Using trust as a currency to fuel impact
Over time, "soft", intangible drivers like emotions as well as personal connections can lead to forming mutual trust – therefore playing a much bigger role than rational goals when it comes to impact investment.
Trust is built up by gradually signalling greater commitment
Creating impact relies on fostering trust that spans from casual connections, towards higher-stakes engagements and all the way up towards a more sustained engagement.
There are many roads that lead to building, fostering and, equally importantly, maintaining trust amongst different stakeholders. Trust can come from creating meaningful connections between people and organisations, or by using data to create awareness and accountability. Additionally, it can also come from shifting the focus towards local communities and making sure they, too, have an equitable seat at the table, by respecting their experiences and co-creating with them not solely designing for them.
Trust, similar to impact, takes time.
“Giving not only comes from the head but also from the heart. The idea is that the feelings around things and the personal connection play a much bigger role. It's not just about "this is where I want to make a difference" and "this is where I want to give my money towards," but it's driven by a much more soft, intangible driver”
— Anolette Walsh / Centre for Asian Philanthropy & Society
“So, poor communication is one issue. Therefore, effective communication is crucial. It is important to report accurately on what is considered important. As I mentioned before, the project platform we visited was limited and not suitable for our needs. However, the use of media, videos of project interviews, local community posts, and the local press are becoming more and more important. These communication channels allow us to showcase the work achieved on the ground more effectively.”
— Stefania Bazzoni / Chief of Staff at the Council of Europe Development Bank
“You can't build trust overnight, but regulations, accountability, and transparency, and sharing stories of impact are needed. Everyone has a role to play… Organisations themselves also have a role in maintaining transparency and adhering to those things, but also in sharing their stories to show the impact they have. “
— Anolette Walsh / Deputy Director, Centre for Asian Philanthropy & Society
“I don't really know who's engaged you to do this work, but if I were advising them, I would say you should convene folks who are actually those who speak authentically, to the needs of communities that you want to support, don't ask them to do it for free, because they need data, meaning they don't have time for that. Support their organizations and support their time and come to it with a promise that you're going to co-create something, because I guarantee that they'll have ideas about careers… What communities need is long-term, short-term support, long-term commitment, and capacity building over time.”
— Deborah Marton / Executive Director, Van Alen Institute
“Going forward, we will require startups we invest in to provide impact data that aligns with their businesses. This data should not be difficult to collect, but it should be sufficient to measure and assess whether they follow our agreement. This year, we are piloting our impact measurement accountability exercise. We will produce our first impact report, partnering with five startups from our portfolio and some funds”
- Cintia Nunes / Director of The Mills Fabrica
“It's hard to boil down because strategies and intent will be different. Somebody may have a thesis that's more about gender, somebody may have a thesis that's more about livelihoods, somebody may have a thesis that's more about carbon emissions, somebody may have something that's more about resilience. That being said, I think that's a little bit of an excuse. ….. A lot of different metrics make sense. But we have to have a way for people to understand it and compare it.”
— Kusi Hornberger / Dalberg
Insights
Impact is often driven by soft, intangible drivers such as relationships, trust, emotional and personal connections.
There is a battle between risk aversion and drive stemming from an emotional desire. Impact investment isn’t driven by risk aversion, but rather, by an emotional desire and pull towards making a difference. However, risk averseness is a huge factor in who decides to participate in impact investing.
This is where establishing trust can make the pendulum swing towards making a positive change – not only from an interpersonal perspective but also from large (often regulated) institutions.
Data as an impact measurement accountability exercise
Data allows for transparency of impact amongst different stakeholders. It can also be used as a neutral and unbiased communication tool for all stakeholders that enables mutual understanding of needs addressed and impact created. It also serves as an accountability tool of all parties involved.
In a way, it creates a common language, that can be used to talk about, measure, understand, prototype and leverage different viewpoints.
Design challenge
How might we make trust a default factor of the impact investment “modus operandi” by leveraging data and technology?
In planning projects
When creating partnerships
To reduce bureaucracy