In impact investing, success goes beyond funding social enterprises—it’s about the additional value funds bring through non-financial strategies. By offering mentorship, refining governance, and enhancing impact measurement and management practices, funds play a pivotal role in driving meaningful change.
In their recent article, “How do impact investors leverage non-financial strategies to create value? An impact-oriented value framework,” published in the Journal of Business Venturing Insights, Rachida Justo and Pola Nachyła introduce the Impact-Oriented Value Framework (IOVC). This practical tool helps impact funds maximize their positive contributions through strategies beyond capital investment.
The IOVC framework provides actionable methods to integrate impact into non-financial support, strengthening portfolio companies and the broader ecosystem. By prioritizing impact, funds can balance financial returns with sustainable social and environmental goals.
The study highlights three dimensions for maximizing social and environmental returns:
- Investee Level: Strategies to help social enterprises plan, measure, report, and manage impact.
- Fund Level: Approaches to embed impact into governance, legal frameworks, and incentive systems while maintaining alignment with founders.
- Community Level: Actions to foster collaboration among social enterprises, promote shared learning, and connect stakeholders with potential partners and investors.
Discover the transformative potential of the IOVC framework and its impact on the investing landscape in this video:
