Cairns Blog

Transparency and Performance Measurement in Community Impact Investing

Here's another meaty one from the "to be read" pile:  

The Center for Community Development Investments published, "Building Scale in Community Impact Investing through Nonfinancial Performance Measurement" by Ben Thornley and Colby Dailey. Based on six months of empirical research in 2010, the report is the subject of a new issue of the Community Development Investment Review from the Federal Reserve.

The lack of transparency in community investing is hampering opportunities for innovation and greater effectiveness not to mention accountability. Given that many, highly diverse investors seeking to create social impact with their money need to go through Community Development Financial Institutions to invest, it would seem to be both urgent and manageable to introduce better performance metrics.

Investors are putting money into domestic, low income communities in the hope of generating both financial and non-financial returns.  Despite the fact that "nonfinancial performance measurement directly informs the investment process" and is essential to providing " latent sources of capital with market-level information on the tradeoffs between financial and social return," there has been a lack of effective measurement tools to understand investor preferences in a complex and diverse process that seeks to maximize impact, growth and risk avoidance.

Surprisingly, many impact investors fail to report non-financial impacts at all (p. 17-18)!

The report examines 4 questions:

1. Does nonfinancial performance measurement really matter for investors?
2. If it does matter, is nonfinancial performance measurement even possible?
3. If nonfinancial performance is possible to measure, what form should it take?
4. How will nonfinancial performance measurement increase community impact investing?

In particular, the authors survey 8 existing but underused measurement tools.  They go on to identify both theoretical and practical barriers to effective measurement including those that stem from the diversity of investor preferences, lack of readily available tools, and an absence of accountability in the system.

They conclude that "nonfinancial performance measurement is critical because, simply put, willingness to pay is partly determined by the quality of the information that investors use to make decisions about financial and nonfinancial tradeoffs."

The report does not commit to a single way forward that will lead to adoption. They suggest 4 possible avenues: 1) industry self-regulation; 2) Community Reinvestment Act reform; 3) CDFI Fund regulatory mandate; 4) additional federal investment to support innovation in nonfinancial performance measurement?

I'm willing to agree with their conclusion that there is no, single tool or silver bullet policy prescription. Hence I think they should be demanding, shouting, calling for trying all four approaches urgently to see what works.  The paper is  more helpful support for the power of open data as well as a good excursus on the how to design law, policy and technology in tandem to produce greater innovation and effectiveness.

U.S. Public Sector Information as an Engine of Growth

Trying to catch up on reading some new reports on open government that have recently appeared. For those whose "to be read" pile is similarly taller than the "already ready" pile. Here's a quick take on one.

Timothy Vollmer of Creative Commons  published the State of Play: Public Sector Information in the United States, an excellent report on open data in the United States as part of the European Public Sector Information Platform series on information re-use.

In it he provides a concise and accurate primer (with footnotes) on the legal and policy framework for open government data in the US. He describes the varied uses for public sector data.

For instance, some view the dissemination and re-use of PSI as a means to increase the transparency and accountability of government. Others view PSI as primarily a means for improving internal government communication and efficiency. Some view PSI as a vehicle for promoting economic activity and innovation. Others are exploring ways for PSI to be used as a means for international diplomacy and global information sharing. Some see PSI as civic capital, working to increase citizen participation in government activities.

Citing to work published by the National Academies he highlights, in particular,  the economic benefit to be gained from open government data:

it promotes new types of research and avoids duplication of research, enables the development of tools that can aid in search and discovery of information, promotes transparency and validation of government funded information, maximizes the return on investment for government funded PSI, promotes interoperability between different sets of government information, and supports socioeconomic and good governance.

Vollmer ends with an uplifting Carl-Malamudism that underscores the positive, economic externalities. "Public data is “the raw material of innovation, creating a wealth of business opportunities that drive our economy forward. Government information is a form of infrastructure no less important to our modern life than our roads, electrical grid, or water systems.”

We need  more empirical research to draw the connection between open government and a thriving economy. I will be talking more about this when I testify before the Canadian Paliament later this week.

 

 

Invitation to Transportation Camp East, March 5-6 at New York Law School

On March 5-6, I am looking forward to hosting Transportation Camp together with OpenPlans.org. I hope you will come.

Transportation Camp will bring together policymakers, technologists, activists and those interested in the intersection of urban transportation, sustainability, and technology.  Come learn about how federal, state and local governments are making data freely available in reusable formats and about ways that decision makers, entrepreneurs, and designers are making use of that data to create tools that improve communities and empower citizens.

Join thinkers and doers for a weekend of learning, debating, connecting, and creating.  Details at http://transportationcamp.org.

Register here: http://transportationcampeast.eventbrite.com

Why:

Transportation is a major metropolitan issue, with direct impacts on economic strength, environmental sustainability, and social equity.  Recent advances in technology (“web 2.0”, mobile computing, open source software, open data and APIs, and spatial analysis) present an opportunity to improve mobility more immediately and at a lower cost than has ever been possible in the past.

TransportationCamp will raise awareness of this opportunity and build connections between disparate innovators in public administration, transportation operations, information design, and software development.

What:

This is not a traditional conference: in addition to talks and presentations from big names in transportation and technology, TransportationCamp will provide an opportunity for every attendee to be a participant in shaping and leading the event.  Be prepared to get involved, meet people, and get busy.

Major themes of discussion will include: open data -- best practices and technical challenges, ways to lower the cost of technology for transportation agencies, and creative new approaches to addressing transportation issues.

Session topics and activities will be suggested by attendees and organizers leading up to the event.  So far, we’ve collected suggestions for over twenty possible topics, ranging from realtime information to legal issues. Add your ideas here: http://transportationcamp.org/topics/

Keep in touch:

Visit http://transportationcamp.org/topics/ and suggests topics and activities for TransportationCamp.

Follow @TranspoCamp on Twitter and the TranspoCamp Event News blog to get event and community updates.

Watch, follow and reblog opentransportation on Tumblr.

Tag tweets, photos, blog posts, etc. with the event hashtag: #transpo

Thanks!