The objective of the Nesta Standards of Evidence is to help us know how confident we can be that a product or service is having a positive impact on one of our target outcomes.
The Nesta Impact Investment Fund Standards of Evidence are on a 1 to 5 scale with Level 1 being the first starting point that we require all investees to have, moving up to Level 5 where a product or service has very strong evidence of effectiveness. As the levels are progressed, it will be expected that data is collected to isolate the impact to the product or service, that findings are validated externally, and then at Level 5, demonstrable evidence that the product or service can be delivered at multiple locations and still deliver a strong, positive impact.
Further details about the Standards of Evidence are available in a paper [PDF], but in summary these are:
- Level 1: Account of impact – this means a potential investee can clearly say what a product or service does and why this may have a positive impact on one of our outcomes in a logical, coherent and convincing way.
- Level 2: Correlation – at this stage some data is being collected which show a positive impact on the users of the product or service, but it is not confirmed that the investment caused this.
- Level 3: Causation – here we will expect to see that the positive change amongst the users of the product or service is happening because of the product or service.
- Level 4: Independent replication – the claims behind a product or service will have been validated, such as through an independently conducted evaluation. At Level 4 we would also expect to see that the product or service can deliver this positive impact at a reasonable cost.
- Level 5: Scaled – to reach this point it is clear that the product or service can be operated by someone else, somewhere else and on a large scale, whilst continuing to have positive and direct impact on the outcome, and whilst remaining a financially viable proposition.
For further information on the Standards of Evidence, including details on the types of methodologies that could be considered at different stages, please see our recent paper, Standards of Evidence for Impact Investing [PDF].