Glossary

A comprehensive impact management glossary with hundreds of terms and counting.

When it comes to managing impact, many terms mean different things to different people, or different words are often used to mean the same thing. This glossary attempts to clarify the similarities and differences in language usage among a number of impact-focused disciplines that often interact.

If you want to know how the glossary was developed, what references are cited, how to have a term added to the glossary, or you want to contact the editing team, let us know at team@impactmanagementproject.com.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
  • Abatement cost
  • Accountability
  • Accounting
  • Accredited Investor
  • Activity(ies)
  • Additionality
  • Agency
  • American Evaluation Association (AEA)
  • Amortization
  • Analysis
  • Anecdotal evidence
  • Angel investor
  • Appraisal
  • Appreciation
  • Assessment
  • Asset Class
  • Asset owner(s)
  • Assumption(s)
  • Attribution
  • Audit
  • B Corporation
  • B Lab
  • Base case
  • Base of Pyramid (BoP)
  • Baseline
  • Benchmark
  • Beneficiary(ies)
  • Benefit Corporation
  • Benefit transfer
  • Bias
  • Blended value
  • Bond
  • Bottom of the Pyramid (BoP)
  • Bounded rationality
  • Capability(ies)
  • Capacity building
  • Case control
  • Catalytic First Lost Capital
  • Causality
  • Charity
  • Clean technology
  • Cleantech
  • Client centered
  • Client centric
  • Client(s)
  • Collateral
  • Collective impact
  • Community Development Financial Institution (CDFI)
  • Community Interest Company (CIC)
  • Comparator group
  • Comparison group
  • Confidence interval
  • Constituent(s)
  • Content validity
  • Context
  • Contingent valuation
  • Control group
  • Control(s)
  • Convention(s)
  • Cooperative
  • Corporate Governance
  • Corporate Social Responsibility (CSR)
  • Correlation
  • Cost allocation
  • Cost-benefit analysis
  • Counterfactual
  • Customer(s)
  • Data
  • Data set
  • Decay
  • Depreciation
  • Development Bank
  • Development Finance Institution (DFI)
  • Development Impact Bond (DIB)
  • Developmental evaluation
  • Discount rate
  • Discounting
  • Displacement
  • Distance travelled
  • Diversification
  • Diversify
  • Double bottom line
  • Dropoff
  • Due diligence
  • Duration
  • Effect(s)
  • Effectiveness
  • Efficiency
  • End user(s)
  • Environmental accounting
  • Environmental, Social, and Governance Criteria (ESG)
  • Equity
  • Ethical investing
  • Evaluation
  • Evidence
  • Evidence-based
  • Ex-ante evaluation
  • Ex-post evaluation
  • Expectation(s)
  • Experimental design
  • External audit
  • External evaluation
  • External validity
  • Feedback
  • Financial first (or finance first)
  • Financial model
  • Financial sustainability
  • Financial value
  • Finding(s)
  • First Loss Capital (FIRLO)
  • Fixed income
  • Formative evaluation
  • Fourth sector
  • Fund advisor
  • Fund manager
  • General Partner (GP)
  • Global Impact Investing Network (GIIN)
  • Global Impact Investing Rating System (GIIRS)
  • Global Reporting Initiative (GRI)
  • Goal(s)
  • Grant
  • Green tech
  • Greenfield
  • Guarantee
  • Hedonic pricing
  • High Net Worth Individual (HNWI)
  • Impact
  • Impact accounting
  • Impact assessment
  • Impact chain
  • Impact evaluation
  • Impact first
  • Impact investing
  • Impact investor
  • Impact management
  • Impact map
  • Impact measurement
  • Impact Reporting and Investment Standards (IRIS)
  • Impact risk
  • Impact thesis
  • Impact value chain
  • Impairment
  • Implicit bias
  • Income
  • Independent evaluation
  • Indicator(s)
  • Input(s)
  • Institutional development
  • Institutional investor
  • Integrated reporting (IR)
  • Interest
  • Intermediary
  • Internal evaluation
  • Internal validity
  • International Integrated Reporting Council (IIRC)
  • Intervention
  • Investee
  • Investment
  • Investment thesis
  • Investor
  • Joint evaluation
  • Judgement
  • Key Performance Indicator(s) (KPI)
  • Limited Partner (LP)
  • Livelihood(s)
  • Logframe
  • Logic Model
  • Logical framework
  • Market
  • Market-rate investment
  • Materiality
  • Measure
  • Merit(s)
  • Meta-evaluation
  • Metric(s)
  • Microfinance
  • Mid-term evaluation
  • Milestone
  • Millenium Development Goals (MDGs)
  • Mission Related Investment (MRI)
  • Monetize
  • Monitoring
  • Net present value (NPV)
  • Net social return ratio
  • Nongovernmental organization (NGO)
  • Nonprofit organization
  • Norm(s)
  • Not for profit organization
  • Note (investment note)
  • Objective
  • Operating support
  • Operations research
  • Optimism bias
  • Outcome evaluation
  • Outcome map / outcome mapping
  • Outcome(s)
  • Outcomes rate card
  • Output(s)
  • Overhead
  • Participation
  • Participatory evaluation
  • Partnership
  • Pay for performance
  • Pay for success (PFS)
  • Payback period
  • Payment by results (PBR)
  • Performance
  • Performance indicator(s)
  • Performance management
  • Performance monitoring
  • Philanthropy
  • Place-based investment
  • Placebo effect
  • Portfolio
  • Portfolio management
  • Power
  • Power calculation
  • Private equity
  • Private foundation
  • Process evaluation
  • Profit with Purpose Business
  • Program
  • Program evaluation
  • Program Related Investment (PRI)
  • Project
  • Project appraisal
  • Project evaluation
  • Proxy
  • Prudence
  • Public charity
  • Public equity
  • Public foundation
  • Qualitative information / data
  • Quasi-equity
  • Quasi-experimental design
  • Randomized Control Trial (RCT)
  • Randomized evaluation
  • Recoverable grant
  • Relevance
  • Relevant
  • Reliability
  • Replicability
  • Reporting standard
  • Responsible investment
  • Result(s)
  • Results chain
  • Results framework*
  • Results-Based Management (RBM)
  • Return on Investment (ROI)
  • Revealed preference
  • Review
  • Risk
  • Risk analysis
  • Risk capital
  • Scalability
  • Scale
  • Sector program evaluation
  • Selection bias
  • Self-evaluation
  • Sensitivity analysis
  • Shared measurement
  • Shared value
  • Significance
  • Small and Growing Business (SGB)
  • Small and Medium Enterprise (SME)
  • Social
  • Social accounting
  • Social audit
  • Social business
  • Social change
  • Social Economy
  • Social enterprise
  • Social entrepreneur(ship)
  • Social impact
  • Social impact assessment
  • Social Impact Bond (SIB)
  • Social impact management
  • Social Purpose Organization
  • Social Return on Investment (SROI)
  • Social return ratio
  • Social sector
  • Social value
  • Social Value International (SVI)
  • Social venture
  • Social Venture Capital
  • Socially Responsible Investing (SRI)
  • Socially responsible investment
  • Stakeholder
  • Stated preference
  • Strategic philanthropy
  • Summative evaluation
  • Sunset provision
  • Sustainability
  • Sustainability Accounting Standards Board (SASB)
  • Sustainable development
  • Sustainable Development Goals (SDGs)
  • System change
  • Target
  • Target group
  • Technical Assistance (TA)
  • Terms of reference
  • Thematic evaluation
  • Theory of Change (TOC)
  • Third sector
  • Tool
  • Triple bottom line
  • Ultra High Net Worth Individual (UHNWI)
  • Underserved
  • Unit cost
  • User voice
  • User(s)
  • Validity
  • Valuation
  • Value
  • Value chain
  • Venture capital
  • Venture philanthropy
  • Voice
  • Well-being
  • Willingness to accept
  • Willingness to pay
  • Worth

Abatement cost

ECONOMICS

A cost borne by many businesses for the removal and/or reduction of an undesirable item that they have created. Abatement costs are generally incurred when corporations are required to reduce possible nuisances or negative byproducts created during production.

Commentary

There are several types of abatement. Common ones include: a) in business, a reduction in the amount of a bill or charge; b) in the environmental sector, elimination or reduction of polluting or hazardous substances (such as asbestos) by removal or other method; c) taxation, a reduction or rebate of taxes given in special circumstances. Abatement cost typically refers to the cost to a business of reducing a problem they have created, such as a pollutant.

Practice & Source:

Accountability

GENERAL

The fact or condition of being accountable; responsibility.

EVALUATION

Obligation to demonstrate that work has been conducted in compliance with agreed rules and standards or to report fairly and accurately on performance results vis a vis mandated roles and/or plans.

ACCOUNTING

The responsibility of either an individual or department to perform a specific function in accounting. An auditor reviewing a company’s financial statement is responsible and legally liable for any misstatements or instances of fraud. Accountability forces an accountant to be careful and knowledgeable in their professional practices, as even negligence can cause them to be legally responsible.

Related: Feedback, Voice

Commentary

Different uses in different fields reflect: a) whether being accountable is an ethical, mangement / administrative, financial, and / or legal responsibility; b) who is being held accountable (eg, politicians, civil servants, board members, managers, shareholders) to whom (eg, beneficiaries, citizens, taxpayers; partners, etc.); and c) what they are being held accountable for (eg, results, profit, cost effectiveness, contractual obligations, social and environmental impacts etc.).

Each responsibility carries different consequences. Some uses of the term include the responsibility to disclose or report results in a transparent manner.

Accounting

Accounting

The work of keeping a company’s financial records, recording its income and expenses, and its business deals.

General

The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.

Related: Impact accounting, Social accounting, Environmental accounting, Social impact accounting, Environmental impact accounting

Commentary

Accounting can also refer to the profession and field, not just the practice.

Practice & Source:

Accredited Investor

FINANCE

A person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience. The term is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include natural individuals, banks, insurance companies, brokers and trusts.

Commentary

As noted in Wikipedia, the definition of an accredited investor (if any), and the consequences of being classified as such, vary between countries. Generally, accredited investors include high-net-worth individuals, banks, and other large corporations, who have access to complex and higher-risk investments such as venture capital, hedge funds and angel investments.

Practice & Source:

Activity(ies)

EVALUATION

Actions taken or work performed through which inputs, such as funds, technical assistance and other types of resources are mobilized to produce specific outputs.

Related: Intervention, Program, Project

Additionality

EVALUATION

The extent to which desirable outcomes would have occurred without public intervention (the ‘counterfactual’). There are diferent forms of additionality, namely: i) Input additionality – the extent to which intervention supplements or substitutes for inputs provided by other means, e.g. the market, or by other actors, e.g. firms’ own resources. ii) Output additionality – the proportion of outputs that would not have been created without public intervention. iii) Behavioural additionality – the difference in behaviour of a target population from public intervention. The concept of behavioural additionality emphasises that programmes have wider and more sustained effects than those that are most obvious to measure and that persistence of effects is of high value. Behavioural additionality concerns itself less with inputs and outputs and more with sustained changes in the behaviour of target groups, induced by contact with any stage of a programme or policy.

ECONOMICS

Extent to which a new input (action or item) adds to the existing inputs (instead of replacing any of them) and results in a greater aggregate.

Related: Counterfactual, Input, Output

Agency

GENERAL

(a) Action or intervention producing a particular effect.
(b) A thing or person that acts to produce a particular result.

Commentary

In social sciences, agency refers to the capacity of individuals to act independently and to make their own free choices and control their lives. Many interventions aim to increase the agency of the beneficiaries, not just achieve specific outcomes.

Practice & Source:

American Evaluation Association (AEA)

EVALUATION

The American Evaluation Association is a professional association of evaluators devoted to the application and exploration of program evaluation, personnel evaluation, technology, and many other forms of evaluation. Evaluation involves assessing the strengths and weaknesses of programs, policies, personnel, products, and organizations to improve their effectiveness. AEA has approximately 7100 members representing all 50 states in the United States as well as over 60 foreign countries.

Practice & Source:

Amortization

ACCOUNTING

The paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan. It also refers to the spreading out of capital expenses for intangible assets over a specific duration (usually over the asset’s useful life) for accounting and tax purposes

Practice & Source:

Analysis

GENERAL

Detailed examination of the elements or structure of something.

Practice & Source:

Anecdotal evidence

EVALUATION

Non-systematic qualitative information based on stories about real events.

GENERAL

(of an account) not necessarily true or reliable, because based on personal accounts rather than facts or research.

 
Practice & Source:

Angel investor

FINANCE

Angel investors invest in small startups or entrepreneurs. Often, angel investors are among an entrepreneur’s family and friends. The capital angel investors provide may be a one-time investment to help the business propel or an ongoing injection of money to support and carry the company through its difficult early stages.

Practice & Source:

Appraisal

EVALUATION

An overall assessment of the relevance, feasibility and potential sustainability of an intervention prior to a decision of funding. In development agencies, banks, etc., the purpose of appraisal is to enable decision-makers to decide whether the activity represents an appropriate use of corporate resources.

BUSINESS

(a) Impartial analysis and evaluation conducted according to established criteria to determine the acceptability, merit, or worth of an item.(b) Evaluation by a qualified appraiser to: (1) assess the current market value of a property, (2) estimate the extent of damage to an insured property and cost of repairs, or (3) determine if a total loss occurred. A written appraisal is usually a key requirement when a property is bought, sold, insured, or mortgaged. It is required also when a claim is filed for compensation for damage or destruction of the insured property.

 
Commentary

Appraisal can take place before implementation (e.g., appraisal of an intervention before resources are invested) or after (e.g., appraisal of an employee’s past performance). Objects of appraisal can be projects, people, companies, opportunities, and more.

Appreciation

GENERAL

a) Recognition and enjoyment of the good qualities of someone or something. b) A full understanding of a situation. c) Increase in monetary value.

FINANCE

An increase in the value of an asset over time.

Practice & Source:

Assessment

GENERAL

a) A judgement that you make about a person or situation after considering all the information. b) A calculation of how much something will cost to repair, how much something is worth, how much money someone should be given etc.

EVALUATION

A synonym for evaluation.

Commentary

Interventions and programs can also be assessed, as well as people and situations. While it can be used as a synonym for “evaluation”, the term “assessment” does not predetermine a particular level of rigour, effort, or timeframe, for making a judgment.

Practice & Source:

Asset Class

FINANCE

An asset class is a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. The three main asset classes are equities, or stocks; fixed income, or bonds; and cash equivalents, or money market instruments. Some investment professionals add real estate and commodities, and possibly other types of investments, to the asset class mix.

 
Practice & Source:

Asset owner(s)

No clear, authoritative definition. See commentary.

Related: Impact investing, Investor

Commentary

Asset owners receive the benefit of owning the asset which is under the person’s or entity’s name. Asset owners are often distinguished from asset managers who manage the asset on behalf of the owner and other types of investors such as lendors or bond holders.

Assumption(s)

Evaluation

Hypotheses about factors or risks which could affect the progress or success of an intervention. Assumptions can also be understood as hypothesized conditions that bear on the validity of the evaluation itself, e.g., about the characteristics of the population when designing a sampling procedure for a survey. Assumptions are made explicit in theory based evaluations where valuation tracks systematically the anticipated results chain.

General

A thing that is accepted as true or as certain to happen, without proof.

Related: Risk, Theory of Change

Attribution

Evaluation

The ascription of a causal link between observed (or expected to be observed) changes and a specific intervention.

Finance

In fund management, attribution is the mathematical decomposition of an investment portfolio’s return compared to its benchmark. The difference between the portfolio return and the benchmark return is broken down, so as to identify where the positive or negative returns are achieved. These can be stated either as a relative or an absolute. Active fund managers typically like to identify the source of active returns that are derived from either portfolio selection choices or market timing. Attribution of these various returns at the fund manager level is done by decomposing returns against a benchmark into stock and sector returns, with an associated interaction effect.

Related: Counterfactual, Additionality, Control group, Impact, Causality

Commentary

Attribution refers to the extent to which a specific intervention can be credited for any observed changes or results achieved after taking account of other interventions, confounding factors, or external shocks.

Practice & Source:

Audit

Evaluation

An independent, objective assurance activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance processes. A distinction is made between regularity (financial) auditing, which focuses on compliance with applicable statutes and regulations; and performance auditing, which is concerned with relevance, economy, efficiency and effectiveness. Internal auditing provides an assessment of internal controls undertaken by a unit reporting to management while external auditing is conducted by an independent organization.

Finance

Formal examination of a company’s accounts by an independent expert, called an auditor, who checks that they are internally consistent, show a true picture of a company’s financial position and conform with the accounting principles governing the company’s legal jurisdiction or listing base

General

a) An official inspection of an organization’s accounts, typically by an independent body.
b) A systematic review or assessment of something.

Related: Appraisal, Due diligence, External audit

Commentary

An audit can be a financial audit, a performance audit, or a systematic review or assessment.

Practice & Source:

B Corporation

SOCIAL ENTERPRISE

A benefit corporation that is certified by B Lab.

Related: B Lab, Benefit Corporation, Community Interest Company, For Benefit Corporation, Social Enterprise

Practice & Source:

B Lab

SOCIAL ENTERPRISE

B Lab is a non-profit organization headquartered in Wayne, Pennsylvania, which created, and awards, the B Corporation certification for for-profit organizations.

Related: B Corp, Benefit Corporation, Community Interest Company, For Benefit Corporation, Social Enterprise

Commentary

B Lab is the non-profit organization which: created and awards the B Corporation certification for for-profit organizations; operates GIIRS, a ratings agency and analytics platform for impact investors; and works to pass legislation for new corporate forms that facilitate companies pursuing social and environmental benefits in addition to profit.

Practice & Source:

Base case

FINANCE

In reference to a financial model, or financial projections, the expected case of the model using the assumptions that management deems most likely to occur. The financial results for the base case should be better than those for the conservative case but worse than those for the aggressive, or upside case.

ECONOMICS

A base case (also called a no build), which is a realistic representation of expected future conditions without the project,

Related: Baseline, Impact evaluation, Net present value (NPV)

Commentary

A base case can either be a prediction of the most likely scenario, or a prediction of what will happen without a particular intervention or decision.

Practice & Source:

Base of Pyramid (BoP)

Finance

The Base of the Pyramid (BoP) theory suggests that new business opportunities lie in designing and distributing goods and services for poor communities. The idea is espoused by influential US business school academics CK Prahalad and Stuart Hart, who argue that companies can help eradicate poverty by providing goods and services for the 4bn people who live on less than $2 a day – this group is known as the base of the pyramid.

Related: User, End user, Social enterprise

Commentary

Though “base of the pyramid” is often used to mainly refer to poor communities in developing countries, Frankln D. Roosevelt used “bottom of the pyramid” in his 1932 radio address, The Forgotten Man, which referred to the plight of the American farmer and the importance of building economic power from the bottom up rather than the top down.

Practice & Source:

Baseline

Evaluation

Data that describes the condition of the population at the beginning of the study. Used for comparison with conditions after the study.

Business/CSR

Clearly defined starting point (point of departure) from where implementation begins, improvement is judged, or comparison is made.

Related: Base case, Comparison group, Comparator group, Control group, Control, Randomized Control Trial (RCT), Impact evaluation

Practice & Source:

Benchmark

Business/CSR

Standard, or a set of standards, used as a point of reference for evaluating performance or level of quality. Benchmarks may be drawn from a firm’s own experience, from the experience of other firms in the industry, or from legal requirements such as environmental regulations.

Finance

A point of reference that is used to compare investment performance. It forms an objective test of the effective implementation of an investment strategy. Benchmarks allow returns and variations in investment returns to be measured and attributed, thereby making it possible to determine how effectively investors have performed against them.

Finance

A benchmark is a standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.

Related: Norm, Convention

Commentary

In evaluation, a benchmark is a reference point or standard against which performance or achievement is assessed. In business, it is the systematic process of evaluating products, services, or work processes of organisations relative to good or best practices in the industry concerned. In finance, it is a composite index against which the performance of a financial product is measured

Practice & Source:

Beneficiary(ies)

Evaluation

The individuals, groups, or organizations, whether targeted or not, that benefit, directly or indirectly, from the intervention.

Finance

Any person who gains an advantage and/or profits from something. In the financial world, a beneficiary typically refers to someone who is eligible to receive distributions from a trust, will or life insurance policy. Beneficiaries are either named specifically in these documents or have met the stipulations that make them eligible for whatever distribution is specified.

Social Enterprise

Individuals for which the organization intends to provide opportunities through consumption, production, or distribution of its products or services.

Related: Client, Customer, User, End user, Stakeholder, Constituent

Commentary

In evaluation and social enterprise, beneficiaries are the entities that benefit directly or indirectly from an intervention. In the financial world, a beneficiary refers to someone who is eligible to receive distributions from a trust, will or life insurance policy.

In recent years, several players in international development and social enterprise have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize those individuals who benefit directly from an intervention as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Benefit Corporation

Social enterprise

A class of corporation that voluntarily meets higher standards of corporate purpose, accountability and transparency. The major characteristics of the benefit corporation form are: 1) a requirement that a benefit corporation must have a corporate purpose to create a material positive impact on society and the environment; 2) an expansion of the duties of directors to require consideration of non-financial stakeholders as well as the financial interests of shareholders; and 3) an obligation to report on its overall social and environmental performance using a comprehensive, credible, independent and transparent third-party standard. The enacting state’s benefit corporation statutes are placed within existing state corporation codes so that the enacting state’s existing corporation code applies to benefit corporations in every respect except those explicit provisions unique in the benefit corporation form.

Related: B Corp, Social enterprise, For benefit corporation

Commentary

A Benefit Corporation is not the same as a B Corporation, as the latter requires being certified by the nonprofit organization, B Lab.

Practice & Source:

Benefit transfer

Sustainable development

A practice used to estimate economic values for ecosystem services by transferring information available from studies already completed in one location or context to another. This can be done as a unit value transfer or a function transfer.

 

Practice & Source:

Bias

General

Inclination or prejudice for or against one person or group, especially in a way considered to be unfair.

Evaluation

The extent to which a measurement, sampling, or analytic method systematically underestimates or overestimates the true value of a variable or attribute.

Related: Implicit bias, Optimism bias, Selection bias

Commentary

There are technical and psychological / behavioral sources of bias. In evaluation, the concept of fairness is not relevant to the use of the term bias.

Practice & Source:

Blended value

Finance

A term coined by Jed Emerson at Stanford University to describe social, financial, and environmental value created by all organizations’ activities (whether non-profit or for-profit). When investors acknowledge these value components, they can be more focused about their investments in organizations that create the mix and amount of value that matched their own values.

Practice & Source:

Bond

In Finance

A debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debt holders, or creditors, of the issuer.

Related: Fixed income

Practice & Source:

Bottom of the Pyramid (BoP)

Social enterprise

See “Base of Pyramid (BoP)”

Related: User, End user, Social enterprise

Bounded rationality

Business/CSR

Concept that decision makers (irrespective of their level of intelligence) have to work under three unavoidable constraints:
(1) only limited, often unreliable, information is available regarding possible alternatives and their consequences,
(2) human mind has only limited capacity to evaluate and process the information that is available, and
(3) only a limited amount of time is available to make a decision. Therefore even individuals who intend to make rational choices are bound to make satisficing (rather than maximizing or optimizing) choices in complex situations. These limits (bounds) on rationality also make it nearly impossible to draw up contracts that cover every contingency, necessitating reliance on rules of thumb.

Practice & Source:

Capability(ies)

General

The power or ability to do something.

Practice & Source:

Capacity building

General

Planned development of (or increase in) knowledge, output rate, management, skills, and other capabilities of an organization through acquisition, incentives, technology, and/or training.

Related: Technical assistance (TA)

Practice & Source:

Case control

Evaluation

A type of study design that is used to identify factors that may contribute to a medical condition by comparing a group of patients who already have the condition with those who do not, and looking back to see if the two groups differ in terms of characteristics or behaviors.

Related: Control group, Comparison group, Randomized Control Study

Commentary

A case control study is an observational study in where subjects (“cases”) who have a particular condition, often a disease, are compared with others (“controls”) who do not but are otherwise similar. In other words, subjects are not randomly allocated to intervention and control groups. This type of study is relatively inexpensive and well-suited to the study of medical conditions.

Practice & Source:

Catalytic First Lost Capital

Finance

Catalytic first-loss capital refers to socially- and environmentally-driven credit enhancement provided by an investor or grant-maker who agrees to bear first losses in an investment in order to catalyze the participation of co-investors that otherwise would not have entered the deal. Catalytic first-loss capital has gained recent prominence in impact investing dialogue as more investors look to enter the market.

Related: First Loss Capital

Practice & Source:

Causality

Evaluation

The relationship between cause and effect.

Evaluation

The claim that a program is responsible for the observed effects.

Related: Attribution, Counterfactual, Additionality, Control group, Impact

Commentary

Confusion and tension can arise not so much from the definition of “causality” but from disagreements on what are appropriate methods and criteria for establishing cause and effect relationships. We infer causality from what we see. Evaluation has tools and approaches to help people make valid inferences, though differences in perspectives and bias can lead to different people inferring different things from the same observations and information.

Practice & Source:

Charity

General

An organization set up to provide help and raise money for those in need.

Related: Nonprofit organization, Not for profit organization, Nongovernmental organization (NGO)

Commentary

Common usage in the UK to denote organizations with a social purpose and a certain tax status. In the US, “charity” more commonly denotes making financial or volunteer donations to an organization, rather than to nonprofit organizations themselves.

Practice & Source:

Clean technology

Sustainable development

See definition for “Green tech”

Related: Sustainability

Commentary

Long form for “cleantech.”

Cleantech

Finance

See “Green tech.”

Commentary

Short form for “clean technology.” Also written “clean tech” or “clean-tech.”

Client centered

See “client centric.”

Related: Client centric impact evaluation

Client centric

Business/CSR

A specific approach to doing business that focuses on the customer. Client centric businesses ensure that the customer is at the center of a business’s philosophy, operations or ideas. These businesses believe that their clients are the only reason that they exist and use every means at their disposal to keep the client happy and satisfied.

Related: Client

Commentary

Outside of monopolies, all businesses need to be client-centric to some degree to survive. Taking a client centric approach refers to the degree a business focusses on clients and customers in how it operates. The term is used in the charity sector to emphaize a focus on the beneficiaries of services rather than the funders of the organisation.

Practice & Source:

Client(s)

Business/CSR

Customer of a professional service provider

Related: Customer, User, End User, Stakeholder, Beneficiary, Constituent

Commentary

In recent years, several players in the sutainable development, social enterprise, and impact investing fields have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize the individuals who benefit directly from an intervention, product, service, or investment as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Practice & Source:

Collateral

Finance

Something pledged as security for repayment of a loan, to be forfeited in the event of a default.

Business/CSR

Printed or electronic information used to help encourage people to buy a product, for example information sheets, websites, etc.

Commentary

In finance, “collateral” refers to a pledge of security. In marketing, “collateral” refers to a set of marketing materials. The noun may potentially be confused with the adjective.

Practice & Source:

Collective impact

Social Enterprise

Collective impact is the commitment of a group of actors from different sectors to a common agenda for solving a complex social problem.

Commentary

The term was coined by John Kania and Mark Kramer in Collective Impact, a 2011 Stanford Social Innovation Review article. The article describes a form of cross-sector collaboration that comprises five components: a common agenda, shared measurement system, mutually reinforcing activities, constant communication, and a backbone support organisation.

Practice & Source:

Community Development Financial Institution (CDFI)

Finance

A private sector financial institution that focuses on personal lending and business development efforts in local communities. CDFIs can receive federal funding through the U.S. Department of the Treasury by completing an application.

Related: Impact investor

Practice & Source:

Community Interest Company (CIC)

Social enterprise

A type of company, designed in particular for social enterprises that want to use their profits and assets for the public good. CICs are easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community.

Related: Benefit Corporation, For benefit corporation, Social enterprise

Commentary

Any CIC assets and profits (aside from those distributed in accordance with the rules on dividend capping) must be kept within the CIC and used solely for community benefit. This is known as an asset lock. The only bodies to which assets can be transferred are other asset-locked bodies, i.e. those organisations which already have an asset lock, such as charities or other CICs.

Comparator group

Evaluation

See definition for “Comparison group.”

Related: Control group

Comparison group

Evaluation

A non-randomly selected group that does not receive the services, products or activities of the program being evaluated.

Related: Control group

Practice & Source:

Confidence interval

Evaluation

A range of values so defined that there is a specified probability that the value of a parameter lies within it.

 

Commentary

“Confidence interval” has a specific meaning based on statistical probabilities that is different from the everyday use of being confident or not confident of or in something.

Practice & Source:

Constituent(s)

General

(a) A member of a body of customers or supporters.
(b) A component part of something.

Related: Stakeholder, Client, Customer, User, End user, Beneficiary

Commentary

In recent years, several players in the sutainable development, social enterprise, and impact investing fields have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize the individuals who benefit directly from an intervention, product, service, or investment as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Practice & Source:

Content validity

Evaluation

The degree to which a measure or set of measures adequately represents all facets of the phenomena it is meant to describe.

Related: Validity, External validity, Internal validity, Impact measurement, Social impact measurement, Indicator, Key Performance Indicator

Practice & Source:

Context

General

The circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood.

Evaluation

The ambient social circumstances that do or may influence what is being evaluated or the evaluation itself; by contrast with ambient physical circumstances that would normally go under “description.” Context includes attitudes and expectations by stakeholders (these factors also apply to consumers), access to documents and sites, and community status. Context has longitudinal (historical, diachronic) and a cross-sectional (concurrent, synchronic) aspect. Context is often crucial for establishing causation.

Commentary

Understanding context, or contextual analysis, is important in evaluation, philanthropy, and social enterprise, and to a lesser degree in economics, in determining whether a particular intervention in a particular point in time and place is likely to be or was successful. Realist evaluation methods in particular emphasize the role of context. Contexts include social, economic and political structures, organizational context, program participants, program staffing, and geographical and historical context, among other features.

Contingent valuation

Economics

The method of valuation used in cost—benefit analysis and environmental accounting. It is conditional (contingent) on the construction of hypothetical markets, reflected in expressions of the willingness to pay for potential environmental benefits or for the avoidance of their loss.

Related: Valuation

Practice & Source:

Control group

Evaluation

A randomly selected group that does not receive the services, products or activities of the program being evaluated.

Related: Comparison group, Comparator group, Attribution

Commentary

The difference between a control group and a comparator group is that the former is randomly selected. The latter is not.

Practice & Source:

Control(s)

Accounting

Any action taken by management, the board and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved. Management plans, organizes and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.

Finance

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

General

The power to influence or direct people’s behavior or the course of events.

Related: Control group, Base case, Attribution

Commentary

“Controls” is often associated with another word, such as “internal controls”, “accounting controls”, “management control”. Confusion can arise if “control” is used as a shortened version of “control group”.

Convention(s)

General

a) A way in which something is usually done.
b) An agreement between states covering particular matters, especially one less formal than a treaty.
c) A large meeting or conference, especially of members of a political party or a particular profession or group.

Related: Norm

Practice & Source:

Cooperative

Business/CSR

Firm owned, controlled, and operated by a group of users for their own benefit. Each member contributes equity capital, and shares in the control of the firm on the basis of one-member, one-vote principle (and not in proportion to his or her equity contribution).

Related: Social enterprise

Practice & Source:

Corporate Governance

Business/CSR

The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).

The corporate governance framework consists of (1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards, (2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and (3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.

Related: Environmental, Social, Governance (ESG) Criteria

Practice & Source:

Corporate Social Responsibility (CSR)

Business/CSR

Corporate social responsibility, often abbreviated “CSR,” is a corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social wellbeing. The term generally applies to efforts that go beyond what may be required by regulators or environmental protection groups.

CSR may also be referred to as “corporate citizenship” and can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.

Practice & Source:

Correlation

Evaluation

a) A mutual relationship or connection between two or more things.
b) A quantity measuring the extent of the interdependence of variable quantities.

Finance

To talk of a correlation is to express the strength of the relationship between two variables. A correlation is said to be positive if movements between the two variables are in the same direction and negative if it moves in the opposite direction. A correlation of zero means there is no correlation at all between the two variables.

Practice & Source:

Cost allocation

Accounting

Assignment of indirect costs to a cost object (a job or task) without arbitrary apportionment. Costs can be allocated where the amount to be assigned can be determined accurately.

Practice & Source:

Cost-benefit analysis

Economics

A method of reaching economic decisions by comparing the costs of doing something with its benefits.

Related: Social Return on Investment (SROI)

Commentary

The Economist definition notes that cost-benefit analysis “sounds simple and common-sensical, but, in practice, it can easily become complicated and is much abused. With careful selection of the assumptions used in cost-benefit analysis it can be made to support, or oppose, almost anything. This is particularly so when the decision being contemplated involves some cost or benefit for which there is no market price or which, because of an externality, is not fully reflected in the market price. Typical examples would be a project to build a hydroelectric dam in an area of outstanding natural beauty or a law to require factories to limit emissions of gases that may cause ill-health.”

Practice & Source:

Counterfactual

Evaluation

The situation or condition which hypothetically may prevail for individuals, organizations, or groups were there no intervention.

General

A counterfactual conditional statement (e.g. If kangaroos had no tails, they would topple over).

Related: Base case, Attribution, Causality, Comparison group, Control group

Commentary

The “counterfactual” is an important concept in evaluation. It is an estimate of what might have happened without the intervention. This is different from the general use of “counterfactual” as a conditional statement. Both might be confused with the adjective.

Customer(s)

Business/CSR

A party that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers.

Related: Client, User, End User, Stakeholder, Beneficiary, Constituent

Commentary

In recent years, several players in the sutainable development, social enterprise, and impact investing fields have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize the individuals who benefit directly from an intervention, product, service, or investment as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Practice & Source:

Data

Evaluation

Information collected by a researcher. Data gathered during an evaluation are manipulated and analyzed to yield findings that serve as the basis for conclusions and recommendations.

General

Facts and statistics collected together for reference or analysis.

Related: Data set; Qualitative information / data; Quantitative information / data

Data set

General

A collection of related sets of information that is composed of separate elements but can be manipulated as a unit by a computer.

Related: Data

Practice & Source:

Decay

General

Undergo a gradual decrease.

Related: Impact

Commentary

Decay is often used to note that the effects of interventions, especially behaviour interventions, may not last indefinitely, as people or the situation tend to revert back to the pre-intervention state.

Practice & Source:

Depreciation

General

A reduction in the value of an asset over time, due in particular to wear and tear.

Accounting

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. For tax purposes, businesses can deduct the cost of the tangible assets they purchase as business expenses; however, businesses must depreciate these assets in accordance with IRS rules about how and when the deduction may be taken.

Related: Amortization

Practice & Source:

Development Bank

Sustainable development

Financial institutions dedicated to fund new and upcoming businesses and economic development projects by providing equity capital and/or loan capital.

Related: Development Finance Institution (DFI)

Practice & Source:

Development Finance Institution (DFI)

Sustainable development

The term ” development finance institutions ” (DFI) encompasses not only government development banks, but also nongovernmental micro-finance organizations, that match grants to attempt to promote community development, decentralization of power, and local empowerment. Measures of the social cost of DFIs that receive public funds, help to check whether DFIs are good uses of public funds, i.e., if the social benefit of a DFI exceeds the social cost, then public funds are indeed well-spent, further improving social welfare.

Related: Community Development Finance Institution (CDFI)

Practice & Source:

Development Impact Bond (DIB)

Finance

Development Impact Bonds provide upfront funding for development programs by private investors, who are remunerated by donors or host-country governments—and earn a return—if evidence shows that programs achieve pre-agreed outcomes.

Related: Social Impact Bond (SIB)

Practice & Source:

Developmental evaluation

Evaluation

An evaluation approach that can assist social innovators develop social change initiatives in complex or uncertain environments. Developmental evaluation (DE) originators liken their approach to the role of research & development in the private sector product development process because it facilitates real-time, or close to real-time, feedback to program staff thus facilitating a continuous development loop. Michael Quinn Patton is careful to describe this approach as one choice that is responsive to context. This approach is not intended as the solution to every situation. Development evaluation is particularly suited to innovation, radical program re-design, replication, complex issues, crises In these situations, DE can help by: framing concepts, test quick iterations, tracking developments, surfacing issues.

Commentary

“Developmental Evaluation” is an approach developed by Michael Quinn Patton. It adds an evaluator’s perspective to the set of models and practices that promote learning, adaptation, and continuous improvement in a fast-changing, complex environment.

Practice & Source:

Discount rate

Finance

a) The interest rate charged by a central bank to commercial banks when lending short-term funds (by discounting government paper or using government paper as collateral). In the US, the discount rate, which acts as a reference rate for commercial banks’ own lending rates, is one of the two key rates manipulated by the Federal Reserve to control money supply (the other being the Federal funds rate). b) The discount rate is also the interest rate at which commercial banks discount bills of exchange. c) The term also refers to the interest rate used to calculate discounted cashflow.

Economics

The annual percentage rate at which the present value of a future pound, or other unit of account, is assumed to fall away through time.

Related: Discounting, Interest, Net present value

Commentary

There is the potential for confusion between the use of “discount rate” to refer to the interest rate charged in certain circumstances of borrowing and the rate used to discount future cash flows to net present value. See “discounting” and “net present value”.

Also, there are debates about what discount rate (for net present value calculations) it is appropriate to use when considering the value of natural capital, which may actually increase in the future relative to the present rather than decrease (the way the value of currency tends to do, due to inflation).

Practice & Source:

Discounting

Economics

A technique used to compare costs and benefits that occur in different time periods. It is a separate concept from inflation, and is based on the principle that, generally, people prefer to receive goods and services now rather than later. This is known as ‘time preference’.

Related: Discount rate. Net present value.

Commentary

“Discounting” can also refer to reducing price to increase sales (i.e., offering a discount).

Displacement

Economics

The action of moving something from its place or position.

Economics

The degree to which an increase in productive capacity promoted by government policy is offset by reductions in productive capacity elsewhere.

Commentary

Displacement in evaluation, economics, and impact investing, typically refers to the benefits of an intervention, program or policy displacing other benefits. For example, a reduction in crime levels in one local area may lead to an increase in crime in another; in such a case crime may not actually decrease but rather is displaced.

Distance travelled

Philanthropy

No clear, authoritative definition. See commentary.

Commentary

“Distance travelled” is used, particularly in the UK non-profit sector, to refer to the relative progress made by people towards health, well-being, and developmental goals, such as from addiction to recovery, educational achievement, or living independently of others. It is an alternative to measuring success by the achievement of absolute goals that tends to be insensitive to progress made that may fall short of the absolute goal.

Diversification

Finance

A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Related: Portfolio mangement

Commentary

This technique is mostly used in the financial world but applies to business–such diversification of prooducts–and other fields.

Practice & Source:

Diversify

Philanthropy

Make or become more diverse or varied.

Commentary

See diversification.

Practice & Source:

Double bottom line

Social enterprise

The simultaneous pursuit of financial and social returns on investment – the ultimate benchmark for a social enterprise or a social sector business

Related: Triple bottom line 

Commentary

“Double bottom line” extends the notion of the conventional bottom line that measures financial performance—profit or loss—by adding positive or negative social impact as a second bottom. “Double bottom line” has been superceeded by “triple bottom line” which has gained more popularity as a concept and in practice.

Practice & Source:

Dropoff

Evaluation

The deterioration of an outcome over time.

Related: Impairment

Commentary

See commentary for “decay”.

Due diligence

Finance

An investigation or audit of a potential investment to confirm all facts, such as reviewing all financial records, plus anything else deemed material. Due diligence refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party. When sellers perform a due diligence analysis on buyers, items that may be considered are the buyer’s ability to purchase, as well as other elements that would affect the acquired entity or the seller after the sale has been completed.

Related: Audit, Appraisal

Practice & Source:

Duration

General

The time during which something continues.

Practice & Source:

Effect(s)

Evaluation

Intended or unintended change due directly or indirectly to an intervention

Related: Result, Outcome

Effectiveness

Evaluation

(1) The extent to which the intervention’s objectives were achieved, or are expected to be achieved, taking into account their relative importance.
(2) Also used as an aggregate measure of (or judgment about) the extent to which an intervention has attained, or is expected to attain, its major relevant objectives efficiently in a sustainable fashion and with a positive institutional development impact.

Business/CSR

The degree to which objectives are achieved and the extent to which targeted problems are solved.

Related: Efficiency

Efficiency

Evaluation

A measure of how economically resources/inputs (funds, expertise, time, etc.) are converted to results.

Business/CSR

The comparison of what is actually produced or performed with what can be achieved with the same consumption of resources (money, time, labor, etc.). It is an important factor in determination of productivity.

Economics

Obtaining the maximum output for given inputs.

Related: Effectiveness

Commentary

“Efficiency” is used slightly differently in different fields. It refers to how inputs are converted to outputs (in business and economics) or results (in evaluation). In economics, allocative efficiency concerns whether resources are optimally allocated to achieve maximum levels of public welfare (well-being).

End user(s)

Business/CSR

Person or organization that actually uses a product, as opposed to the person or organization that authorizes, orders, procures, or pays for it.

Related: User, Customer, Client

Commentary

In recent years, several players in the sutainable development, social enterprise, and impact investing fields have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize the individuals who benefit directly from an intervention, product, service, or investment as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Practice & Source:

Environmental accounting

Accounting

Environmental accounting refers to: a) national accounting: physical and monetary accounts of environmental assets and the costs of their depletion and degradation; b) corporate accounting: the term usually refers to environmental auditing, but may also include the costing of environmental impacts caused by the corporation.

Related: Environmental economics, Social impact accounting, Impact accounting

Commentary

Environmental accounting is used in a similar way to “financial accounting”, though the practices of environmental accounting are not as developed, widespread, and agreed-upon as those for financial accounting. The entry in Wikipedia notes that “environmental accounting is a field that identifies resource use, measures and communicates costs of a company’s or national economic impact on the environment. Costs include costs to clean up or remediate contaminated sites, environmental fines, penalties and taxes, purchase of pollution prevention technologies and waste management costs.”

Practice & Source:

Environmental, Social, and Governance Criteria (ESG)

Finance

A set of standards for a company’s operations that socially conscious investors use to screen investments. Environmental criteria looks at how a company performs as a steward of the natural environment. Social criteria examines how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits and internal controls, and shareholder rights. Investors who want to purchase securities that have been screened for ESG criteria can do so through socially responsible mutual funds and exchange-traded funds.

Related: Sustainability, Environmental accounting, Social accounting, Corporate governance, Reporting standard

Commentary

This is often referred to as simply “ESG,” where each letter is sounded out individually.

Practice & Source:

Equity

Finance

The value of an asset less the amount of all liabilities on that asset. It can be represented with the accounting equation: Assets – Liabilities = Equity.

General

The quality of being fair and impartial.

Related: Investment, Public equity, Private equity, Quasi-equity

Commentary

The is potential for misunderstanding between the concept of equity as fairness and equity as the net value of an asset. In addition, there is the potential for further confusion because of different variations of the latter definition. “Equity” is often shorthand for shareholder equity reflecting what a shareholder owns in a corporation. Another common use is to call a stock or any other security representing an ownership interest as “equity”. In real estate, “equity” is the difference between the current fair market value of the property and the amount the owner still owes on the mortgage.

Practice & Source:

Ethical investing

Finance

Using one’s ethical principles as the main filter for securities selection. Ethical investing depends on an investor’s views; some may choose to eliminate certain industries entirely (such as gambling, alcohol, or firearms, also known as sin stocks) or to over-allocate to industries that meet the individual’s ethical guidelines.

Related: Socially responsible investing (SRI), Impact investing

Commentary

“Ethical investing” is sometimes used interchangeably with “socially responsible investing” but the latter typically have one overarching set of guidelines that is used to select the portfolio, while ethical investing may tend toward a more personalized perspective.

Practice & Source:

Evaluation

Evaluation

The systematic and objective assessment of an ongoing or completed project, program or policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of objectives, efficiency, effectiveness, impact and sustainability. An evaluation should provide information that is credible and useful, enabling the incorporation of lessons learned into the decision-making process of both recipients and donors. Evaluation also refers to the process of determining the worth or significance of an activity, policy or program. An assessment, as systematic and objective as possible, of a planned, ongoing, or completed intervention. Evaluation in some instances involves the definition of appropriate standards, the examination of performance against those standards, an assessment of actual and expected results and the identification of relevant lessons.

General

The making of a judgment about the amount, number, or value of something; assessment.

Commentary

Confusion can arise due to differences in understanding what an evaluation involves. Professional evaluators use the term to describe an assessment, or investigation of a program or intervention using a set of defined practices and principles undertaken by people with relevant skills and experience. Others may understand evaluation as simply making a judgment about something, or as being synonymous with applied research. “Evaluation” is also sometimes used to refer to the professional field and practice in a similar way to “accounting” or “social work.”

Evidence

General

The available body of facts or information indicating whether a belief or proposition is true or valid.

Related: Outcomes, Impact, Baseline, Base case, Control group, Comparison group, Assessment, Evaluation

Commentary

There is little disagreement about the definition of the term “evidence”, but what counts as good evidence is often contested.

Practice & Source:

Evidence-based

General

Supported by a large amount of scientific research.

Evaluation

A practice that is based on rigorous research that has demonstrated effectiveness in achieving the outcomes that it is designed to achieve.

Related: Evidence

Commentary

“Evidence-based” is often used in front of “practice” or “policy”. A common definition, created by Dr. David Sackett, of “Evidence-Based Practice” in medicine is “the conscientious, explicit and judicious use of current best evidence in making decisions about the care of the individual patient. It means integrating individual clinical expertise with the best available external clinical evidence from systematic research.” The term has since spread to other sectors. In practice, the details of what counts as good evidence in social and environmental policy and practices can be contested.

Ex-ante evaluation

Evaluation

An evaluation that is performed before implementation of an intervention.

Related: Ex-post evaluation, Appraisal

Ex-post evaluation

Evaluation

Evaluation of an intervention after it has been completed.

Related: Ex-ante evaluation

Expectation(s)

General

a) A strong belief that something will happen or be the case; a belief that someone will or should achieve something.
b) A predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.

Practice & Source:

Experimental design

Evaluation

A methodology in which research subjects are randomly assigned to either a treatment or control group, data is collected both before and after the intervention, and results for the treatment group are benchmarked against a counterfactual established by results from the control group.

Related: Randomized Control Trial (RCT), Control, Control group, Quasi-experimental design

Practice & Source:

External audit

Accounting

Periodic or specific purpose (ad hoc) audit conducted by external (independent) qualified accountant(s). Its objective is to determine, among other things, whether (1) the accounting records are accurate and complete, (2) prepared in accordance with the provisions of GAAP, and (3) the statements prepared from the accounts present fairly the organization’s financial position, and the results of its financial operations.

Related: Audit, External evaluation

Commentary

An external audit is often thought to refer to a financial audit, but it can be used for any type of checking processes or standards by an external party, such as an external audit of health and safety, fair trade standards, and environmental practices. The basic process is where one party checks another party’s account of something on behalf of somebody else.

Practice & Source:

External evaluation

Evaluation

The evaluation of an intervention conducted by entities and/or individuals outside the donor and implementing organizations.

Related: External audit, Independent evaluation

External validity

Evaluation

The degree to which findings, conclusions, and recommendations produced by an evaluation are applicable to other settings and contexts.

Related: Internal validity

Commentary

“External validity” is a technical evaluation term that refers to the validity in generalizing from something that has been evaluated to a similar thing that has not.

Practice & Source:

Feedback

Evaluation

The transmission of findings generated through the evaluation process to parties for whom it is relevant and useful so as to facilitate learning. This may involve the collection and dissemination of findings, conclusions, recommendations and lessons from experience.

General

Information about reactions to a product, a person’s performance of a task, etc., used as a basis for improvement.

Related: Voice, Customer, Client, User, Stakeholder, Constituent, Beneficiary

 

Commentary

The distinction is often made betweeen solicited feedback (eg, customer surveys) and unsolicited feedback, where customers etc. provide opinions without being asked.

Financial first (or finance first)

Finance

Investors who prioritize the financial return objective over the social or environmental objectives of an investment. This group tends to include commercial investors seeking investments that offer market-rate returns and also yield social or environmental good. Also included in this group are investors that are required to uphold a fiduciary standard and are therefore unable to make investments that lack the potential to yield market rate returns.

Related: Impact first investor, Impact investing

Commentary

“Finance first” can also be used to describe a business or organization. Also see “impact first”.

Practice & Source:

Financial model

Business/CSR

Mathematical representation of key financial and operational relationships. Comprising of one or several sets of equations, it is used in analyzing how a business will react to different economic situations or events, and in estimating the outcome of financial decisions before committing any funds. A financial model generally includes cash flow projections, depreciation schedules, debt service, inventory levels, rate of inflation, etc. It may also quantify the financial impact of the firm’s policies, and of restrictions or covenants imposed by investors and/or lenders. A cash budget (whether computed by hand or with a spreadsheet program) is a basic financial model.

Practice & Source:

Financial sustainability

Social enterprise

Financial sustainability for a social enterprise is the degree to which it collects sufficient revenues from the sale of its services to cover the full costs of its activities. For charities, it involves achieving adequate and reliable financial resources, normally through a mix of income types.

Related: Sustainability

Commentary

Some uses of “financial sustainability” for social enterprises do not limit revenues to just proceeds from sales, but also count predictable and secure grants and donations. Thus a broader definition is the ability to fund the future of a nonprofit or social enterprise, typically through a combination of earned income, charitable contributions and / or public sector subsidies.

Practice & Source:

Financial value

Finance

No clear, authoritative definition. See commentary.

Related: Social value, Value

Commentary

“Financial value” is typically understood as the value of an asset expressed in monetary terms which can be converted into cash by selling the asset or through its generation of cash flows.

Finding(s)

Evaluation

Factual statements about a project or program which are based on empirical evidence. Findings include statements and visual representations of the data, but not interpretations, judgments or conclusions about what the findings mean or imply.

Related: Evidence

Commentary

In law, a finding is the verdict or decision of a judge or jury rather than the reporting of objective facts in an evaluation or investigation.

Practice & Source:

First Loss Capital (FIRLO)

Finance

With first-loss capital, the investor would provide capital if the manager or hedge fund will contribute a fixed percentage of the total managed account, usually ranging from 10%-20% depending on the capital provider. The performance fee received by the hedge fund or manager is more than that of the usual industry standard. The caveat is that should the manager incur any losses, that money comes out of their capital and the investor’s remains intact. Thus the hedge fund managers are in the position to sustain first-loss. If they should suffer a big monthly loss, then they lose their own money quickly while the first-loss capital providers can withdraw their investment to protect their own interests.

Related: Catalytic First Loss Capital

Practice & Source:

Fixed income

Finance

A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals and at reasonably predictable levels. Fixed-income investors are typically retired individuals who rely on their investments to provide a regular, stable income stream. This demographic tends to invest heavily in fixed-income investments because of the reliable returns they offer.

Related: Bond

Commentary

Investopeda also notes that “fixed-income security is an investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity.”

Practice & Source:

Formative evaluation

Evaluation

Evaluation intended to improve performance, most often conducted during the implementation phase of projects or programs. Formative evaluations may also be conducted for other reasons such as compliance, legal requirements or as part of a larger evaluation initiative.

Related: Evaluation

Fourth sector

Social enterprise

The “fourth sector” is an emerging sector of the economy which consists of “for-benefit” organizations that combine market-based approaches of the private sector with the social and environmental aims of the public and non-profit sectors.

Related: Social sector, Third sector, Profit with purpose business

Practice & Source:

Fund advisor

Finance

a) The person or company responsible for making investments on behalf of, and/or providing advice to, investors. b) In the context of the mutual fund business, an advisor, also known as an investment advisor, is an organization employed by an investment company to manage a particular fund’s portfolio. A fund’s advisor assigns a manager(s) to make the day-to-day decisions involved in the purchase and sale of a fund’s securities according to stated strategies and investment objectives.

Related: Fund manager

Practice & Source:

Fund manager

Finance

A fund manager is responsible for implementing a fund’s investing strategy and managing its portfolio trading activities. A fund can be managed by one person, by two people as co-managers, or by a team of three or more people. Fund managers are paid a fee for their work, which is a percentage of the fund’s average assets under management (AUM)

Related: Fund advisor

Practice & Source:

General Partner (GP)

Business/CSR

One of the co-owners of an unincorporated business (organized as a general partnership) who has control of the firm and, unlike limited or nominal partner, has unlimited personal liability for the firm’s debts. Actions taken by one general partner are binding upon the other general partners. Also called full partner.

Related: Limited Partner (LP)

Practice & Source:

Global Impact Investing Network (GIIN)

Finance

A nonprofit organization dedicated to increasing the scale and effectiveness of impact investing around the world.

Related: Impact investing

Practice & Source:

Global Impact Investing Rating System (GIIRS)

Finance

A project of B Lab that assesses the social and environmental impact (but not the financial performance) of companies and funds, using a ratings approach analogous to Morningstar investment rankings or rating agency credit risk ratings.

Related: Impact investing

Practice & Source:

Global Reporting Initiative (GRI)

Business/CSR

A multi-stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. The guidelines were developed so that companies, government agencies, and non-governmental organizations can report on the economic, environmental, and social dimensions of their activities, products and services. Started in 1997 by the Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environment Program (UNEP), the GRI incorporates the active participation of representatives from business, accountancy, investment, environmental, human rights, research, and labor organizations from around the world.

Related: Impact investing

Practice & Source:

Goal(s)

General

The object of a person’s (or group of people’s) ambition or effort; an aim or desired result.

Practice & Source:

Grant

Philanthropy

Bounty, contribution, gift, or subsidy (in cash or kind) bestowed by a government or other organization (called the grantor) for specified purposes to an eligible recipient (called the grantee). Grants are usually conditional upon certain qualifications as to the use, maintenance of specified standards, or a proportional contribution by the grantee or other grantor(s).

Related: Foundation, Philanthropy, Recoverable grant

Commentary

Grants differ from “recoverable grants” in that grantees are not required to pay the money back to the grantor.

Practice & Source:

Green tech

Sustainable development

Alternatively referred to as environmental technology or cleantech, this term is used to describe a collection of modern technologies and approaches that maximize human, environmental, and economic benefits. Specifically, green tech utilizes advancements of modern environmental science, biotechnology and engineering to provide products and services in a way that least degrades natural resources, and in some cases, regenerates them. Common examples of green tech include: materials recycling; utilization of solar, wind and other renewable energy sources for power; biological water treatment and grey water recycling; biofuels; and energy-conserving electronics.

Related: Sustainability

Commentary

Short form for “green technology.”

Practice & Source:

Greenfield

General

Denoting or relating to previously undeveloped sites for commercial development or use.

Finance

A particular type of investment where an international company begins a new operation in a foreign company by constructing new operational facilities from the ground up. There are many different types of investments of which greenfield investments are only one small category. The new greenfield operation is often a subsidiary of the multinational corporation.

Commentary

The term is used to refer to new development where none has been before. In some, but not all, cases, it means development in a new country for a given business.

Practice & Source:

Guarantee

General

a) A formal assurance (typically in writing) that certain conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality. b) An undertaking to answer for the payment or performance of another person’s debt or obligation in the event of a default by the person primarily responsible for it.

Finance

a) A formal written promise to repair or replace a product if it has a fault within a specific period of time after you buy it. b) An agreement to be responsible for someone else’s promise, especially a promise to repay a loan if the original borrower defaults (fails to repay it or make interest payments on it). c) Money or assets held by an organization until someone has paid their debts, or debts that they might have in the future.

Commentary

Giving a guarantee means making a committment. Different uses reflect different ways of making such a commitment, such as whether it is done orally or in writing and whether it has legal and / or financial backing.

Practice & Source:

Hedonic pricing

Business/CSR

A method of pricing based on the principle that, the price of a marketed good is affected by certain external environmental or perceptual factors that can raise or lower the “base” price of that good. This is commonly applied to the housing market, where the price of a house can be affected by factors such as scenic views, house appearance, and neighborhood demand. The hedonic pricing model is used to estimate the extent that price and demand can be affected by such factors i.e. how much people are willing to pay for that good when considering these factors.

Related: Stated preference

Practice & Source:

High Net Worth Individual (HNWI)

Finance

A classification used by the financial services industry to denote an individual or a family with high net worth. Although there is no precise definition of how rich somebody must be to fit into this category, high net worth is generally quoted in terms of liquid assets over a certain figure. The exact amount differs by financial institution and region, but the most commonly quoted figure for membership in the high net worth club is $1 million in liquid financial assets.

Related: Ultra High Net Worth Individual (UHNWI)

Practice & Source:

Impact

Evaluation

Positive and negative, primary and secondary long-term effects produced by an intervention, directly or indirectly, intended or unintended.

Evaluation

A result or effect that is caused by or attributable to a project or program. Impact is often used to refer to higher level effects of a program that occur in the medium or long term, and can be intended or unintended and positive or negative.

General

a) The action of one object coming forcibly into contact with another. b) A marked effect or influence.

Related: Effect, Outcome, Impact evaluation

Commentary

Different uses of “impact” give different weight to the importance of causality between an intervention and its effects and the measurability, breadth and timeframe of those effects. In the generic definition, the degree of influence, breadth of effects and timeframe are not specified. In evaluation, the narrow definition of impact refers to short and/or long-term effects that have been measured by comparing a group receiving an intervention to a control or comparator group, whereas the broader definition encompasses all long-term apparent effects of an intervention–intended and unintended, positive and negative–where causality is implied but not necessarily measured. Such differences and expectations as to what counts as an impact can be a source of misunderstanding, particularly in the context of the meaning and scope of an “impact evaluation”. One evaluator may use the term “impact” in the narrow sense, meaning an intervention that has a measurable, typically intended, effect. Others may use the broader definition, implying broader, longer-term effects that may neither be intended nor measurable. Currently businesses and impact investors that intend to generate positive social or environmental impacts typically do not imply or require the rigorous measurement implied by the narrow definition. Impact is sometimes added as a modifier to conventional words and phrases to signify application of that word or phrase only to social and / or environmental impacts (eg, impact due diligence, impact risk, impact mamangement).

Impact accounting

Accounting

No clear, authoritative definition found. See commentary.

Related: Corporate social responsibility, Social accounting, Environmental accounting, Social audit

Commentary

This is a case of using “impact” as a modifer to “accounting” to imply a method of accounting for social and environmental impacts, and a discipline and profession, that mirrors financial accounting. There is growing interest in approaches to impact accounting, with a corresponding growth in methods, guidance, and platforms. Nevertheless, the application of impact accounting lags far behind the application of financial accounting (which is a much older field).

Impact assessment

Sustainable development

The process of identifying the future consequences of a current or proposed action.

Related: Impact measurement; Social impact measurement; Social impact assessment; Impact evaluation

Commentary

The term is often used to describe ex-ante predictions of social and / or environmental impacts of policy, planning, and business decisions, but it can also be used as a synonym for ex-post impact evaluations.

Practice & Source:

Impact chain

Finance

The impact chain represents how a social purpose organization achieves its impact by linking the organization to its activities, and the activities to outputs, outcomes and impact. The impact chain forms the central line running through the impact plan.

Related: Impact value chain, Value chain, Logical framework, Logframe, Impact map, Logic model, Theory of Change

Commentary

See “Logic model”.

Impact evaluation

Evaluation

A systematic study of the change that can be attributed to a particular intervention, such as a project, program or policy. Impact evaluations typically involve the collection of baseline data for both an intervention group and a comparison or control group, as well as a second round of data collection after the intervention, some times even years later.

Evaluation

An impact evaluation provides information about the impacts produced by an intervention – positive and negative, intended and unintended, direct and indirect. This means that an impact evaluation must establish what has been the cause of observed changes (in this case ‘impacts’) referred to as causal attribution (also referred to as causal inference).

Related: Summative evaluation

Commentary

The issue of whether an impact evaluation requires a control or comparator group is subject to debate among evaluators. Having a strong focus on attribution favors rigorous (typically experimental and quasi-experimental) quantitative methods that can be good at assessing causality. But such methods may limit the scope of an impact evaluation to only what can be measured under special conditions; are not always feasible or cost-effective given the complexity of the real world; and may, if experimental, raise ethical and sometimes legal concerns. Thus some evaluators argue for using alternative and / or complementary methods such as case studies and qualitative methods. See Broadening the range of designs and methods for impact evaluation by Stern et. al.

Practice & Source:

Impact first

Finance

Impact first investors targeting social or environmental good as their primary objective, above achieving a financial return. This may mean accepting a below-market rate of return in order to reach tougher social/environmental goals that are seemingly not achievable through mainstream investment or philanthropic activities.

Related: Finance first investor, Impact first investor, Impact investing, Impact investor

Commentary

“Impact first” and its counterpart, “finance first”, are general concepts. There is no common, clearly defined point at which an investment approach shifts from impact first to finance first or vice versa.

Practice & Source:

Impact investing

Finance

Impact investing is investing that aims to generate specific beneficial social or environmental effects in addition to financial gain. Impact investing is a subset of socially responsible investing (SRI), but while the definition of socially responsible investing encompasses avoidance of harm, impact investing actively seeks to make a positive impact by investing, for example, in non-profits that benefit the community or in clean technology enterprises.

Finance

Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate and premium returns. Although often associated with risk capital for small-scale, early stage enterprises, an investment is considered “impactful” provided the investor is committed to achieving a social or environmental benefit and to tracking and reporting progress.

Related: Ethical investing, Finance first, Impact first, Impact investor, Socially responsible investing (SRI), ESG Criteria

Commentary

There is some ambiguity as to whether “impact investing” is defined simply by the intent of the investor to create a positive social and / or environmental impact, or whether the investments actually need to create such an impact. The latter implies verification as an essential part of the process.

Impact investing and venture philanthropy belong in the overlap of two sets of activities: using money to generate more money and using money to create a positive impact on people’s lives. Though there is no clear dividing line between impact investing and venture philanthropy, generally the priorities and practices of impact investing are closer to mainstream investing while the priorities and practices of venture philanthopy are closer to philanthropy.

Practice & Source:

Impact investor

Finance

No clear, authoritative definition currently exists. See commentary.

Related: Finance first, Impact first, Impact investing

Commentary

Impact investors are individuals, companies, and funds who make investments into other companies, organizations, and funds with the intention of generating social and environmental impact alongside financial returns.

Impact management

Social enterprise

No clear, authoritative definition currently exists. See commentary.

Related: Impact measurement

Commentary

The Impact Management Project describes impact managment as learning about–and improving–effects experienced by people and the planet.

Impact map

Business/CSR

A table that captures how an activity makes a difference: that is, how it uses its resources to provide activities that then lead to particular outcomes for different stakeholders.

Evaluation

The impact map displays, in table format, the linkages among organizational goals and the desired results, critical actions, and key skills/ knowledge of a role.

Business/CSR

An impact map is a visualization of scope and underlying assumptions, created collaboratively by senior technical and business people. It is a mind-map grown during a discussion facilitated by answering the following four questions: why? who? how? what?

Related: Value Chain, Impact chain, Impact value chain, Logical Framework, Logframe, Theory of change, Logic model

Commentary

There are different types of impact maps used either for planning and/or evaluation. They are sometimes preferred over more linear causal models such as logic models, results chains, and logframes. The concept of impact maps was introduced by Dr. Robert O. Brinkerhoff as a tool to ensure that training was focused on the most organizational-critical skills and knowledge. Since then its use has been adapted. One important difference in types is whether they focus on the recipient of the impact or the creator of the impact.

Impact measurement

Finance

Measuring and managing the process of creating social and environmental impact in order to maximize and optimize it.

Related: Impact management, Impact assessment, Social impact assessment, Social impact measurement

Commentary

“Impact measurement” can be used in a narrow sense, meaning measurement of the immediate results of a logic model or results chain, without making an explicit judgment about causality. Or it can be used interchangeably with “impact assessment” which does involve an evaluative judgement (see “assessment”), and even to also imply management of impact (see the definition). “Impact measurement” is mostly, but not always, used when the impact of an intervention is thought to be direct, easily attributable with no or few unintended effects, and measurable in the short-term or in real-time. It is typicially understood that “impact measurement” implicitly includes “social” and / or “environmental” though confusion can arise as to whether it means either or both.

Practice & Source:

Impact Reporting and Investment Standards (IRIS)

Finance

The Impact Reporting and Investment Standards (IRIS) provide a common reporting language to describe social and environmental performance and ensure uniform measurement and articulation of impact across portfolios. The IRIS initiative defines terms to enable consistent reporting and allows benchmarking of data across companies, funds, investment portfolios and other organizations by serving as a repository for aggregated IRIS-compliant data. IRIS is an initiative of the Global Impact Investing Network.

Related: B corp, B Lab, GIIRS, GIIN, Impact investing

Commentary

IRIS is a catalog of measures for investors and providers to use, rather than standards of measurement and reporting to follow, such as the International Financial Reporting Standards. IRIS also provides links to impact measurement guides.

Practice & Source:

Impact risk

Finance

The likelihood that impact will be different than expected.

Related: Impact due diligence

Commentary

See commentary for “impact”. It is extremely unlikely that an intervention will have exactly the planned or expected impact. In practice, the term “impact risk” implies risks that are material from the perspective of stakeholders (i.e., “material impact risk”). Impact risk is higher when: i) small actions can have disproportionate impacts; (ii) there is uncertainty as to the key influences of impact; (iii) the intervention changes as it is implemented; iv) there is volatility and turmoil in the operating environment; (v) there are changes in the intervention design or in the authorizing environment; (vi) the operating environment changes in response to the intervention.

Practice & Source:

Impact thesis

Finance

No clear, authoritative definition currently exists. See commentary.

Related: Investment thesis, Theory of Change

Commentary

The term “impact thesis” is derived from the combination of “investment thesis” and “impact”. An impact thesis explains how activities and funding are expected to generate results likely to contribute to intended impacts. In impact investing, impact thesis is often used interchangeably with “theory of change,” though it is sometimes the case that though an impact investor has articulated an impact thesis, they have not developed a full-fledged theory of change.

Impact value chain

No clear, authoritative definition. See commentary.

Related: Impact chain, Value chain, Logical framework, Logframe, Impact map, Logic model, Theory of Change

Commentary

A logic model used for impact investing, first described in 2004 by the Double Bottom Line Project Report: assessing social impact in double bottom line ventures. Also referred to in the 2014 report, Measuring Impact: Subject paper of the Impact Measurement Working Group of the G8 Social Investment Impact Taskforce.

Impairment

Accounting

Impairment is an accounting principle that describes a permanent reduction in the value of a company’s asset, normally a fixed asset. When testing for impairment, the total profit, cash flow or other benefit that’s expected to be generated by a specific asset is periodically compared with that same assets book value. If it’s found that the book value of the asset exceeds the cash flow or benefit of the asset, the difference between the two is written off and the value of the asset declines on the company’s balance sheet.

General

The state or fact of being impaired, especially in a specified faculty.

Related: Drop-off

Practice & Source:

Implicit bias

General

A term of art referring to relatively unconscious and relatively automatic features of prejudiced judgment and social behavior. While psychologists in the field of “implicit social cognition” study “implicit attitudes” toward consumer products, self-esteem, food, alcohol, political values, and more, the most striking and well-known research has focused on implicit attitudes toward members of socially stigmatized groups, such as African-Americans, women, and the LGBTQ community. For example, imagine Frank, who explicitly believes that women and men are equally suited for careers outside the home. Despite his explicitly egalitarian belief, Frank might nevertheless implicitly associate women with the home, and this implicit association might lead him to behave in any number of biased ways, from trusting feedback from female co-workers less to hiring equally qualified men over women. Psychological research on implicit bias is relatively recent, but a host of metaphysical, epistemological, and ethical questions about implicit bias are pressing.

Related: Bias

Practice & Source:

Income

Economics

The flow of money to the factors of production: wages to labor; profit to enterprise and capital; interest also to capital; rent to land. Wages left for spending after paying taxes is known as disposable income.

Practice & Source:

Independent evaluation

Evaluation

An evaluation carried out by entities and persons free of the control of those responsible for the design and implementation of the intervention. The credibility of an evaluation depends in part on how independently it has been carried out. Independence implies freedom from political influence and organizational pressure. It is characterized by full access to information and by full autonomy in carrying out investigations and reporting findings.

Related: External audit, External evaluation, Internal evaluation, Self-evaluation

Commentary

The rationale for independence is to provide for, and to protect, the impartiality of evaluations and to ensure that the ability of the evaluators to provide credible reports and advice is not compromised. The independence of an evaluation function requires: (i) structural independence: the evaluation is sufficiently removed from political pressures to report findings without fear of repercussions; (ii) behavioral Independence: evaluators are able and willing to issue strong, high quality, and uncompromising reports; (iii) protection from outside interference: the evaluation is not subject to overruling or external influence; and (iv) avoidance of conflicts of interest: there are no official, professional, personal or financial relationships that might cause evaluators to limit the extent of an inquiry, limit disclosure, or weaken or slant findings.

Indicator(s)

Evaluation

Quantitative or qualitative factor or variable that provides a simple and reliable means to measure achievement, to reflect the changes connected to an intervention, or to help assess the performance of an actor.

Business/CSR

Measurable variable used as a representation of an associated (but non-measured or non-measurable) factor or quantity.

Finance

Indicators are statistics used to measure current conditions as well as to forecast financial or economic trends. Technical indicators are used extensively in technical analysis to predict changes in stock trends or price patterns in any traded asset.

Economics

A statistic used for judging the health of an economy, such as GDP per head, the rate of unemployment or the rate of inflation.

Related: Measure, Performance indicators, Key Performance Indicators

Commentary

In evaluation, an indicator is a variable that allows verification of changes in the intervention or shows results relative to what was planned. In business, it is a measure of how effectively a company is achieving its objectives. In economics, it is a piece of data used to judge the health of an economy. In finance, it is a tool used to predict market changes. The Better Evaluation website notes that “The terms “measure”, “metric” and indicator” are often used interchangeably and their definitions vary across different documents and organisations. Hence, it is always useful to check what these terms mean in specific contexts.” In an engineering context “indicator” refers to an instrument, not the measure.

Practice & Source:

Input(s)

Evaluation

The financial, human, and material resources used for the intervention.

General

What is put in, taken in, or operated on by any process or system.

Related: Output, Outcome

Commentary

Frequently used in discussion of an intervention’s logic model or theory of change to refer to resources used to implement it. This is a specific version of the generic definition.

Institutional development

Sustainable development

The creation or reinforcement of a network of organizations to effectively generate, allocate and use human, material and financial resources to attain specific objectives on a sustainable basis.

Related: Capacity building

Commentary

“Institutional development” refers to trying to strengthen institutions, particularly in developing countries, to ensure sustainable development, rather than or instead of running projects and programs. Related terms include institutional strengthening, institutional capacity building, and organizational development.

Institutional investor

Finance

A nonbank person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed they are more knowledgeable and better able to protect themselves. Examples of institutional investors include pension funds and life insurance companies.

Practice & Source:

Integrated reporting (IR)

Business/CSR

Integrated reporting aims to provide a detailed picture of a company’s ability to produce value over time for different stakeholders.

Business/CSR

IR is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.

An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.

Related: Sustainability reporting, Environmental, Social, and Governance (ESG) Criteria, Shared value

Commentary

Integrated Reporting is particularly promoted by the International Integrated Reporting Council (IIRC), a global coalition of regulators, investors, companies, standard setters, the accounting profession, and NGOs. The IIRC has developed the International Integrated Reporting Framework that aims to, among other goals, “enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies.”

Practice & Source:

Interest

Finance

What it costs to borrow money and what is earned from lending it or putting it on deposit. Interest is normally expressed in annual terms and as a percentage of the amount borrowed, lent or deposited (the interest rate). The term interest also means a share of ownership.

General

a) The feeling of wanting to know or learn about something or someone. b) Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt. c) The advantage or benefit of a person or group. d) A stake or involvement in an undertaking, especially a financial one. e) (usually interests) A group or organization having a common concern, especially in politics or business.

Practice & Source:

Intermediary

Finance

An entity that acts as the middleman between two parties in a financial transaction, such as a commercial bank, investment banks, mutual funds and pension funds. Financial intermediaries offer a number of benefits to the average consumer, including safety, liquidity, and economies of scale involved in commercial banking, investment banking and asset management

Practice & Source:

Internal evaluation

Evaluation

Evaluation of an intervention conducted by a unit and/or individuals reporting to the management of the donor, partner, or implementing organization.

Related: Independent evaluation, Self-evaluation

Internal validity

Evaluation

The degree to which conclusions about causal linkages are appropriately supported by the evidence collected.

Practice & Source:

International Integrated Reporting Council (IIRC)

Business/CSR

The International Integrated Reporting Council (IIRC) – which describes itself as a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs – seeks to raise awareness and encourage companies to include non-financial information in their regular reports. The IIRC aims to improve the quality of information available to investors to enable a more efficient and productive allocation of capital. It aims to ensure that there is more communication of risk factors which could affect a company’s value over time. It aims to enhance accountability and promote good stewardship.

Related: Integrated reporting (IR)

Commentary

See “Integrated reporting”.

Practice & Source:

Intervention

Evaluation

An action or entity that is introduced into a system to achieve some result. In the program evaluation context, an intervention refers to an activity, project or program that is introduced or changed (amended, expanded, etc.).

Related: Activity, Project, Program

Practice & Source:

Investee

Finance

A company or entity in which an investor makes a direct investment. More commonly used in the venture capital vernacular to describe a company in which a controlling interest is held by a venture capitalist firm.

Related: Social enterprise, Investor, Investment

Commentary

Investments made to an investee could be in the form of either a loan, an equity investment, or a hybrid of the two. Philanthropic actors may view grants as “investments” as well, and grant recipients as “investees”, however this can be confusing to investors who would not see a grant (that does not need to be repaid) as an investment.

Practice & Source:

Investment

Finance

The use of money to make more money. There are two kinds of investment: direct investment that involves putting one’s capital into specific fixed assets such as property, factories, buildings, etc.; indirect investment that involves investing in securities or other assets that are traded on financial markets.

Related: Investor, Investee

Commentary

For indirect investments, investors can place money in different types of investments (asset classes) where the investor tyically trades-off different levels of return for different levels of risk. For some investors (ie, impact investors) lower financial returns might also be acceptable if the creation of social returns can be demonstrated.

Practice & Source:

Investment thesis

Finance

The beliefs that investors decide to use when determining what investments to purchase or sell, when to take an action and why. An investment thesis helps investors establish goals for their investments, and measures whether they have been achieved, either in written form or simply as an idea. A sound investment thesis can be a foundation for a profitable portfolio. On the other hand, an incorrect investment thesis can result in sub-par returns or losses.

Related: Impact thesis, Theory of Change

Practice & Source:

Investor

Finance

Any person or organization who commits capital with the expectation of financial returns. Investors utilize investments in order to grow their money and/or provide an income during retirement (for individuals), such as with an annuity. Investors typically perform technical and/or fundamental analysis to determine favorable investment opportunities, and generally prefer to minimize risk while maximizing returns

Related: Investment, Investee

Commentary

As well as seeking to minimize risk while maximizing financial returns, investors may choose to pursue investment opportunities that provide social and environmental returns.

Practice & Source:

Joint evaluation

Evaluation

An evaluation in which different donor agencies and/or partners participate. There are various degrees of “jointness” depending on the extent to which individual partners cooperate in the evaluation process, merge their evaluation resources and combine their evaluation reporting. Joint evaluations can help overcome attribution problems in assessing the effectiveness of programs and strategies, the complementarity of efforts supported by different partners, the quality of aid coordination, etc.

Judgement

General

An opinion or conclusion.

Practice & Source:

Key Performance Indicator(s) (KPI)

Business/CSR

Key performance indicators (KPI) are a set of quantifiable measures that a company uses to gauge its performance over time. These metrics are used to determine a company’s progress in achieving its strategic and operational goals, and also to compare a company’s finances and performance against other businesses within its industry.

Related: Indicator, Measure, Metric, Performance indicator, Targets

Commentary

The term “KPI’s” has been expanded to cover measures of the performance of any type of project, organization or intervention.

Practice & Source:

Limited Partner (LP)

Business/CSR

One of the co-owners of a business organized as limited partnership who (unlike a general partner) does not participate in the management of the firm and has limited personal liability for the firm’s debts. Also called nominal partner.

Related: General Partner (GP)

Practice & Source:

Livelihood(s)

Sustainable development

A means of securing the necessities of life.

Sustainable development

A livelihood comprises the capabilities, assets (including both material and social resources) and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stress and shocks and maintain or enhance its capabilities and assets both now and in the future, while not undermining the natural resource base.

Commentary

“Livelihood” can be used generically to refer to someone’s employment or specifically to the Sustainable Livelihoods Framework.

Logframe

Evaluation

See definition for “Logical Framework.”

Related: Impact chain, Value chain, Impact value chain, Impact map, Logic model, Theory of Change

Logic Model

Evaluation

A visual representation, provides a road map showing the sequence of related events connecting the need for a planned program with the programs’ desired outcomes and results.

Evaluation

The program logic model is defined as a picture of how your organization does its work – the theory and assumptions underlying the program. A program logic model links outcomes (both short- and long-term) with program activities/processes and the theoretical assumptions/principles of the program.

Related: Theory of change, Value chain, Impact chain, Impact map, Impact value chain, Logframe, Logical Framework

Commentary

A basic logic model links inputs, activities or processes, outputs, and outcomes (short-term and long-term). There are many variations of logic models and formats to present them.

Logical framework

Evaluation

Management tool used to improve the design of interventions, most often at the project level. It involves identifying strategic elements (inputs, outputs, outcomes, impact) and their causal relationships, indicators, and the assumptions or risks that may influence success and failure. It thus facilitates planning, execution and evaluation- of a development intervention.

Related: Impact chain, Value chain, Impact map, Logic model, Theory of Change, Impact value chain

Commentary

Logical frameworks (logframes) share much in common with logic models, impact maps and theories of change and these are often used as synonyms. Logical frameworks tend to be tables rather than graphics and are typically based on a simple linear logic of a results chain. Theories of change allow for more complex causal pathways. The term “logframe” is used almost exclusively used in development field.

Market

General

Where buyers and sellers of goods or services carry out transactions, sometimes through an intermediary. Also, the whole group of potential buyers for a good or service.

Commentary

Markets can be physical or virtual places where buyers and sellers meet.

Practice & Source:

Market-rate investment

Finance

No clear, authoritative definition was found. See commentary.

Related: Market risk-adjusted rate of return, commercially constructive, below-market, below-market risk-adjusted rate investment

Commentary

The term is used to differentiate an investment that expects to receive an average or typical financial rate of return for a given level of risk (i.e., a market rate return) from an investment that expects to receive a below average financial return but generate positive social and / or environmental impacts.

Materiality

General

The quality of being relevant or significant.

Accounting

Magnitude of an omission or misstatements of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would change or be influenced.

Commentary

As noted in the Corporate Reporting Dialogue’s Statement of Common Principles of Materiality, “materiality is both a general and legal concept” that is “pervasive throughout the business, financial, legal and regulatory communities of the world.” There is agreement on the generic definition of”materiality”, but there are many ways of deciding what is material and measures of materiality as well as tests to assess what counts as material for reporting purposes. All defintions tend to be conceptually aligned in that material information is any information which is capable of making a difference to the evaluation and analysis at hand. However a key distinction between major approaches to reporting about environmental and social performance is whether materiality is defined solely as what would be considered relevant to a financial investor/shareholder, or whether materiality is defined by all stakeholders who are affected in a significant way by the entity’s activities. Assessing what is material is a professional judgment.

Measure

General

Assess the importance, effect, or value of (something)

Related: Impact measurement

Practice & Source:

Merit(s)

General

a) The quality of being particularly good or worthy, especially so as to deserve praise or reward. b) A good feature or point. c) Merits: The intrinsic rights and wrongs of a case, outside of any other considerations.

Evaluation

The intrinsic value of the evaluands, as opposed to extrinsic or system-related value/worth. For example, the merit of researchers lies in their skill and originality, whereas their worth (to the institution that employs them) might include the income they generate through grants, fame, or bequests, attracting other good faculty and students.

Commentary

In evaluation, “merit” refers to the intrinsic characteristics of that which is evaluated relative to legitimate standards or benchmarks. In business, “merit” is often associated with merit pay or merit bonus which bases an employee’s remuneration on performance according to specific criteria. As a legal term. “merits” refer to the inherent rights and wrongs of a case rather than procedural or other factors.

Meta-evaluation

Evaluation

The term is used for evaluations designed to aggregate findings from a series of evaluations. It can also be used to denote the evaluation of an evaluation to judge its quality and/or assess the performance of the evaluators.

Metric(s)

Business/CSR

Standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed.

Finance

Parameters or measures of quantitative assessment used for measurement, comparison or to track performance or production. Analysts use metrics to compare the performance of different companies, despite the many variations between firms.

Related: Indicator, Key Performance Indicator (KPI), Measure

Practice & Source:

Microfinance

Finance

A type of banking service that is provided to unemployed or low-income individuals, or groups who otherwise have no other access to financial services. Ultimately, the goal of microfinance is to give low-income people an opportunity to become self-sufficient by providing a way to save money, borrow money and get insurance.

Finance

Financial services targeting low-and-moderate income businesses or households that are underserved by traditional financial institutions. Microfinance services include credit, savings, insurance and remittances.

Practice & Source:

Mid-term evaluation

EVALUATION

Evaluation performed towards the midpoint of program or project implementation.

Related: Formative evaluation

Practice & Source:

Milestone

General

A significant stage or event in the development of something.

Practice & Source:

Millenium Development Goals (MDGs)

Sustainable development

The eight Millennium Development Goals (MDGs) – which range from halving extreme poverty rates to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 – form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions. They have galvanized unprecedented efforts to meet the needs of the world’s poorest. The UN is also working with governments, civil society and other partners to build on the momentum generated by the MDGs and carry on with an ambitious post-2015 development agenda.

Related: Sustainable Development Goals (SDGs)

Commentary

The Millenium Development Goals (MDGs) have been replaced by the Sustainable Development Goals (SDGs).

Practice & Source:

Mission Related Investment (MRI)

Finance

An investment made using assets from a foundation’s endowment that seeks to create social impact as well as typically risk-adjusted financial returns.

Related: Program Related Investment (PRI)

Commentary

Unlike Program Related Investments, Mission Related Investments are not statutorily prescribed and there is no agreed definition. The jeopardizing investment rules and other legal requirements, such as state prudent investor rules, do apply to MRIs. Some people use MRI to indicate strictly market-rate investments designed to achieve a social impact. Others consider below market rate Program-Related-Investments as a sub-category of MRIs.

Practice & Source:

Monetize

Finance

To monetize is to convert an asset or any object into money or legal tender. The term “monetize” has different meanings depending on the context. Governments monetize debt to keep interest rates on borrowed money low and to avoid financial crisis, while businesses monetize products and services to generate profit.

Related: Social Return on Investment (SROI), Social value, Financial value

Commentary

As well as being used to describe the process of coverting an object into money or legal tender, “monetize” is also used to ascribing something that is valued (ie, something that people like, such as a sense of well-being or happenienss) a monetary value, even though it is not actually converted into money. This is often done to give a relative sense of importance in a business context to something of social value.

Practice & Source:

Monitoring

Evaluation

The performance and analysis of routine measurements to detect changes in status. Monitoring is used to inform managers about the progress of an ongoing intervention or program, and to detect problems that may be able to be addressed through corrective actions.

Evaluation

A continuing function that uses systematic collection of data on specified indicators to provide management and the main stakeholders of an ongoing development intervention with indications of the extent of progress and achievement of objectives and progress in the use of allocated funds.

Related: Evaluation, Indicator, Performance, Performance Indicator, Key Performance Indicator (KPI)

Commentary

Evaluators distinguish monitoring–periodic tracking to make sure an intervention is running as intended–from evaluation–an assessment of the difference the intervention makes.

Net present value (NPV)

General

The discounted value of a stream of either future costs or benefits. The term Net Present Value (NPV) is used to describe the difference between the present value of a stream of costs and a stream of benefits.

Related: Discount rate, Discounting

Net social return ratio

See Social Return on Investment.

Related: Cost-Benefit Analysis, Social Return on Investment (SROI)

Nongovernmental organization (NGO)

Philanthropy

A non-profit, citizen-based group that functions independently of government. NGOs, sometimes called civil societies, are organized on community, national and international levels to serve specific social or political purposes, and are cooperative, rather than commercial, in nature. As non-profits, NGOs rely on a variety of sources for funding, including membership dues, private donations, the sale of goods and services, and grants. Despite their independence from government, some NGOs rely significantly on government funding.

Related: Charity

Commentary

NGO, NPO, nonprofit organization, not-for-profit organization, and charity are mostly synonyms, but usage varies. Non-profit and not-for-profit are almost exclusively used in the US. Charity is used in the UK. NGO is used commonly in other countries and to denote international development organizations. Non-profit entities with significant government ties, such as public universities, are not usually considered NGOs, so the terms are not entirely synonymous.

Practice & Source:

Nonprofit organization

Philanthropy

See “Nongovernmental organization”

Related: Not for profit organization, Charity

Commentary

NGO, NPO, nonprofit organization, not-for-profit organization, and charity are mostly synonyms, but usage varies. Non-profit and not-for-profit are almost exclusively used in the US. Charity is used in the UK. NGO is used commonly in other countries and to denote international development organizations. Non-profit entities with significant government ties, such as public universities, are not usually considered NGOs, so the terms are not entirely synonymous.

Norm(s)

GENERAL

Something that is usual, typical, or standard

Related: Convention

Practice & Source:

Not for profit organization

Philanthropy

See “Nongovernmental organization”

Related: Nonprofit organization, Charity

Commentary

NGO, NPO, nonprofit organization, not-for-profit organization, and charity are mostly synonyms, but usage varies. Non-profit and not-for-profit are almost exclusively used in the US. Charity is used in the UK. NGO is used commonly in other countries and to denote international development organizations. Non-profit entities with significant government ties, such as public universities, are not usually considered NGOs, so the terms are not entirely synonymous.

Note (investment note)

Finance

A financial security that generally has a longer term than a bill but a shorter term than a bond. U.S. Treasury notes, for example, are sold in $100 increments, pay interest in six-month intervals and pay investors face value upon maturity. There are numerous types of notes, including mortgage-backed notes, unsecured notes, municipal notes, bank notes, euro notes, promissory notes, demand notes and structured notes.

Practice & Source:

Objective

General

A thing aimed at or sought; a goal.

Related: Goal

Practice & Source:

Operating support

Philanthropy

A contribution given to cover an organization’s day-to-day, ongoing expenses, such as salaries, utilities, office supplies, etc.

Commentary

“Operating support” is also commonly referred to as “general operating support.” It tends to be seen as all too rare by nonprofit organizations.

Practice & Source:

Operations research

Evaluation

A way of using analytical methods to help make better decisions. Its methods can be used by almost all organizations, groups and individuals. It uses methods such as logic and mathematical modelling to analyze complex situations, giving decision makers of all types the power to make more effective decisions.

Related: Process evaluation, Formative evaluation

Commentary

Similar to “evaluation”, “accounting”, and “economics”, “operations (or operational) research” can refer to the field of practice or the profession. Operations research includes methods of simulation, system dynamics, and decision modelling among others.

Practice & Source:

Optimism bias

Evaluation

Over-emphasizing pleasing outcomes, while failing to identify limitations and weaknesses. This might come about through evaluating ambiguous information in a favorable light. It might also take the form of requiring a higher standard of evidence for a negative conclusion, while accepting a lower standard of evidence for a positive conclusion.

Related: Bias, Selection bias

Commentary

Optimism bias, which is also known as unrealistic or comparative optimism, is a common cognitive bias that causes a person to believe that they are at a lesser risk of experiencing a negative event compared to others (see wikipedia entry). But when applied to evaluation it means the tendency of appraisers–whether applying ex ante or ex post–to give less weight to negative findings from to positive findings.

Outcome evaluation

Evaluation

This form of evaluation assesses the extent to which a program achieves its outcome oriented objectives. It focuses on outputs and outcomes (including unintended effects) to judge program effectiveness but may also assess program processes to understand how outcomes are produced.

Related: Impact evaluation

Commentary

An outcome evaluation does not require the development of a counterfactual as is required for an impact evaluation.

Practice & Source:

Outcome map / outcome mapping

Evaluation

Outcome mapping (OM) is a methodology for planning, monitoring and evaluating development initiatives in order to bring about sustainable social change. As the name suggests, its niche is understanding outcomes; the so-called ‘missing-middle’ or ‘black box’ of results that emerge downstream from the initiative’s activities but upstream from longer-term economic, environmental, political or demographic changes.

General

Outcome mapping is an approach to planning, monitoring and evaluation that: puts people at the center; defines outcomes as changes in behavior; helps measure contribution to complex change processes.

Related: Impact map, Logic model, Theory of change

Commentary

Outcome maps are part of family of tools that includes logic models and theory of change frameworks, which seek in slightly different ways to clarify the presumed logical intended relationships among the objects of a program, project or activity. The outcome map approach was developed by the International Development Research Centre. It pays particular attention to tracking changes in behaviors as important intermediate outcomes towards longer-term goals.

Practice & Source:

Outcome(s)

Evaluation

The likely or achieved short-term and medium-term effects of an intervention’s outputs.

Evaluation

A results or effect that is caused by or attributable to the project, program or policy. Outcome is often used to refer to more immediate and intended effects.

Related: Effect, Impact, Output, Result

Commentary

Outcomes follow outputs in a logic model or value chain and reflect the result of the output on stakeholders, especially intended beneficiaries. Sometimes the term implies postive and intended results. Unlike outputs, outcomes are not within the full control of the management of the intervention, service etc., are not fully attributable to intervention, but do have value (positive or negative) to the intended beneficiary and/or other stakeholders. The World Bank Results Framework Terminology refers to this distinction as a difference between the supply of goods and services (outputs) compared to a change in the use or demand of goods and services (outcomes).

Outcomes rate card

Finance

Outcomes rate cards are a menu of outcomes that government seeks to achieve and the prices they are willing to pay for each outcome achievement.

They are used as a procurement and contracting tool with the ability to standardize performance-based financing, through Pay for Success, and drastically reduce the time such deals take to get to market. One rate card can result in multiple contracts with multiple providers, who must deliver against its pre-determined outcomes and prices, receiving payment only when the stated outcomes are achieved and participants’ lives are positively impacted.

Related: Outcome, Pay for Success, Social Impact Bond (SIB)

Practice & Source:

Output(s)

Evaluation

The products, capital goods and services which result from a development intervention; may also include changes resulting from the intervention which are relevant to the achievement of outcomes.

Evaluation

The products, goods, and services which result from an intervention.

Economics

The fruit of economic activity: whatever is produced by using the factors of production.

Related: Efficiency, Input, Logic model, Outcome

Commentary

“Output” or “outputs” refer to the planned and direct result of a business, service, intervention, or program that is within full control of the management of the business etc. It is often as part of a logic model or theory of change. It is also used as an aggregate measure of production. See the commentary on “outcome(s)” for the distinction between outputs and outcomes.

Overhead

Accounting

Costs of a business that are not directly associated with the production or sale of goods or services.

Commentary

While developed for businesses, the concept overhead applies to the costs of operating a nonprofit or social enterprise that are not directly related to the production of services or goods. Overhead costs are not the same as selling, general and administrative (SG&A) expenses although they may overlap. In the charity sector, the term overhead is sometimes used incorrectly to refer to costs that are not directly project-related, such as administrative staff or fundraising costs.

Practice & Source:

Participation

Business/CSR

Joint consultation in decision making, goal setting, profit sharing, teamwork, and other such measures through which a firm attempts to foster or increase its employees’ commitment to collective objectives

Related: Partnership

Practice & Source:

Participatory evaluation

Evaluation

Evaluation method in which representatives of agencies and stakeholders (including beneficiaries) work together in designing, carrying out and interpreting an evaluation.

Related: Stakeholder, Beneficiary

Partnership

Business/CSR

A type of business organization in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement. In absence of such agreement, a partnership is assumed to exit where the participants in an enterprise agree to share the associated risks and rewards proportionately.

Evaluation

A collaboration between individuals and/or organizations to achieve mutually agreed upon objectives. The concept of partnership connotes shared goals, common responsibility or outcomes, distinct accountabilities and reciprocal obligations. Partners may include governments, civil society, non-governmental organizations, universities, professional and business associations, multilateral organizations, private companies, etc.

Related: Participation

Pay for performance

Business/CSR

Pay-for-performance (“P4P”) is a term that describes payment systems that offer financial rewards to providers who achieve, improve, or exceed their performance on specified quality and cost measures, as well as other benchmarks.

Related: Pay for success, Payment by results, Social impact bond (SIB)

Pay for success (PFS)

Philanthropy

A way of financing social services to help governments target limited dollars to achieve a positive, measurable outcome. Under the Pay for Success (PFS) model, a government agency commits funds to pay for a specific outcome that is achieved within a given timeframe. The financial capital to cover the operating costs of achieving the outcome is provided by independent investors. In return for accepting the risks of funding the project, the investors may expect a return on their investment if the project is successful; however, payment of the committed funds by the government agency is contingent on the validated achievement of results. In this way, the PFS model shifts the burden of investment risk from the government to private investors, effectively creating a social investment market where the government only pays for results.

Related: Pay for performance, Payment by results

Commentary

“Pay for Success” is the US term for what are known in the UK and elsewhere as Social Impact Bonds. However, sometimes “Pay for Success” refers both to Social Impact Bonds and other outcomes-based contracts, such as Pay for Performance (P4P) and rate cards. “Pay for Success” can apply to environmental services and goals as well as social goals.

Payback period

Finance

The payback period is the length of time required to recover the cost of an investment. The payback period of a given investment or project is an important determinant of whether to undertake the position or project, as longer payback periods are typically not desirable for investment positions. The payback period ignores the time value of money, unlike other methods of capital budgeting, such as net present value, internal rate of return or discounted cash flow.

Related: Investment

Practice & Source:

Payment by results (PBR)

Philanthropy

The practice of paying providers for delivering public services based wholly or partly on the results that are achieved. It is a relatively new model for paying for public services, and contrasts with the previously common practice of paying for the inputs of services delivered. Many public services operate by purchasing infrastructure or inputs (such as staff, buildings and equipment) that are then used to undertake activities (such as appointments, sessions or treatments) that seek to deliver outcomes (such as increased health or education, or reduced crime). Payment by Results (PbR) seeks to improve the productivity of public service spending by paying only when specific outputs or outcomes are achieved.

Related: Pay for performance, Social impact bond

Commentary

The term “Payment by results” is predominately used in the UK. “Pay for Performance” is more common in the US.

Performance

General

a) The action or process of performing a task or function. b) A task or operation seen in terms of how successfully it is performed. c) c) The capabilities of a machine, product, or vehicle. d) The extent to which an investment is profitable, especially in relation to other investments.

Evaluation

The degree to which an intervention or a development partner operates according to specific criteria/standards/guidelines or achieves results in accordance with stated goals or plans.

Related: Impact, Result, Indicator, Key Performance Indicator, Performance indicator

Commentary

Differences in use and meaning of “performance” generally relate to whether the object is a task, a person / job, equipment, a company, a financial instrument, or an economy. Assessment of performance can also depend on perspective. For example, achievement of a narrow goal may be seen as a success from one perspective but not successful from another that considers the narrow goal lacking in ambition.

Performance indicator(s)

Evaluation

A variable that allows the verification of changes in the intervention or shows results relative to what was planned.

Business/CSR

In business, these are used for evaluating specific goals and objectives.

Related: Indicator, Key Performance Indicator (KPI), Measure, Metrics

Commentary

“Peformance Indicators”, or “Key Performance Indicators”, can be anything that are used to assess performance toward a goal or objective.

Performance management

Business/CSR

The management of employees, departments, and organizations to ensure that goals and objectives are being reached efficiently and effectively. Performance management involves defining what effective performance looks like, as developing the tools and procedures necessary to measure performance.

Evaluation

Systematic process of collecting and analyzing performance data to track progress towards planned results to improve resource allocation, implementation, and results.

Related: Impact management, Performance, Indicator, Performance indicator, Key Performance Indicator (KPI)

Practice & Source:

Performance monitoring

Evaluation

A continuous process of collecting and analyzing data to compare how well a project, program, or policy is being implemented against expected results.

Related: Performance management, Key Performance Indicator, Indicator, Benchmark

Philanthropy

Philanthropy

Philanthropy is defined in different ways. The origin of the word philanthropy is Greek and means love for mankind. Today, philanthropy includes the concept of voluntary giving by an individual or group to promote the common good. Philanthropy also commonly refers to grants of money given by foundations to nonprofit organizations. Philanthropy addresses the contribution of an individual or group to other organizations that in turn work for the causes of poverty or social problems-improving the quality of life for all citizens. Philanthropic giving supports a variety of activities, including research, health, education, arts and culture, as well as alleviating poverty.

Related: Venture philanthropy, Nonprofit, Not for profit, NGO, Charity

Commentary

Philanthropy is taking on increasingly diverse forms as philanthropists use a wide range of financial products, including not only the traditional grant, but also various structures of debt, equity, fixed-income securities, and guarantees.

Practice & Source:

Place-based investment

Finance

Place based investment works to create economic and social outcomes through investing in a specific region or community, particularly those experiencing decline or disadvantage. Such investments create sustained, positive cycles of economic development and regeneration by providing local businesses with access to capital, markets, and growth opportunities, as well as fostering job creation, and spending power in the community.

Practice & Source:

Placebo effect

General

A beneficial effect produced by a placebo drug or treatment, which cannot be attributed to the properties of the placebo itself, and must therefore be due to the patient’s belief in that treatment.

Commentary

“Placebo effect” is a medical concept applied to the evaluation of social interventions. A placebo is an inert substance, such as a sugar pill, that is not known to have physiological or therapeutic benefits. A placebo is either used to make people better psychologically, or in drug testing as part of a controlled trial to deceive people (with their consent) that they are taking something designed to improve their condition. Identifying placebo effects is part of understanding the causal mechanisms by which an intervention has positive results. For social interventions, it helps distinguish whether any positive effects flow from the intrinsic nature of the intervention or people’s beliefs about the intervention.

Practice & Source:

Portfolio

General

a) A range of investments held by a person or organization. b) A range of products or services offered by an organization. c) A set of pieces of creative work intended to demonstrate a person’s ability to a potential employer.

Commentary

It should be clear from the context whether a portfolio refers to investments, a group of services or products, or a set of creative materials.

Practice & Source:

Portfolio management

Finance

The managing of a group of different types of investments, paying attention to the risk and profits of each in relation to the rest.

Related: Portfolio

Practice & Source:

Power

General

a) The ability or capacity to do something or act in a particular way. b) The capacity or ability to direct or influence the behavior of others or the course of events. c) Physical strength and force exerted by something or someone. d) Energy that is produced by mechanical, electrical, or other means and used to operate a device.

Evaluation

Number or percentage that indicates the probability a study will obtain a statistically significant effect. For example, a power of 80 percent (or 0.8) means that a survey or study (when conducted repeatedly over time) is likely to produce a statistically significant result 8 times out of 10.

Related: Power calculation, Agency

Commentary

“Power” has multiple meanings. In evaluation it may be used as a shortened version of statistical power, the probability that a study will find an effect when there is an effect there to be detected. A low power study might not find a statistically significant effect even if there is one because the statistical test might conclude the postiive result could have occurred as matter of chance.

Practice & Source:

Power calculation

Evaluation

A calculation of the sample required for the impact evaluation, which depends on the minimum effect size and required level of confidence.

Related: Power

Commentary

“Power calculation” is a statistical term, not related to assessing differences in power of different stakeholders. See entry for “power”.

Private equity

Finance

Capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions, expand working capital, and to bolster and solidify a balance sheet.

Related: Public equity, Quasi-equity

Commentary

The difference between public and private equity is the former is more tradeable and hence more liquid.

Practice & Source:

Private foundation

Philanthropy

A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family, or corporation) and program managed by its own trustees or directors, established to maintain or aid social, educational, religious, or other charitable activities serving the common welfare, primarily through grantmaking. U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and are classified by the IRS as a private foundation as defined in the code.

Related: Foundation, Philanthropy

Practice & Source:

Process evaluation

Evaluation

An evaluation of the internal dynamics of implementing organizations, their policy instruments, their service delivery mechanisms, their management practices, and the linkages among these.

Related: Evaluation

Profit with Purpose Business

Social enterprise

A business that is fully profit-distributing, and with a long-term commitment to priorities, deliver and report on their social impact.

Related: Social enterprise

Program

Evaluation

A set of interventions, activities or projects that are typically implemented by several, parties over a specified period of time and may cut across sectors, themes and/or geographic areas.

Related: Intervention, Project, Activity

Practice & Source:

Program evaluation

Evaluation

The systematic collection of information about the activities, characteristics, and outcomes of programs to make judgments about the program, improve program effectiveness, and/or inform decisions about future program development.

Related: Evaluation

Program Related Investment (PRI)

Finance

An investment made by foundations to support charitable activities that involve the potential return of capital within an established time frame. Program related investments include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations or in commercial ventures for charitable purposes.

Finance

An investment made by a U.S.-based foundation that qualifies as a charitable expense under the tax code, allowing the foundation to include the investment as part of the 5% of assets it must distribute philanthropically each year to maintain its non-profit status.

Related: Mission related investment

Commentary

In the US, revenue to private foundations from PRIs count against the 5% payout that foundations are required to make each year to retain their tax-exempt status.

Practice & Source:

Project

Evaluation

An activity implemented by a defined set of implementers and designed to achieve specific objectives within specified resources and implementation schedules.

General

a) An individual or collaborative enterprise that is carefully planned to achieve a particular aim. b) (North American) A government-subsidized housing development with relatively low rents.

Related: Activity, Intervention, Program

Practice & Source:

Project appraisal

Evaluation

A comprehensive and systematic review of all aspects of the project — technical, financial, economic, social, institutional, environmental — to determine whether an investment should go ahead.

Business/CSR

Systematic and comprehensive review of the economic, environmental, financial, social, technical and other such aspects of a project to determine if it will meet its objectives

Related: Appraisal, Due diligence

Commentary

See commentary on “appraisal”.

Practice & Source:

Project evaluation

Evaluation

Evaluation of an individual intervention designed to achieve specific objectives within specified resources and implementation schedules, often within the framework of a broader program. Cost benefit analysis is a major instrument of project evaluation for projects with measurable benefits. When benefits cannot be quantified, cost effectiveness is a suitable approach.

Related: Cost benefit analysis, Project

Proxy

General

a) The authority to represent someone else, especially in voting. b) A figure that can be used to represent the value of something in a calculation.

Practice & Source:

Prudence

Accounting

An accounting principle that requires recording expenses and liabilities as soon as possible, but the revenues only when they are realized or assured. Also called conservatism principle.

General

The quality of being prudent; cautiousness.

Related: Due diligence, Validity

Practice & Source:

Public charity

Philanthropy

Public charities include a wide variety of charitable organizations, including hospitals, schools, churches, and organizations that make grants to others. Charities that primarily make grants are commonly referred to as public foundations. Most of these foundations are publicly supported charities, meaning they receive their funds from multiple sources, which may include private foundations, individuals, government agencies, and fees they charge for charitable services they provide. Some foundations are public charities because they meet at least one of the US Internal Revenue Service (IRS) tests for qualifying as a public charity. One kind of public charity, known as a supporting organization, is recognized by the IRS as charitable simply because of its legal relationship to one or more other public charities. A community foundation is yet another kind of public charity. In some cases, corporate foundations are set up as public, rather than private, foundations.

Related: Charity, Nonprofit organization, Not for profit organization, Nongovernmental organization, Philanthropy

Practice & Source:

Public equity

Finance

Public equity is an asset class where individuals and/or organizations can buy ownership in shares/stock of a company through a public market such as the New York Stock Exchange.

Related: Private equity, Quasi-equity

Practice & Source:

Public foundation

PHILANTHROPY 

See definition for “public charity.”

Related: Foundation, Private foundation

Qualitative information / data

General

Data that approximates or characterizes but does not measure the attributes, characteristics, properties, etc., of a thing or phenomenon. Qualitative data describes whereas quantitative data defines.

Evaluation

Observations or information expressed using categories (dichotomous, nominal, ordinal) rather than numerical terms. Examples include sex, survival or death, and first.

Related: Qualitative information, Data

 

Commentary

Qualitative information or data is about qualities or characteristics rather than quantities or measured values. It is broad ranging and essentially non-numerical in nature. Qualitative information typically comes from interviews, focus groups, texts, and observations.

Quasi-equity

Finance

A form of company debt that could also be considered to posses some traits of equity, such as being non-secured by any collateral.

Related: Public equity, Private equity

Commentary

Although the definition refers to company debt, quasi-equity could also apply to debt that has some properties of equity that is owned by other organizations .

Practice & Source:

Quasi-experimental design

Evaluation

A methodology in which research subjects are assigned to treatment and comparison groups typically through some sort of matching strategy that attempts to minimize the differences between the two groups in order to approximate random assignment.

Related: Comparison group, Comparator group

Practice & Source:

Randomized Control Trial (RCT)

IN EVALUATION

A study in which a number of similar people are randomly assigned to 2 (or more) groups to test a specific drug, treatment or other intervention. One group (the experimental group) has the intervention being tested, the other (the comparison or control group) has an alternative intervention, a dummy intervention (placebo) or no intervention at all. The groups are followed up to see how effective the experimental intervention was. Outcomes are measured at specific times and any difference in response between the groups is assessed statistically. This method is also used to reduce bias.

Related: Attribution, Control, Control group

Commentary

Randomized controlled trials (RCTs) are typically regarded as the most rigorous way of determining whether a cause-effect relation exists between an intervention and outcome and for assessing the cost effectiveness of an intervention. Other study designs, including non-randomized controlled trials, can detect associations between an intervention and an outcome. But they cannot rule out the possibility that the association was caused by a third factor linked to both intervention and outcome. Random allocation ensures no systematic differences between intervention groups in factors, known and unknown, will affect the outcome. However, there is often disagreement among experts as to when RCTs are the most appropriate form of evaluation and identifying causality.

Randomized evaluation

IN EVALUATION

See definition for “Randomized Controlled Trial.”

Related: Attribution, Control, Control group

Recoverable grant

Finance

Essentially a convertible note, with no time expiration and no liquidation payback rights, where the conversion occurs only at valuations greater than a given threshold. It’s designed specifically for very early-stage investment, where entrepreneurs need risk tolerant and inexpensive capital.

Philanthropy

No clear, authoritative definition currently exists. See commentary.

Related: Grant, Venture philanthropy, Program Related Investment

Commentary

In the field of philanthropy, recoverable grants (also known as forgivable loans) are a unique type of grant where a philanthropist or non-profit organization decides to lend out money on the hope that an entrepreneur will be successful. If an entrepreneur is not successful, they don’t have to pay anything back, regardless of how much they originally borrowed.

Two types of options are available with recoverable grants: “put options” or “call options.” With the put option, a grant maker is given payment when the entrepreneur achieves a particular milestone. The call option works in an opposite manner. Basically, the grantee has a financial obligation to the loan until they achieve a certain milestone.

Practice & Source:

Relevance

Evaluation

The extent to which the objectives of an intervention are consistent with beneficiaries’ requirements, country needs, global priorities and partners’ and donors’ policies. Retrospectively, the question of relevance often becomes a question as to whether the objectives of an intervention or its design are still appropriate given changed circumstances.

General

the quality or state of being closely connected or appropriate.

Related: Material, Relevant

Commentary

While the concepts are different, “relevance” is sometimes used synonymously with “materiality”, in that something that is not material may not seem relevant. In accounting, materiality is the application of the principle of relevance for a specific entity. In evaluation, relevance is the extent to which the objectives of an intervention are consistent with beneficiaries’ requirements, country needs, global priorities and agreed policies. In conventional business (see entry for Relevant), the term characterizes corporate data that according to an accountant or an auditor is useful and could make a difference to decision making.

Relevant

General

Closely connected or appropriate to what is being done or considered.

Business/CSR

a) Accounting: Benefit or cost actually caused by, or expected to follow, a financial event or transaction.
b) Law: Evidence or fact logically connected to or helpful in proving a material point.

Accounting

Relevant financial information is capable of making a difference in the decisions made by users. Financial information is capable of making a difference in decisions if it has predictive value, confirmatory value, or both.

Relevant: Material, Relevance

Commentary

See entry for “relevance”.

Reliability

General

a) The quality of being trustworthy or of performing consistently well.
b) The degree to which the result of a measurement, calculation, or specification can be depended on to be accurate.

Evaluation

Consistency or dependability of data and evaluation judgments, with reference to the quality of the instruments, procedures and analyses used to collect and interpret evaluation data. Evaluation information is reliable when repeated observations using similar instruments under similar conditions produce similar results.

Related: Significance, Validity, Internal validity, External validity

Replicability

Business/CSR

Property of an activity, process, or test result that allows it to be duplicated at another location or time.

Related: Scalability, Scale, Scale up

Practice & Source:

Reporting standard

No clear, authoritative definition. See commentary.

Related: Benchmark

Commentary

Reporting standards are principles and practices that are widely accepted and used in financial and non-financial reporting. They also set out the format and content of disclosure. Reporting standards faciliate comprehension and comparison of reports by users and support the efficient production of reports. A reporting standard is different from a measurement standard that sets out how an item is to be measured or valued though many standards are a mix of both. Accounting reporting standards set out how a firm should prepare and present its business income, expenses, assets and liabilities. International Financial Reporting Standards, usually called IFRS Standards, are standards issued by the IFRS Foundation and the International Accounting Standards Board.

Responsible investment

Finance

Responsible investment is an investment strategy which seeks to generate both financial and sustainable value. It consists of a set of investment approaches that integrate environmental, social and governance (ESG) and ethical issues into financial analysis and decision-making. Responsible investment goes by many names – it is variously referred to as socially responsible investing (SRI), ethical investing, sustainable investing, triple-bottom-line investing, green investing – but underlying these differing names is a common theme focused on long-term value creation. Value in this context refers not only to economic value, but to the broader values of fairness, justice, and environmental sustainability.

Related: Environmental, Social, and Governance (ESG) factors, Socially Responsible Investing (SRI), Conventional investing

Practice & Source:

Result(s)

General

a) A thing that is caused or produced by something else; a consequence or outcome. b) A favorable outcome of an undertaking or contest. c) (usually results) The outcome of a business’s trading over a given period, expressed as a statement of profit or loss. d) An item of information obtained by experiment or some other scientific method; a quantity or formula obtained by calculation.

Evaluation

The output, outcome or impact (intended or unintended, positive and/or negative) of an intervention.

Related: Output, Outcome, Impact, Effect, Intervention

Results chain

Evaluation

The causal sequence for a development intervention that stipulates the necessary sequence to achieve desired objectives- beginning with inputs, moving through activities and outputs, and culminating in outcomes, impacts, and feedback. In some agencies, reach is part of the results chain.

Related: Impact map, Theory of change, Logframe, Logical Framework, Assumption, Result, Results framework, Inputs, Activity, Output, Outcome, Impact, Logic model, Impact chain

Commentary

See commentary for “theory of change”.

Results framework*

Evaluation

The logic that explains how the objective of the program is to be achieved, including causal relationships and underlying assumptions.

Related: Results chain, Logical Framework, Logframe, Assumption

Results-Based Management (RBM)

Evaluation

A management strategy focusing on performance and achievement of outputs, outcomes and impacts.

Related: Logical Framework, Logframe

Return on Investment (ROI)

Finance

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio.

Related: Social Return on Investment (SROI)

Practice & Source:

Revealed preference

Business/CSR

An economic theory of consumption behavior which asserts that the best way to measure consumer preferences is to observe their purchasing behavior. Revealed preference theory works on the assumption that consumers have considered a set of alternatives before making a purchasing decision. Thus, given that a consumer chooses one option out of the set, this option must be the preferred option.

Economics

The inference of willingness to pay for something which is non-marketed by examining consumer behavior in a similar or related market.

Related: Stated preference

Commentary

Revealed preference is one technique that can be used to value goods and services where there is not an efficient market to estimate value.

Review

General

a) A formal assessment of something with the intention of instituting change if necessary. b) A reconsideration of a judgment, sentence, etc. by a higher court or authority. c) A report on or evaluation of a subject or past events. d) A critical appraisal of a book, play, film, etc. published in a newspaper or magazine.

Evaluation

An assessment of the performance of an intervention, periodically or on an ad hoc basis. Frequently “evaluation” is used for a more comprehensive and/or more in- depth assessment than “review”. Reviews tend to emphasize operational aspects. Sometimes the terms “review” and “evaluation” are used as synonyms.

 

Commentary

The different definitions of “review” could potentially lead to misunderstanding. In addition, “review” could also be confused with literature reviews or systematic reviews that are specific research and evaluation methods. Though slightly different from each other, they share the same purpose of summing up the best available research on a specific question and using transparent procedures to synthesize the results of relevant studies.

Risk

General

A situation involving exposure to danger.

Finance

The chance an investment’s actual return will differ from the expected return. Risk includes the possibility of losing some or all of the original investment. Different versions of risk are usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment.

Finance

The measurable uncertainty that an investment (or the running of a business) will not generate the expected returns (or earnings). The basic risk/return concept assumes a trade-off between the two – the more risk one takes, the higher the investment gains one should expect, and vice-versa. That is because most investors are risk-averse – faced with two investments that offer the same returns, they will choose the one that carries less risk. Some investors are risk-neutral – they seek to maximize returns and do not care about the amount of risk involved; and a few could theoretically be risk-seeking – faced with two investments with the same expected returns, they will choose the riskiest. There are many different kinds of risk, relating not only to financial investments but also to operational concerns and the impact on earnings. These include exchange risk, political risk, regulatory risk, systematic risk (involving a whole market), non-systematic risk (involving a specific stock), etc.

Related: Assumption, Impact risk, Risk analysis

Commentary

The generic definition of risk used outside of the finance and business sectors only includes the potential for harm (downside risk). However, the concept of financial risk of investments or businesses includes the potential for better than expected returns (upside risk). Thus in finance and business risks are not necessarily to be avoided, but to be managed based on risk preferences (risk averse, risk neutral, or risk seeking) and a comparison betwen the level of return expected and the level of risk taken on. Different business sectors have variations and definitions of risk. For example, in the insurance sector that is built around risk management, risk is measurable, not simply an uncertainty.

Practice & Source:

Risk analysis

Finance

The study of the underlying uncertainty of a given course of action. Risk analysis refers to the uncertainty of forecasted future cash flows streams, variance of portfolio/stock returns, statistical analysis to determine the probability of a project’s success or failure, and possible future economic states. Risk analysts often work in tandem with forecasting professionals to minimize future negative unforeseen effects.

Business/CSR

As a component of risk management, it consists of (1) Identification of possible negative external and internal conditions, events, or situations, (2) Determination of cause-and-effect (causal) relationships between probable happenings, their magnitude, and likely outcomes, (3) Evaluation of various outcomes under different assumptions, and under different probabilities that each outcome will take place, (4) Application of qualitative and quantitative techniques to reduce uncertainty of the outcomes and associated costs, liabilities, or losses.

Evaluation

An analysis or an assessment of factors (called assumptions in the logframe) affect or are likely to affect the successful achievement of an intervention’s objectives. A detailed examination of the potential unwanted and negative consequences to human life, health, property, or the environment posed by development interventions; a systematic process to provide information regarding such undesirable consequences; the process of quantification of the probabilities and expected impacts for identified risks.

Related: Risk, Impact risk

Commentary

The definition of risk analysis (i.e., what it involves) depends on whether the risks relate to investment returns or to risks to a business or venture.

Practice & Source:

Risk capital

Finance

Investment funds allocated to speculative activity and refers to the funds used for high-risk, high-reward investments such as junior mining or emerging biotechnology stocks. Such capital can either earn spectacular returns over a period of time, or it may dwindle to a fraction of the initial amount invested if several ventures prove unsuccessful, so diversification is key for successful investment of risk capital. In the context of venture capital, risk capital may also refer to funds invested in a promising startup.

Finance

Equity capital of a firm against which all losses are charged and which takes the full brunt of the effects of failures, misjudgments, uncertainties, and adverse circumstances.

Related: Risk, Impact risk, Venture capital

Practice & Source:

Scalability

Business/CSR

A characteristic of a system, model or function that describes its capability to cope and perform under an increased or expanding workload. A system that scales well will be able to maintain or even increase its level of performance or efficiency when tested by larger operational demands. In financial markets, scalability refers to financial institutions’ ability to handle increased demands; in the corporate environment, a scalable company is one that can maintain or improve profit margins while sales volume increases.

Related: Scale, Scale up, Replicability

Commentary

Used in philanthropy to denote the quality of a model with the financial and infrastructure characteristics that permit it to saturate a given market.

Practice & Source:

Scale

General

a) A graduated range of values forming a standard system for measuring or grading something.
b) The relative size or extent of something.

Related: Social enterprise

Practice & Source:

Sector program evaluation

Evaluation

Evaluation of a cluster of interventions in a sector within one country or across countries, all of which contribute to the achievement of a specific goal. A sector includes activities commonly grouped together for the purpose of public action such as health, education, agriculture, transport etc.

Related: Program evaluation

 

Selection bias

Evaluation

Potential biases introduced into a study by the selection of different types of people into treatment and comparison groups. As a result, the outcome differences may potentially be explained as a result of pre- existing differences between the groups, rather than the treatment itself.

Related: Bias, Optimism bias

Self-evaluation

Evaluation

An evaluation by those who are entrusted with the design and delivery of an intervention.

Related: Independent evaluation, Internal evaluation

Sensitivity analysis

ECONOMICS

Analysis of the effects on an appraisal of varying the projected values of important variables.

Shared measurement

Philanthropy

Shared measurement involves charities and social enterprises working on similar issues, and towards similar goals, reaching a common understanding of what to measure, and developing the tools to do so. The aim of shared measurement is to develop common indicators and tools for specific fields or interventions to help share and compare results, methods and lessons, and to identify the most effective solutions.

Related: Impact measurement, Social impact measurement, Impact assessment, Social impact assessment

Practice & Source:

Shared value

Business/CSR

A management strategy in which companies find business opportunities in social problems.

Related: Blended value, Value, Shared values

Commentary

Not to be confused with “shared values”, “shared value” was coined in a 2006 article by Michael Porter and Mark Kramer (and Porter’s earlier work) on the link between corporate social responsibility (CSR) and competitive advantage. Porter and Kramer argued that corporate social responsibility initiatives by companies were deficient and that instead companies need to view CSR initiatives as part of their core business strategy to boost innovation and competitive advantage. The term has been adapted to Creating Shared Value (CSV) and the Shared Value Initiative, a community of leaders dedicated to finding business opportunities in addressing societal challenges.

Practice & Source:

Significance

General

a) The quality of being worthy of attention; importance.
b) The meaning to be found in words or events.
c) The extent to which a result deviates from that expected to arise simply from random variation or errors in sampling.

Related: Power calculations, Reliability, Validity, Internal Validity, External Validity

Commentary

It is easy to confuse the generic use of “signifiance” with the statistical use. When statisticians or evaluators use the term significant they generally mean that the result passess a statistical test that shows the result did not occur by chance.

Practice & Source:

Small and Growing Business (SGB)

Business/CSR

A commercially viable business that has significant potential for expansion and social impact in the communities where it operates.

Related: Small and Medium Enterprise (SME), Social enterprise

Commentary

The Aspen Network of Development Entrepreneurs note two differences between SGBs and SMEs. First, SGBs are different from livelihood-sustaining small businesses, which start small and are designed to stay that way. Second, unlike many medium-sized companies, SGBs often lack access to the financial and knowledge resources required for growth.

Practice & Source:

Small and Medium Enterprise (SME)

Business/CSR

The categorization SME is designed to differentiate businesses with relatively small amounts of capital and/or personnel from larger organizations, particularly in relation to market segmentation, financial assistance or regulatory issues.

Related: Small and Growing Business (SGB), Social enterprise

Commentary

The criteria for defining an SME vary by jurisdiction and the defining organization and even within organizations. For example, the World Bank uses different definitions for different programs, policies, and research.

Practice & Source:

Social

General

Relating to society or its organization.

Related: Social enterprise, Social impact measurement, Social impact assessment

Commentary

“Social” is often added as a modifier to other terms (eg, value, business, investment etc.) to show consideration for impacts, costs, and benefits that affect people (individuals and communties) beyond those who are directly part of an exchange or involved in an activity. “Social” is sometimes used a shorthand for both social and environmental.

Practice & Source:

Social accounting

Accounting

The preparation and publication of an account about an organization’s social, environmental, employee, community, customer and other stakeholder interactions and activities and, where, possible, the consequences of those interactions and activities. The social account may contain financial information but is more likely to be a combination of quantified non-financial information and descriptive, non-quantified information. The social account may serve a number of purposes but discharge of the organization’s accountability to its stakeholders must be the clearly dominant of those reasons and the basis upon which the social account is judged.

Economics

When a set of accounts is made from government figures, showing the income and spending of the various parts of the economy.

Related: Corporate social reporting, Corporate social responsibility reporting, Non-financial reporting, Social and environmental accounting, Social audit

Commentary

There is not a consensus on the definition of social accounting. It is often used as an umbrella term to include any approach to taking social and environmental effects of an organisation, typically busineses, into consideration. Most definitions include the key themes of the link between financial and non-financial performance, qualitative and quantitative measurement of social impacts, and consideration of wider stakeholder groups beyond shareholders. Some uses include environmental impacts. A rare defintion is the process of developing social accounts, which are normally called national accounts.

Social audit

Business/CSR

A formal review of a company’s endeavors in social responsibility. A social audit looks at factors such as a company’s record of charitable giving, volunteer activity, energy use, transparency, work environment, and worker pay and benefits to evaluate what kind of social and environmental impact a company is having in the locations where it operates.

Related: Corporate social reporting, Corporate social responsibility reporting, Non-financial reporting, Social and environmental accounting, Social accounting, Social

Practice & Source:

Social business

Social enterprise

A non-loss, non-dividend business created and designed to address a social problem.

Related: Social enterprise, Social venture, Social

Commentary

Under the Yunus definition, social businesses are a subset of social enterprises. The latter allows for businesses that are designed to achieve a social purpose alongside making a profit and distributing dividends. Such distribution is not allowed under Yunus’ definition of social business. A separate definition is that “social business” refers to businesses that have integrated digital technologies and social network technologies in their business models.

Social change

GENERAL

A change in the customs, institutions, or culture of a society, especially due to ideological or technological factors.

Related: System change

Practice & Source:

Social Economy

Business/CSR

The segment of the economy is composed of entities that aim to increase social inclusion and reduce inequalities, while simultaneously creating economic value. Social economy organizations include different types of cooperatives, associations, foundations, mutual and social enterprises (which are businesses of various legal forms using an entrepreneurial approach in order to respond to an increasing number of social and environmental challenges. While measuring them remains challenging both at national and international levels, existing evidence suggests that they are vibrant agents assisting local and national economic development and contributing to inclusive growth and shared prosperity through job creation, re-integration of vulnerable individuals to society and the labor market, and environmental sustainability.

Related: Third Sector, Fourth Sector, Nonprofit, Social enterprise, Cooperative

Social enterprise

Social enterprise

Broadly defined as an enterprise that puts social benefit above or at least alongside profit. Traditionally these were non-profit organizations or charities with a philanthropic purpose, but they can also be structured as for-profit entities where profit is not the only overriding concern.

Social enterprise

Any organization, in any sector, that uses earned income strategies to pursue a double or triple bottom line, either alone (as a social sector business) or as part of a mixed revenue stream that includes charitable contributions and public sector subsidies

Social enterprise

A for-profit organization that applies business principles (sale of goods and services), with the priority objective of maximizing the creation of value for society in its field of expertise. In social enterprises, the demand for profit for the owners of the organization is constrained (by statute and/or practice) by the purpose of delivering value to society. The social enterprise seeks to achieve its mission, while fairly remunerating the resources that it uses in its activities (including financial capital and human capital), seeking to identify and eliminate any negative impacts that its actions may cause.

Related: Social venture, Social business, Social entrepreneur, Social

Commentary

There are some differences in definitions as to whether a business counts as a “social enterprise.” These differences include: its legal status–different countries have different definitions; the existence and priority of a social purpose; whether a social enterprise must be a nonprofit or not; and the extent to which it abides by certain principles, such as following sustainability principles and the commitment to empower the main participants in the value chain.

Practice & Source:

Social entrepreneur(ship)

Social enterprise

There is some debate among experts, including those offering teaching in social entrepreneurship, on what it actually is. For some, it is simply any business activity that creates social value – for example a business venture that generates environmental benefits, or provides education to underprivileged children in developing countries. For other proponents of social entrepreneurship, the focus is simultaneously on the entrepreneurship part of the term. For these people a social entrepreneur should also have launched a new company to deliver the social value.

Social enterprise

Any person, in any sector, who runs a social enterprise.

Related: Social enterprise, Social

Practice & Source:

Social impact

General

The effect of an activity on the social fabric of the community and well-being of the individuals and families.

Practice & Source:

Social impact assessment

Sustainable development

Analyzing, monitoring and managing the social consequences of development.

Commentary

Confusion can arise as to whether social impact assessment is used in a general way to refer to the evaluation of social impacts (see “impact assessment”) of a project or organisation, or the practice of conducting social impact assessments typically prior to a planning or business decision is made. Though there is overlap, evaluators tend to use one set of methods for restrospective (ex-post) evaluations, whereas planners tend to use other methods for prospective (ex-ante) evaluations. For retrospective evaluations, social impact assessment sometimes is used interchangeably with social impact measurement, while others would separate assessment from measurement in that the former requires an evaluative judgement, whereas the latter does not.

Social Impact Bond (SIB)

Finance

A social impact bond (SIB) is a contract with the public sector or governing authority, whereby it pays for better social outcomes in certain areas and passes on part of the savings achieved to investors. A social impact bond is not a bond, per se, since repayment and return on investment are contingent upon the achievement of desired social outcomes; if the objectives are not achieved, investors receive neither a return nor repayment of principal. SIBs derive their name from the fact that their investors are typically those who are interested in not just the financial return on their investment, but also in its social impact.

Related: Pay for success, Payment by results, Pay for performance

Commentary

As noted in the definition Social Impact Bonds are not really bonds. This is one reason why in the US Pay For Success (PFS) is used instead of Social Impact Bond.

Practice & Source:

Social impact management

No clear, authoritative definition was found. See commentary and “impact management.”

Related: Impact, Impact management, Impact measurement, Social impact measurement

Commentary

Social impact management involves planning for impact, measuring social impacts, and taking corrective actions as needed. Confusion can arise from whether the “social” in “social impact management” refers to both social and environmental impact or just social. See “impact management”.

Social Purpose Organization

Philanthropy

No clear, authoritative definition was found. See commentary.

Related: NGO, Nonprofit, Social enterprise, Benefit Corporation, B Corporation, For benefit corporation

 

Commentary

Often used as an umbrella term to describe the wide variety of organizations working for a social purpose, such as nonprofits, foundations, and social enterprises.

Social Return on Investment (SROI)

Evaluation

A method for measuring values that are not traditionally reflected in financial statements, including social, economic and environmental factors, which can identify how effectively an organization uses its capital and other resources to create value for the community. While a traditional cost-benefit analysis is used to compare different investments or projects, SROI is used more to evaluate the general progress of certain developments, showing both the financial and social impact of the corporation.

Related: Return on Investment (ROI)

Commentary

SROI exists within and has strong similarities to traditional cost-benefit analysis but was first documented as a distinct methodology for the social enterprise/venture philanthropy context in 2000 by REDF (formerly the Roberts Enterprise Development Fund) as a means of estimating social value creation alongside financial value and return on investment (see commentary for social value). The approach was taken up by what became the SROI Network and was later renamed Social Value International.

Practice & Source:

Social return ratio

General

See Social Return on Investment.

Related: Cost-Benefit Analysis

Commentary

The original formulation of Social Return Ratio that was developed by Roberts Enterprise Development Fund (REDF) alongside its Social Return on Investment calculation, involved adding the net social benefits and business cash flow of an enterprise and dividing that by the total amount philanthropic dollars invested in the lifetime of the investment. This formulation is not widely adopted.

Social sector

No clear, authoritative definition was found. See commentary.

Related: Third sector, Fourth sector

Commentary

Social sector is sometimes used as a synonym for the non-profit sector, charitable sector, voluntary sector (UK), or third sector. Other times it is used more broadly to include non-profits, social enterprises, philanthropic bodies, and impact investors who seek to address social problems.

Social value

General

Social Value is the quantification of the relative importance that people place on the changes they experience in their lives. Some, but not all of this value is captured in market prices.

Business/CSR

Larger concept which includes social capital as well as the subjective aspects of the citizens’ well-being, such as their ability to participate in making decisions that affect them.

General

Social Value refers to wider financial and non-financial impacts of programs, organizations and interventions, including the wellbeing of individuals and communities, social capital and the environment.

Related: Social Value Principles, Social Value International, Value, Financial value

Commentary

There is no consensus on the definition of social value but different definitions try to capture the value that people place on things, activities, and states of being that are not reflected in prices or by financial measures. In some uses social value is meant to stand in contrast to financial value (ie, the value of non-financial benefits to an activity or intervention), in others it is meant to stand in contrast to private value (ie, the value, positive or negative, to people who are not party to a transaction but are affected by it) or both.

Practice & Source:

Social Value International (SVI)

General

A global network focused on social impact and social value. Their members, comprised of organizations from 40 countries across a huge range of sectors and disciplines, share a common goal: to change the way society accounts for value.

Related: Social Value Principles, Social value

Commentary

SVI is the result of a merger between the SROI Network and the Social Impact Analysts Association.

Practice & Source:

Social venture

No clear, authoritative definition was found. See commentary.

Related: Social enterprise, Social business

Commentary

Often used as an umbrella term to describe the wide variety of organizations working for a social purpose, such as nonprofits, foundations, and social enterprises.

Social Venture Capital

Finance

Social venture capital differs from traditional venture capital in that investors look beyond financial return and risk-reward models when deciding where to place their money. Rather than placing utmost importance on return on investment (ROI), social venture capitalists seek to invest in ventures that offer profit potential and make the world a better place through their products and services.

Related: Return on Investment (ROI), Social Return on Investment (SROI), Venture Capital

Practice & Source:

Socially Responsible Investing (SRI)

Finance

See definition for Socially Responsible Investment and Responsible investing.

Related: Ethical investing, Responsible investing, Impact investing

Commentary

SRI is the practice of making sociallly responsible investments. “SRI”, “responsible investing”, “ethical investing”, and “impact investing” all refer to incorporating ethical concerns, social impacts, and environmental impacts in choices of investments. While sometimes used synonymously, there are differences between them. These relate to whether the filters are negative (ie, some investments are excluded to avoid their negative effects) or positive (ie, investments are included because they make positive contributions) and whether the filters are individualised (typically ethical investing) or systematized (typically SRI and responsible investing).

Practice & Source:

Socially responsible investment

Finance

An investment that is considered socially responsible because of the nature of the business the company conducts. Common themes for socially responsible investments include avoiding investment in companies that produce or sell addictive substances (like alcohol, gambling and tobacco) and seeking out companies engaged in social justice, environmental sustainability and alternative energy/clean technology efforts. Socially responsible investments can be made in individual companies or through a socially conscious mutual fund or exchange-traded fund (ETF).

Related: Socially Responsible Investing (SRI), Ethical investing, Responsible investing, Impact investing

Commentary

See “Socially Responsible Investing”.

Practice & Source:

Stakeholder

General

A person with an interest or concern in something, especially a business.

Evaluation

Agencies, organizations, groups or individuals who have a direct or indirect interest in the intervention or its evaluation.

Related: Customer, Client, User, End user, Constituent, Beneficiary

Commentary

The definition of stakeholder is consistent across fields, but in practice there may be different views as to who counts as a stakeholder, namely who has legitimate or warranted interest.

In recent years, several players in the sutainable development, social enterprise, and impact investing fields have begun to use “client,” “customer,” “user,” “end-user,” “constituent,” and “stakeholder” in place of “beneficiary” as part of a movement to recognize the individuals who benefit directly from an intervention, product, service, or investment as active participants, rather than passive recipients. Though each of these terms vary slightly in meaning, they are often used interchangeably.

Stated preference

Economics

Willingness to pay for something that is non-marketed, as derived from people’s responses to questions about preferences for various combinations of situations and/ or controlled discussion groups.

Related: Revealed preference, Hedonic pricing, Contingent valuation

Strategic philanthropy

Business/CSR

The practice of companies by which they target their respective charitable and philanthropic activities around a specific issue or cause that will in turn support their own business objectives.

Philanthropy

Outcome-oriented, result-oriented, and effective philanthropy. This is philanthropy where: donors articulate and seek to achieve clearly defined goals; they and/or their grantees explore and then pursue evidence-based strategies for achieving those goals; and both parties monitor progress toward outcomes and assess success in achieving them in order to make appropriate course corrections.

Related: Philanthropy, Corporate Social Responsibility (CSR)

Commentary

The meaning of the term differs from whether it is used by a business considering its philanthropic giving or a foundation considering its approach to grant-making.

Summative evaluation

Evaluation

A study conducted at the end of an intervention (or a phase of that intervention) to determine the extent to which anticipated outcomes were produced. Summative evaluation is intended to provide information about the worth of the program.

Evaluation

Evaluation of an intervention or program in its later stages or after it has been completed to (a) assess its impact (b) identify the factors that affected its performance (c) assess the sustainability of its results, and (d) draw lessons that may inform other interventions.

Related: Impact evaluation

Commentary

There are subtle distinctions between summative and impact evaluations, such as when the evaluation takes place, the assessment of sustainability, and the inclusion of lessons learned. Such differences may not appear in practice.

Sunset provision

General

A stipulation that an agency or program be disbanded or terminated at the end of a fixed period unless it is formally renewed.

Related: Sunset, Foundation

Practice & Source:

Sustainability

General

a) The ability to be maintained at a certain rate or level.
b) Avoidance of the depletion of natural resources in order to maintain an ecological balance.

Sustainable development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Many organizations use the following criteria to assess sustainable products, services, and other activities: (1) Social Criteria: Socially desirable, Culturally acceptable, Psychologically nurturing, (2) Financial Criteria: Economically sustainable, Technologically feasible, Operationally viable, (3) Environmental Criteria: Environmentally Robust, Generationally Sensitive, Capable of continuous learning

Sustainable development

The continuation of benefits from an intervention after it has been completed. The probability of continued long-term benefits. The resilience to risk of the net benefit flows over time.

Related: Sustainable development, Sustainable Development Goals (SDGS)

Commentary

There is unlikely to be misunderstanding over the general concept of sustainability, but there is potential for misunderstanding in use in particular cases (i.e, in what is to be maintained at what level).

Practice & Source:

Sustainability Accounting Standards Board (SASB)

Sustainable development

The Sustainability Accounting Standards Board sets industry-specific standards for corporate sustainability disclosure, with a view towards ensuring that disclosure is material, comparable, and decision-useful for investors.

Commentary

In promoting environmental accountabilty, SASB tries to mirror the US Financial Accountability Standards Board (FASB) that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). Thus SASB develops and promulgates environmental reporting standards.

Practice & Source:

Sustainable development

Sustainable development

Development that meets present needs without compromising the ability of future generations to meet their own needs. It assumes the conservation of the natural assets for future growth and development.

Related: Sustainable Development Goals (SDGs), Sustainability

Commentary

Sustainable development should not be confused with sustainable growth when used by economists to describe a rate of growth that an economy can sustain indefinitely without causing a rise in inflation. Environmentalists may use sustainable growth as a synonym for sustainable development.

Practice & Source:

Sustainable Development Goals (SDGs)

Sustainable development

The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.

These 17 Goals build on the successes of the Millennium Development Goals, while including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.

Related: Sustainable development, Sustainability, Millennium Development Goals (MDGs)

Practice & Source:

System change

Philanthropy

An intentional process designed to alter the status quo by shifting and realigning the form and function of a targeted system. Organizations, service delivery networks, poor neighborhoods, and even whole communities are often the systems targeted in these efforts.

Related: Social change

Commentary

In philanthropy and impact investing, the term “system change” is used to distinguish investments intended to transform systems from investments that fund direct services to targeted populations.

Target

General

a) A person, object, or place selected as the aim of an attack.
b) An objective or result towards which efforts are directed.

Evaluation

The specified result(s), often expressed by a value of an indicator(s), that a project, program, or policy is intended to achieve.

Related: Goal

Commentary

A target can be a specific indicator or result, such as an earnings target, or a group of people, such as target beneficiaries or target customers. There are also several phrases that start with target, such as target company and target accounting, that have specific meanings.

Practice & Source:

Target group

Evaluation

The specific individuals or organizations for whose benefit the intervention is undertaken.

Related: Beneficiary, Client, Customer, User, End user

Commentary

The difference between the target group of an intervention and the beneficiaries of an intervention is that the former are intended to benefit whereas the latter may benefit without intention.

Technical Assistance (TA)

Philanthropy

Operational or management assistance given to a nonprofit organization. It can include fundraising assistance, budgeting and financial planning, program planning, legal advice, marketing, and other aids to management. Assistance may be offered directly by a foundation or corporate staff member or in the form of a grant to pay for the services of an outside consultant.

Related: Capacity building

Commentary

Technical Assistance is not just restricted to the non-profit sector. It is sometimes given to a private sector company to enhance its management or operational practices. In the banking industry in developing countries a Multilateral Development Bank or donor may provide Technical Assitance to establish enhanced credit regulations and adequate rule in respect of corporate governance. In the private sector Technical Assistance is sometimes provided with the intention that part of the cost is paid back.

Practice & Source:

Terms of reference

General

The scope and limitations of an activity or area of knowledge.

Commentary

A common use of “terms of reference” is to describe the scope and purpose of an evaluation.

Practice & Source:

Thematic evaluation

EVALUATION

Evaluation of a selection of interventions, all of which address a specific priority that cuts across countries, regions, and sectors.

Theory of Change (TOC)

Evaluation

A comprehensive description and illustration of how and why a desired change is expected to happen in a particular context. It is focused in particular on mapping out or “filling in” what has been described as the “missing middle” between what a program or change initiative does (its activities or interventions) and how these lead to desired goals being achieved. It does this by first identifying the desired long-term goals and then works back from these to identify all the conditions (outcomes) that must be in place (and how these related to one another causally) for the goals to occur.

Related: Impact thesis, Impact chain, Value chain, Logical framework, Logframe, Impact map, Logic model, Impact value chain

Commentary

Theories of change are one of the most common causal-based models used for planning and evaluation. Others include logic models, results chains, value chains, outcome maps, impact maps, and logframes. There are differences in the design of these models–for example theories of change allow for more complex causal pathways than logic models and results chains–but in practice some of these differences are not apparent and these terms are sometimes used as synonyms.

Practice & Source:

Third sector

General

The part of an economy or society comprising non-governmental and non-profit-making organizations or associations, including charities, voluntary and community groups, cooperatives, etc.

Related: Social sector, Fourth sector

Practice & Source:

Tool

General

A thing used to help perform a job

Commentary

The broad definition means that tool can apply to methods, software, checklists, guidance, and more.

Practice & Source:

Triple bottom line

Sustainable development

Triple bottom line is a phrase introduced in 1994 by John Elkington and later used in his 1997 book “Cannibals With Forks: The Triple Bottom Line Of 21st Century Business,” which seeks to broaden the focus on the financial bottom line by businesses to include social and environmental responsibilities. A triple bottom line measures a company’s degree of social responsibility, its economic value and its environmental impact. A key challenge with the triple bottom line, according to Elkington, is the difficulty of measuring the social and environmental bottom lines, which necessitates the three separate accounts being evaluated on their own merits.

Related: Double bottom line

 

Commentary

“Triple bottom line” and “double bottom line” are often used interchangeably, though they have slightly different meanings. “Triple bottom line” refers to the financial, social, and environmental value generated by a business, while “double bottom line” refers to the financial and social or environmental value generated by a business.

Practice & Source:

Ultra High Net Worth Individual (UHNWI)

Finance

Ultra high net worth individuals (UHNWI) are people with investable assets of at least $30 million, excluding personal assets and property such as a primary residence, collectibles and consumer durables. UHNWIs comprise the richest people in the world and control a disproportionate amount of global wealth. Ultra-high net worth is generally quoted in terms of liquid assets over a certain figure, but the exact amount differs by financial institution and region.

Related: High Net Worth Individual (HNWI)

Practice & Source:

Underserved

Finance

Potential consumers, particularly within the BoP, who lack access to mainstream suppliers of goods and services.

Related: Bottom of the Pyramid (BoP), Base of Pyramid (BoP)

Practice & Source:

Unit cost

Business/CSR

Expenditure incurred in producing one unit of a good or service, computed usually as average cost.

Practice & Source:

User voice

Sustainable development

Involving the people whom an organization exists to help in the planning, delivery, and assessment of its work

Related: User

User(s)

Business/CSR

Entity that has authority to use an application, equipment, facility, process, or system, or one who consumes or employs a good or service to obtain a benefit or to solve a problem, and who may or may not be the actual purchaser of the item.

Related: Client, Customer, End user, Beneficiary

Commentary

“User” is a generic term that applies for receivers of services or users of products in the for-profit, non-profit, social enterprise, and public sectors. It is often a synonym for “client”, “customer”, or “intended beneficiary”. Some in the non-profit sector prefer “user” to “beneficiary” as it avoids the implication of the indebtedness or relative weakenss of the beneficiary to the benefactor.

Practice & Source:

Validity

General

a) The quality of being logically or factually sound; soundness or cogency.
b) The state of being legally or officially binding or acceptable.

Evaluation

The extent to which the data collection strategies and instruments measure what they purport to measure.

Related: Internal validity, External validity, Significance

Commentary

In evaluation, the validity of a measurement is the extent to which it accurately measures the intended object. Validity can also refer to the extent to which findings are backed by evidence. In business, validity refers to whether an agreement, bid, offer or document is allowable or binding.

Valuation

General

An estimation of the worth of something, especially one carried out by a professional valuer.

Finance

The determination of the value of an asset.

Commentary

In business and economics, valuation typically involves placing a monetary value on something, though there are methods of identifying the relative non-monetary value of a set of alternatives (for example, by multi-criteria decision analysis). In practice we implicitly engage in valuation through choices we make every day.

Practice & Source:

Value

General

The regard that something is held to deserve; the importance, worth, or usefulness of something.

Evaluation

A valid judgment of merit, worth and significance, the main remit of evaluation.

Related: Social value, Financial value

 

Commentary

In business, value is often shorthand for the finanical or monetary value of an asset for the owner. In other settings it can refer either to financial value, anything that people may care about, or moral standards.

Value chain

Business/CSR

Value chain refers to all the activities, from receipt of raw materials to post-sales support, that together create and increase the value of a product.

Sustainable development

The value chain identifies the various value-adding activities of an organization or network.

Related: Impact chain, Logical framework, Logframe, Impact map, Logic model, Theory of Change, Impact value chain

Commentary

Value chain analysis is increasingly used in social enterprise and non-profit sectors to identify how they create value in what they do. For such organization the value created is social value, not private value for the owners.

Practice & Source:

Venture capital

Finance

Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specialized financial institutions (development finance houses or venture capital firms). Also called risk capital. Venture capital is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange for equity in the startup. This is most commonly found in high growth technology industries like biotech and software. A person who deals in venture capital is a venture capitalist, and usually works for a venture capital firm.

Related: Venture philanthropy

Practice & Source:

Venture philanthropy

Finance

A high-engagement and long-term approach to generating societal impact through three practices:
• Tailored financing: Using a range of financing mechanisms (including grants, debt, equity hybrid financing) tailored to needs of organization supported.
• Organizational Support: Added-value support services that VPOs offer to investees (SPOs) to strengthen the SPO’s organizational resilience and financial sustainability by developing skills or improving structures and processes.
• Impact measurement and management: Measuring and managing the process of creating social impact in order to maximize and optimize it.

Related: Venture capital, Philanthropy

Commentary

There is overlap between venture philanthropy and impact investing. The practices of the latter are more like mainstream investing than philathropy. See “impact investing.”

Practice & Source:

Voice

Evaluation

Voice refers the values, opinions, beliefs, perspectives, and cultural backgrounds of stakeholders as well as the degree to which those values, opinions, beliefs, and perspectives are considered, included, listened to, and acted upon when important decisions are being made about an intervention, product, service, or investment. While the inclusion of voice may take a wide variety of forms, there are a few main types of voice:
i) Formal: When voice is formalized or institutionalized, governance and organizational systems may be reconfigured to include stakeholder voices in leadership roles or major operational decisions.
ii) Informal: When voice is informal, leaders may take the opinions of stakeholders under advisement, but there is usually no formal obligation to act on their opinions or to include them in official leadership roles and decisions.
iii) Evaluative: Stakeholder voice may also be considered in the evaluation of an intervention, product, service, investment, or their respective leadership.

Related: Feedback, Stakeholder, User, Constituent

Commentary

The most common variations of “voice” are “stakeholder voice,” “user voice,” and “constituent voice.”

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Well-being

General

With reference to a person or community: the state of being healthy, happy, or prosperous; physical, psychological, or moral welfare.

Practice & Source:

Willingness to accept

Economics

The amount that someone is willing to receive or accept to give up a good or service.

Related: Contingent valuation, Stated preference, Valuation, Willingness to pay

Willingness to pay

Economics

The amount that someone is willing to give up or pay to acquire a good or service.

Related: Contingent valuation, Stated preference, Valuation, Willingness to accept

Worth

General

a) Equivalent in value to the sum or item specified.
b) Sufficiently good, important, or interesting to be treated or regarded in the way specified.

Evaluation

The value to a stakeholder, an institution or a collective by contrast with intrinsic value.

Related: Value, Social value, Financial value

Commentary

Different sectors use “worth” in different ways. In finance, “net worth” is the amount by which the financial value of assets exceed liabilities. In economics, “worth” is a market concept defined by the amount for which something can be sold. In evaluation, “worth” refers to the value placed on the subject of the evaluation by one or more stakeholders so that worth estimates are influenced by the interests and the values of individual stakeholders. In business, comparable “worth” refers to jobs that require comparable abilities, knowledge and skills entitling employees to the same remuneration irrespective of age, gender, race, etc.