Editor's Choice, October 2011: the IRIS data report
463 inclusive businesses have tracked their social impact and pooled the results. This month's Editor's Choice, the 2011 IRIS Data Report, shares the findings from this first-ever aggregation of such business results.
63% are profitable: more in energy than in agriculture, more in Sub-Saharan African than in South Asia. Amongst agricultural businesses, the percentage of revenue paid to smallholders varies from 50% to 95%, with higher shares paid by those with larger turnover. The wages they pay vary widely, from US$5,000 to US$ 27,000 per year (purchasing power parity).
These businesses probably do not call themselves 'inclusive businesses' but they are all ventures that combine social and commercial return, and are seeking or receiving 'impact investment'. In addition to the 463 inclusive businesses, several thousand micro-finance organisations have also reported their data, but are analysed separately. (For an introduction to what 'impact investment' means to inclusive businesses, see our new blog reporting on a day spent with impact investors).
Having a shared set of data marks a major step forward. It's a result of the impact investment community (known as Global Impact Investing Network, GIIN) developing a common library of indicators (known as Impact Reporting and Investment Standards, or IRIS). Seven intermediary institutions - Acumen Fund, E+Co, Grassroots Business Fund, IGNIA, New Ventures, Root Capital, and Small Enterprise Assistance Funds (SEAF) shared their data from clients, in partnership with the Aspen Network. Still, this represents only a fraction of IRIS users, so marks a mere beginning.
There is a tantalising taste of what lies ahead as data sets grow. Current data shows that agricultural businesses that have higher revenue, share a larger share with smallholders: suggesting economies of scale. But those that source from larger numbers of smallholders do not share a different level of revenue. As the authors say, the observation could indicate that increasing the number of smallholder suppliers results in fewer efficiencies than does sourcing more from each existing smallholder farmer.
Conjecture so far, but eventually IRIS reports hope to analyse smallholder revenue against multiple variables: crop type, value added processing, corporate form and more. The new Global Impact Investing Rating System (GIIRS) is establishing a partnership with IRIS, and will be sharing data from the 25 GIIRS pioneer funds. So we can expect this first report to be just one step along the way to a sharper picture of the social returns across a swathe of inclusive businesses.