Unveiling the social impact marketplace

Last week was a whirlwind: early flights into and late flights out of cities to meet with corporations, foundations, and social entrepreneurs nationwide. As the week ended, instead of winding down, my mind is charged with insights and contagious enthusiasm for the disruptive idea we shared. The social outcomes marketplace heralds a future of heightened accountability, streamlined capital use, and greater impact transparency. After three roadshows and the amazing response it has received, I'm convinced - it's time for this idea to shine.

Corporations, investors, and governments are investing unprecedented sums in social initiatives, surpassing $13 trillion in recent years. Despite this surge in spending to achieve social outcomes, the progress towards achieving the Sustainable Development Goals (SDGs) by 2030 appears set to reach only 12% of them.  The staggering expenditure isn't yielding proportional returns, exacerbating the disconnect between increased social spending and actual progress.

Here's why I think the social impact marketplace is a transformative and promising approach to address this disconnect. The social outcomes marketplace is, simply put, a platform to connect impact buyers with impact producers who are achieving actual social and environmental outcomes, not outputs. While philanthropic giving will always be accompanied by a strong emotional pull, it doesn’t have to be void of evidence and data. The marketplace enables impact producers to feature the work and evidence of impact they are delivering in a way that allows the buyer to make selections based on the types of beneficiaries they want to reach, the quality of the producer’s evidence, and comparisons to benchmarks to enable true price discovery. Impact organisations currently spend 20% on all funds they raise which is a colossal waste of resources. The marketplace gives impact producers access to impact buyers globally, and they can now compete for funds based on evidence of the quality of the services they are delivering. For impact buyers, they are now able to select organizations with the best quality of evidence regardless of whether they are large international NGOs or small community based organizations. This market levels the playing field. 

As one of the participants at the roadshow commented, “the marketplace will help deliver measurable outcomes eliminating excuses for not deploying capital.”

What are the benefits of an outcomes market for social investors?    

• Enhances return on funding
• Ensures strategic alignment between social investors and grantees
• Improves ROI by evaluating programs effectiveness, benchmarking  - social investors purchase outcomes from verified programs 
• Prioritizes impact, funding entire outcome costs
• Enhances accountability to stakeholders
• Provides transparent impact reporting, not just expenditure
• Tracks social spend ROI with business like rigor 
• Engages employees and customers on the issues they care about    
• Orients the team towards strategic operations
• Reduces time spent on due diligence and administration
• Focuses on strategic functions like grantee capacity building 

How does the marketplace change the game?

Traditionally, funders have taken risky bets by investing in future outcomes, requiring a high risk appetite. This often necessitates extensive due diligence, consuming significant resources for both impact organizations and funders, resulting in delays in investment and overall outcomes delivery.

The marketplace shifts this paradigm by allowing impact organizations to offer already achieved outcomes on the market, validating their work through standardized verification methods by a third party. This reduces administrative burdens and risks for funders. Verified impact reporting offers funders comparability for resource allocation, enhances accountability standards for grantees, and improves transparency. It empowers evidence-based decision-making and fosters learning and improvement in funding strategies. It also helps funders navigate the presently highly complex cross border giving.

Funders can now identify effective strategies, evaluate scalability and sustainability of interventions, and allocate resources strategically to initiatives with the highest potential for positive social change.

The way the market works is that an organization receives funding from a donor. This catalytic funding allows the outcome producer to register and get these outcomes verified by the Impact Genome Registry (IGR), the leading registry for social outcomes. If the impact producer has robust proof of impact, their outcomes can be sold on the market. When an outcomes buyer then purchases these outcomes, the producer has the funding to deliver even more social outcomes to put back on the market. Finally, social enterprises (non profits or others) have a much more sustainable and efficient way to fund their operations, enabling them to continue delivering robust outcomes. 

How about organisations that have not delivered the outcomes yet but promise future outcomes? Will they continue to be resource starved?

The marketplace will have both retroactive social outcomes and future anticipated outcomes up for takes by funders. While the expectation from foundations is to provide risk capital, evidence of the enormous due diligence and long years it takes to structure these grants or other investment models, they often prove themselves quite risk-averse. Not-for-profits need sustainable finance based on their work quality to continue producing. Retroactive evaluation allows organizations, funders, policymakers, and other stakeholders to understand the real-world impact of their efforts, identify areas of success or improvement, and inform future decision-making thus addressing this concern of risk and being more agile in funding.  

However, there is a place for both types of funders. The marketplace will see a disruption in bringing changemakers together, unlocking more capital but in a manner that is efficient, less burdensome, transparent and also with lowered risk. As one participant at the roadshow said, “the potential to unlock additional capital, which helps alleviate the impact organisation’s struggle in moving from proof of concept to scale, significantly increases".  It also levels the playing field for a rich variety of stakeholders. Several participants were very optimistic regarding the market mechanism's ability to scale small and medium enterprises.  

What else does the marketplace offer? Price Benchmarks.  

Benchmarking results in social impact, has been notoriously difficult. Historically, social programs have only been compared based on their overhead expenses or financials, not their impact. Cost benchmarks allow for the comparison of two disparate outcomes using a common unit of analysis. On this marketplace there would be program data submitted by impact producers, identifying the primary outcome that best represents the program, the number of beneficiaries that have achieved the outcome and the cost of delivering the program – which is verified by IGR. This shifts the narrative from ‘cost of delivering a program’ to ‘price of delivering the outcomes’. 

What are the opportunities ahead? 

There has been a significant evolution of this space in the last decade with the growing focus of the Government towards outcomes and leveraging resources effectively for scale. The role of government involvement is crucial to scale the platform.  

There is a new energy to blended finance and the platform will provide a common place for different kinds of stakeholders across CSR, philanthropic capital and commercial capital to come together. 

There are huge synergies with different regulatory trends in the market – whether it is the Social Stock Exchange in India that has been designed with a similar purpose to raise a corpus through retail giving; or the Singapore Monetary Authority’s tax rebates for giving in and outside of Singapore.

There is potentially a lot to leverage from existing expertise and income sources in the for-profit entrepreneurial ecosystem.  

Creating unique and localised user journey maps incorporating regulatory and compliance information for various markets and scenarios, will increase the access to different kinds of funding.

Right now the marketplace aims to keep it as rooted in facts and evidence and there is cost-based outcomes pricing, however the platform holds the potential to have value-based pricing and even milestone-based funding as alternatives, again potentially unlocking exponentially more capital.

About the AVPN OutcomesX partnership:

AVPN is the largest social investing network in Asia, that is increasing the flow of financial, human and intellectual capital from Asia and around the world into the social sector in Asia. AVPN provides a network of peers, rigorous learning programmes, and innovative capital mobilization opportunities that make sure resources are more effectively deployed. In this effort to mobilize more capital and in a far more productive manner, AVPN has partnered with OutcomesX to create a social impact marketplace. 

OutcomesX is a social outcomes exchange whose mission is to transform social impact into a tradable good that impact investors, corporations and philanthropy can purchase from vetted non-profits and social enterprises. OutcomesX creates the infrastructure to standardise, price, trade and report on social impact where outcome buyers benefit from price discovery and verified data to inform social spending, and impact producers get access to liquidity and reduced fund raising and reporting burden.

The AVPN-OutcomesX team shared this revolutionary idea in Delhi, Mumbai and Bengaluru last month, and further took this to Singapore, Malaysia, Indonesia and Hong Kong. The sessions have been designed to inform social innovators on the latest trends and movements shaping the future of social impact. This innovative model guarantees social impact, promoting equity, and catalysing future impact by giving social innovators the tool to allocate capital and maximise social progress. 

This partnership and the marketplace will be launched at the AVPN Global Conference in Abu Dhabi (April 23-25, 2024). To partake in the launch of this revolutionary new idea register here today. 

Our upcoming AVPN Global Conference 2024 will take place between April 23-25, 2024 in partnership with Abu Dhabi, the capital of the United Arab Emirates. This will be the most inclusive social investment conference to date, bridging north, south, east and west through our platform, and we are excited to hold our conference in West Asia for the first time. Our conference theme for the 2024 edition is 'One Asia, One Future'. To harness Asia’s immense collective power towards achieving the UN Sustainable Development Goals by 2030, we look to shed light on our region's diversity, the resilience and capacity of our communities as well as our shared commitment to achieving impact.

Hope to see you there. Register now.