Imagine an investment officer at a development finance institution (DFI) reviewing a follow-on proposal from a financial inclusion fund they backed five years ago. The first fund invested in a range of Series B-stage financial services providers (FSP). But now, as they consider a second investment into a second fund, they realize something’s missing: outcomes evidence. Not just outputs like the number of loans disbursed or accounts opened, but data on how clients actually fared. Did these financial services help clients become more resilient or financially healthy? Was there any unintended harm? With little more than a dashboard with key performance indicators and a single lean data survey, the investment officer is unsure how to assess the fund’s impact or how to project future performance to justify another investment.
Now consider a different scenario: an investment officer at an early-stage venture fund is backing a fintech startup that helps informal microenterprises digitally track their business transactions. The product shows promise, but many users try it once and don’t return. Why? What kind of value does it offer in users’ day-to-day lives? The startup is still refining its model, and while it is tracking uptake and usage, there’s little feedback from users themselves. Without that insight, it’s hard to know whether the innovation is truly useful or potentially missing the mark.
Not just a technical challenge
These two examples underscore a key issue in outcome-oriented impact measurement and management (IMM): the challenge isn’t just about collecting more or better data, it’s about ensuring that the IMM approach fits the context. Doing so requires rethinking conventional practices and exploring new ways to link measurement to decision-making.
The information needed to guide a DFI’s follow-on investment decision is very different from what’s needed to help a startup refine its product in real time. The investment stage, business maturity, stakeholder roles and incentives, and the relationships between them all influence what IMM should look like. A fund manager might need product-level insights to refine services, while a capital provider may require retrospective and more robust evidence to justify re-investment. Both are valid goals that require different IMM strategies.
Fitting the approach to these circumstances means starting with a clear understanding of why outcomes evidence is needed and designing methods, indicators, and reporting arrangements that align with the specific purpose. It also involves being transparent about the trade-offs and potential impact risks if an appropriate approach is not applied, so that decisions are made consciously rather than by default.
A practical way forward: use cases for outcomes orientation in IMM
In the absence of a shared, context-specific understanding, impact investors and investee FSPs often default to easily available output data. While convenient, this approach can leave key investment and impact decisions underinformed and further risks undermining the credibility of impact investing and financial services enablers of real outcomes.
To address this and push the boundaries of how IMM is typically framed and practiced, CGAP is developing a portfolio of use cases that support outcomes orientation in IMM. Each use case links a specific investment challenge or decision point with the strategic and operational choices required to measure and manage outcomes, along with the associated impact risks. These use cases are purpose-driven and designed to help clarify roles, responsibilities, and expectations across stakeholders. Each use case addresses four key questions:
- Why integrating outcomes data and evidence matters, and how it informs decision-making.
- What to integrate and measure, and when, including when proxy indicators and triangulation with the broader evidence base may be more appropriate than direct measurement.
- Who is responsible for funding and implementing outcomes measurement and management.
- How IMM strategies and reporting arrangements should be designed to support implementation, learning, and mitigation of impact risks.
Putting use cases into action
The earlier examples can provide a helpful illustration of how a use case can clarify what is needed in each scenario.
For the DFI considering a follow-on investment, the use case would start by clarifying the purpose: the capital provider wants to understand the outcomes achieved in Fund I before committing to Fund II. In this case, a right-fit IMM approach might involve a targeted evaluation of client outcomes in select markets or among specific FSPs. While the fund manager and a few FSPs could help facilitate the effort, the DFI would lead and commission the study. Sufficient lead time would be required to ensure findings are available for the Fund II commitment. This one-off assessment would supplement existing output and social performance data, informing the DFI’s investment decision and supporting improvements to the IMM approach for the next fund.
In the early-stage venture context, the goal is quite different. Here, the fund manager isn’t looking for definitive ‘proof’ of outcomes performance, but rather early signals or ‘lead indicators’ that the product is creating real value or potentially posing unintended risks to users.
Given the fintech’s growth stage and its rapid product cycles, it hasn’t yet begun collecting the type of feedback needed. A right-fit IMM approach at this stage might involve embedding simple user feedback mechanisms into the product rollout —led by the fintech, with support from the fund manager—to gather insights on utility, relevance, and unintended effects. Depending on the stage and needs, third-party expertise may be brought in later to support deeper insights. This feedback can help the fintech learn and iterate more effectively. The aim is product-impact fit and refinement, not realization of outcomes. What matters at this stage is making sure the innovation is on the right track to achieving outcomes.
Table: How use cases drive better-fit outcomes-focused IMM
What’s next?
These two examples reflect a small slice of the complexity that impact investors and FSPs face when deciding how to include outcomes into investment decision making. In practice, IMM choices vary because these actors operate within different structural, relational, and contextual realities. To better understand these dynamics and clarify the use cases emerging in practice, we are examining these three interconnected dimensions:
- Relationship dynamics: decision-making authority, incentives, and responsibilities
- Organizational factors: investment structure, product characteristics, financial resources, governance structure, and even cultural features
- Contextual factors: geography, market maturity, customer segments, and thematic priorities
These use cases are not about prescribing best practices in the abstract. They’re about enabling right-fit strategies that help stakeholders improve outcomes orientation and make smarter investment decisions. Each use case balances flexibility with consistency, ensuring that measurement approaches are adapted to purpose and context while still offering shared reference points and expectations.
We’re grounding this work in research and consultations with practitioners. An advisory group of capital providers, DFIs, fund managers, board members, FSPs, and standard setters is helping ensure the work remains relevant and practical. We invite others to follow this work, share feedback, and help shape the next phase. Together, we can move beyond measuring and managing what’s easy and start measuring and managing what matters.
