is provided about both impact investing and about traditional risk and return management.
What the reviewer found helpful:“An accessible yet insightful paper that looks at the traditional concepts
of risk and return through the lens of impact investing.”Yinni Hu
Advanced
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A portfolio approach for impact investment
World Economic Forum
Reading time: 10 minutes
This report offers a practical guide to building, analysing and managing portfolios of impact investments for professional investors. It discusses the friction between impact and returns and the difference in process between public and private markets (I.e. diversification).
What the reviewer found helpful:It is set out in bite-sized chunks with helpful diagrams which provide a framework and help walk through things to consider.”
Mhairi Littlewood
Intermediate