Throughout my years working as a chief impact officer at a leading impact investment firm and as a nonprofit executive for a long time before that, I've learned that the purpose of impact investment it can mean many things to many different people. Depending on the stakeholder, people will define impact differently and seek different desired outcomes.

A managing director at an investment firm will be interested if their impact funds offer a significant double-digit return. A bloom entrepreneur or small business owner will focus on whether the capital they have secured will enable them to scale, increase production, increase the number of employees and generate more income for what they have defined as work or their influential product. Impact-minded politicians, philanthropists, and foundations will be more concerned with the community-wide improvement or value difference an investment (or grant) can make.

Any interest of a person or organization may impact investment, this is very true: without measurement, there is no mission validation. That's why the data we collect and provide is essential to our impact investing strategies. By reporting on our progress, investors and others can influence to ensure that we are moving our mission forward.

Unfortunately, all too often, we see investors looking to do good fail to define goals and measure results. Many times, this can be attributed to the fact that their goals may be related to vanity metric or other data that does not demonstrate or convey real impact or improve results. For example, it's one thing for a company to aim to generate a 10% return to funders or add three dozen new jobs. However, it's another for those jobs to pay more than a county's average wage, offer great benefits, including wealth-building opportunities like 401Ks, and offer paths and training for advancement.

Basically, investors need to define their own metrics and assess whether they accurately describe the factors that change people's lives.

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Impact investors must develop an investment framework

Impact investment frameworks should define dual investment goals for investors and business owners alike to ensure that investment, business growth, and impact investment objectives are aligned from the outset.

Each party wants to see a return generated from the money a business receives, but deliver and show real impact; additional standards must also be met.

It's one thing for a new supermarket to make a profit, but is the business also prepared to show how iMPACT feeling all over her neighborhood? Is the grocery store focused on increasing healthy food options in the community? Does the business provide quality work to local residents who were previously marginalized or otherwise struggling to make ends meet? If so, are those profits being spent or reinvested in the community, perhaps through the purchase of new homes?

When you begin, all stakeholders should clearly identify their North Star and have it framed. An environmental impact investor, for example, needs to be clear on their mission and the results they want to see. Do they want to reduce carbon emissions or aspire to provide affordable clean energy to more people? If the answer is yes to either, they should describe how they will get there and measure their progress.

If investment dollars are going to a business, be prepared to identify the community-wide impact, especially for workers. Do the wages help workers forgo public assistance or meet or exceed the average wage in a region? Are employees receiving health benefits and are they building personal economic stability that leads to personal and generational wealth?

By establishing a framework early on, investors can set clear goals and work rigorously towards them to achieve the true spirit of their impact investing strategy.

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Clearly define what needs to be measured

The metrics we use to measure the effectiveness of impact investments must be deliberately and deliberately set to ensure we are doing the great work we set out to do. I have long believed that if you haven't measured it, you haven't done it!

Considering the financial and economic impact, decide to see if the compensation of newly hired or supported workers is affordable and is at or above the average wage in a region. Track whether these workers are also enrolling in retirement plans or perhaps taking equity in the company. Decide whether workers are also receiving additional benefits that deepen family stability, such as child care, wellness and mental health support.

Measuring meaningful impact extends beyond the walls of any particular investment in a portfolio. Impact investors should be prepared to track the effect that new funding or job creation has on a county or city. Are more people falling out of the unemployment ranks? Is the need for public assistance decreasing in a community? Returning to the clean energy space, do we see a marked improvement in regional air quality? Or are the residents' electricity bills reduced?

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Admittedly, tracking these types of metrics takes time, and seeing trends and results requires longitudinal analysis, but to ensure impact investors are meeting and exceeding their mission, tracking must be done.

As impact investors, we must look beyond short-term gains. Annual reports must contain data that convincingly demonstrate this COmmuNiTiEs they are rising and people's lives are being changed for the better. After all, these metrics are at the heart of the mission of impact investing.