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The downside of metrics
The worst news from the Skoll World Forum was from another investor. They were trying to co-invest with a venture philanthropy fund, but found two significant barriers; one that fund does not co-invest, nor release its due diligence reports to even other like-minded institutional funders.
Worse was that this fund had made the social enterprise sign an exclusive deal; they would not take funding from another fund. The reason, it seems, is metrics run amok; they only way to make sure they can measure their impact is to try to restrict other impacts on the enterprises. So less good gets done, less growth of the mission and the company happens in the name of being able to accurately measure and report.
The enterprise, for its part, is looking into going around the restriction by spinning out another entity that investors can take part in. I can’t say how repugnant I find this. Capital needs to learn to flow together, but some seem more intent on creating walled gardens to prove a counter productive point.
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April 14th, 2008 um 7:51 am
[…] The problem is exemplified in this post from Kevin Jones, over at Xigi: The worst news from the Skoll World Forum was from another investor. They were trying to co-invest with a venture philanthropy fund, but found two significant barriers; one that fund does not co-invest, nor release its due diligence reports to even other like-minded institutional funders. Worse was that this fund had made the social enterprise sign an exclusive deal; they would not take funding from another fund. The reason, it seems, is metrics run amok; they only way to make sure they can measure their impact is to try to restrict other impacts on the enterprises. […]
April 14th, 2008 um 7:55 am
Kevin,
Thanks for the post. As you see on blog post this morning, I spent yesterday with Jed Emerson talking through this issue at some depth.
My question is: who is going to step up and provide a common ground for this metrics discussion to get exposed to some fresh air?
April 14th, 2008 um 9:24 am
[…] Ratings for Entrepreneurs and Investors Published April 14, 2008 Collective Intelligence , Social Transformation Tags: foundations, reputation, social finance, social ventures Greg Berry’s post today highlights the need for better metrics in the social finance sector. He cites a recent post by Kevin Jones describing how one social venture fund refused to cooperate with another because it would mess up it’s metrics for the project it was investing in by making it hard to tell what factors were most important. Greg not only agrees with the absurdity of this situation, but also proposes an extremely interesting solution. The solution involves developing better standards for venture metrics, which his group has already at least partially achieved and tested. (Entrepreneurial Standards Forum.) […]
April 14th, 2008 um 9:26 am
metrics has no meaning outside of an increasing flow of capital
April 16th, 2008 um 11:46 pm
[…] xigi.net » Blog Archive » The downside of metrics Kevin Jones tells the story of the kind of “metrics mania” that makes me want to hide behind my Wall Street Journal and hope no one in the nonprofit sector conflates my point of view with the insanity he’s talking about. The funder in his story is dumb, n (tags: philanthropy) […]