What are we talking about?
The impact contract is an innovative mechanism for financing social and environmental innovation.
The social and environmental innovation project leader obtains financing from private investors. The latter are reimbursed by the State if and only if the social and environmental impact of the project is demonstrated.
Impact contracts therefore bring together three types of actors with different objectives
- the project owner, who is looking for visibility on its budget in order to be able to implement projects
- the private investor, who is looking for financial profitability
- the State, which seeks to control public spending
To function effectively, impact contracts require the intervention of an evaluator.
Our method of intervention as an evaluator
An evaluator, at the heart of the Impact Contract mechanism, is necessary to
- align the interests of the 3 parties to the contract, in the structuring phase, by determining the indicators that will condition the repayments of the investors, and their level. These indicators must be ambitious (in the interest of the State), realistic (in the interest of the project leader) and achievable (in the interest of the investors)
- audit the veracity of the information provided by the project leader and collect the data necessary to calculate the indicators, throughout the life of the CIS (3 to 7 years), in order to determine whether the State must reimburse the investors
- Evaluate the costs and benefits generated by the program at the end of the program to develop recommendations for scaling up.
The evaluator positions himself as a trusted third party, guaranteeing the alignment of the interests of the parties to the contract.
Our 3 phases of intervention :
What is the role of the evaluator?
Pre-contracting
- Support for project design
- Co-construction of payment triggers and their targets
- Requires diving into the association’s track record and looking at the counterfactual
- Calculate SROI ex ante to confirm targets
- Verification of the robustness of the information system and determination of audit procedures
- Definition of informative indicators
- Participation in the drafting of agreements.
Evaluation during the contract
- Recovery of data from the IT and databases cleaning
- Data audit
- Calculation of payment triggers and drafting of the annual performance certificate
- Participation in the reflection on how to correct deviations from the target, if necessary
- Monitoring of informative indicators (not payment triggers)
- Participation in steering committees
Ex-post evaluation
- Calculation of the full ex-post SROI
- Drafting of a final report, with recommendations on scaling up
As an evaluator of 11 impact contracts, Citizing has developed a solid line of work, led by Judith Lefebvre de Preÿ. Our approach requires flexibility in posture:
- to be a guide in the pre-contractual phase to find together a balance between ambition and feasibility
- to be an auditor-consultant in the contractual phase
- be a researcher-consultant in the post-contractual phase
Benefits of Impact Contracts
- Project leaders benefit from a multi-year source of funding
- The government outsources the risk of funding innovations: if the impacts are not achieved, the government does not have to reimburse investors
- Investors have an opportunity to fund impact projects
- Actors who are not used to working together are brought together and can learn from each other (professionalization, stigma)
- Social and environmental innovations financed by impact contracts are systematically evaluated, a virtuous process for monitoring the proper allocation of public funds
Testimony of ENVIE Autonomie
Thanks to CITIZING, ENVIE Autonomie has entered the era of impact measurement. Together, we set the stakes for our action, defined legible, objective indicators and projected ourselves into the future. This work was crucial in convincing our partners to support us and follow us in our long-term change of scale.
ENVIE Autonomie is the winner of an Impact Contract. Measuring impact is at the heart of this contract; it requires a method and reliable, sustainable tools for our entire network. Citizing was able to adapt and support us in meeting this challenge. Listening, teaching and a requirement based on competence were the keys to the success of this partnership, which is set to last six years!