The IRIS team interviewed Rafi Menachem, Social Impact Coordinator at the Grassroots Business Fund, about his experiences using IRIS metrics to measure the social performance of their portfolio companies.
IRIS: Why did you choose IRIS as your framework for reporting social impact?
Rafi Menachem: After GBF spun off from the International Finance Corporation, we had a lot of internal debate on what kinds of things to measure and how exactly to quantify them. IRIS provides valuable guidance on what to measure and how to measure it. Also, there is real value in standardizing this measurement across the industry to be able to make meaningful comparisons. And within GBF, having consistency across our investments also makes a huge difference
IRIS: Once you decided to go with IRIS, how did you choose which indicators to track?
Rafi Menachem: We were already tracking a list of indicators. So, the first step was to adapt the names and definitions of these metrics so that they matched the IRIS metrics. Then we looked through IRIS for guidance as to additional indicators that would be useful and easy to track. There were a few indicators that we didn’t directly track in the beginning but then decided to start capturing and then there were other indicators where guidance from IRIS helped us refine our approach.
At GBF we don’t want to make reporting difficult and complicated for our investees. The client should value the metrics they collect and use them as a tool to manage their business. IRIS helped us focus on the core metrics we should consider for a specific sector. It was also helpful to see what our industry peers are tracking and capturing.
IRIS: How did you roll out IRIS across your portfolio?
Rafi Menachem: With a lot of our legacy projects, the metrics that they were reporting were already aligned with IRIS. Now that we’ve gone through the mapping process we have a clearer sense of what we want to collect in each of the agricultural, artisanal and access to finance sectors. But we also want to ensure these data are feasible for the companies to collect. So while we have a prescribed IRIS list, we will work with each investee to figure out how to implement these reporting requirements. Also, for each project we define the reporting requirements in the legal agreement. We then collect the data regularly and feed it into our Salesforce system.
IRIS: What are some of the challenges you’ve faced?
Rafi Menachem: One of the biggest challenges has been raising awareness about the emphasis the industry is placing on measuring social impact and also for entrepreneurs to recognize the benefits. Right now, many only see it as a reporting requirement. Until they can actually do something with those numbers or can compare themselves with others in their region or sector, they won’t fully appreciate the value. Once they can see that their performance in a certain area is out of line compared to 5 other similar organizations, they will get it. Then it will be a win-win for everyone.
IRIS: GBF has agreed to contribute its data to the IRIS data repository; can you explain why you think this is important?
Rafi Menachem: We want to see benchmarks and want to understand how our investees are doing within their sectors. Currently we have metric scorecards for each of our investments. I envision our future scorecards including a section with IRIS benchmarks showing average performance for a particular sector or region. Furthermore, if everyone contributes real data, it will be easy to identify those who are inflating their numbers during the due diligence process and over time.
IRIS: Looking out a couple of years, what do you think the benefits of using IRIS will be?
Rafi Menachem: IRIS will definitely help us better manage our investments and better vet our pipeline of projects. I think we’ll also be in a better position to share these data with all of our stakeholders – our investees, investors and donors. Hopefully, we’ll also have reduced the burden on the investees. Right now, when we have a co-investment with another fund, we often have different reporting requirements. If we could coordinate and standardize reporting requirements between the two of us and beyond, it would make a big difference for the entrepreneurs.