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Her choice was make impact or be hurt. Why are you angry?

Somaly Mam said she was trafficked into a brothel as a young girl in Cambodia. Then she escaped, and helping others came to run a couple of organizations in Cambodia that battled forced prostitution. She wrote an autobiography, was feted at the State Department and Kennedy Center, and celebrated by journalists, including the New York Times

But then Newsweek, after previously celebrating Somaly Mam, suggested recently that her back story might have been faked. And a parallel accusation suggests Long Pross, a young woman who had worked with Somaly Mam, concocted her story about losing an eye to a violent brothel manager. Newsweek says she lost the eye naturally. Both Somaly Mam and Long Pross stick by their stories.

The sex trafficking situation improved in Cambodia over the years, and New York Times writer, Nicholas Kristof believes Somaly deserves some credit for that (along with State Department pressure and many other factors). But he notes that simply doing good work doesn’t give anyone the right to embellish their backstory.

And while Kristoff highlights that truth is paramount, it’s significant that 21 million people worldwide are subjected to forced labor, including forced prostitution, according to the International Labor Organization.

So while sorting out the facts will take time, he now has some regrets about writing about her and wonders if the same is true of The Washington Post, CNN, Time and other news organizations. Yet he aspires that people will be as diligent in covering the scandal that is human trafficking as they may be in following the scandal of false or embellished backstories.


Photo licensed under Creative Commons from Gideon Wright on flickr

If you’re skeptical about measuring impact investing, you have this man to thank.

There is a great deal of debate on how to measure social impact.   More simply its difficult to assess social change. It takes money, time, and creativity.

Today there are over 150 different tools and resources for assessing impact. But the science of measuring impact dates back to 1957, when one man, Donald Campbell, published Factors Relevant to the Validity of Experiments in Social Settings. This book introduced concepts that are now critically important components of social science methodology.  Basically, if Campbell didn’t question whether social impact was valid, we might not have good measurement today.

Over fifty years later Tools and Resources for Assessing Social Impact (TRASI) counts over 150 approaches to measuring the impact of social programs and investments. TRASI is a project of the Foundation Center, developed in partnership with McKinsey & Co. and with input from experts in the field. The assessment approaches in TRASI were developed by a range of organizations, including social investors, foundations, NGOs, and microfinance institutions.

But just like accounting, measuring social impact is subject to abuse by those who would manipulate the rules for individual gain. What’s more important, reports McKinsey, is a process built upon 10 core beliefs designed to be self reinforcing. And they’ve designed a toolkit to help impact investors and social investors make sure they can trust the process, even though managers will always look for ways to cheat.


Photo licensed under Creative Commons from walkadog on flickr


Investors worry impact funds will waver. So this is how they keep them honest.

Impact funds strive for both good return and high impact.  But how do you know a fund is doing a good job?

Social Performance Based Success Fees are a twist on carried interest. Typically, once a fund achieves its pre-determined hurdle rate, the fund manager receives a portion of the profits over that goal, usually around 20%. This is called carried interest.

But at Vox Capital, “If we do not reach the minimum expected social impact level, our team is entitled to only half of the carry. At the same time, if the financial return is below its target, we are not entitled to any success fee, regardless of our social impact results.”  Vox measure Impact using Global Impact Investing Ratings System (GIIRS)

Insitor Management, is also held accountable. But instead of measuring impact over the entire portfolio, they have different thresholds for each investment.

These are some of the findings of a report summarizing 30+ interviews on measuring impact, from big impact investors like Calvert Foundation and Acumen Fund, to small organizations with less than 15 employees.


Photo licensed under Creative Commons from uwdigicollec on flickr