New Power Labs Research
In the Dark
Assessing progress toward equity, diversity, and inclusion across impact investors and social impact accelerators.
Authored by New Power Labs and Propel Impact.
Funded by New Power Labs and Social Economy Through Social Inclusion (SETSI).
The Canadian social innovation and social finance sector lacks standards, transparency, and guidelines for improving equity and equitable capital flow.
This report illuminates the ways that impact investors and social impact accelerators are integrating equity, diversity, and inclusion (EDI) into their work and practices.
Read the full report
The historic events of 2020 made inaction no longer an option.
In 2020, the number and frequency of conversations about equity and racial justice began to increase in various working groups and national gatherings for the social innovation sector.
Yet, it was acknowledged in these forums that there is lack of clarity around standards and guidelines for improving equity within organizations and across the sector. Without insight into the internal workings of different organizations, our collective understanding of progress on EDI has been based on anecdotes and sidebar conversations.
Our question
How are Canadian impact investing funds, the impact investing arms of foundations, and social impact accelerators addressing equity, diversity, and inclusion (EDI) within their leadership teams, internal operations, and portfolio and program ventures?
To help answer this question, we surveyed and interviewed 27 impact investors and 13 social impact accelerators, representing approximately 10% of the Canadian ecosystem.
Altogether, impact investors and social impact accelerators have good intentions and want to do better on EDI challenges – but we remain in the dark from a systemic lack of data.
Our key findings
Impact investors and social impact accelerators feel confident that they have taken steps to address equity, diversity, and inclusion.
Collecting disaggregated data — and hence assessing progress — is challenging partly due to a lack of standard categories and terminology. As such, few organizations surveyed are collecting self-identified demographic data.
Leadership teams have various approaches to implementing EDI practices in their organizations, including signing pledges, setting targets, and committing financial resources for EDI initiatives.
Many impact investors and social impact accelerators have policies for EDI in their internal operations, most commonly around gender equality - but the implementation of these in practice varies.
More small impact investors and social impact accelerators than large ones are actively aiming to invest in or recruit ventures led by equity-deserving groups, and of these, more organizations are actively aiming to recruit women- and BIPOC-led ventures than those led by LGBTQIA2S+ founders or founders with disabilities.
Research insights
From the data and insights generated through the survey and interview process, four key insights emerged:
Small impact investors and social impact accelerators develop EDI practices and policies as their needs arise. They are:
35% less likely to establish a formal EDI committee than large organizations.
23% less likely to have an EDI budget than large organizations.
But often express that EDI is part of their culture or core practices, and with smaller teams, they can test and implement EDI practices more quickly or be more intentional in using an EDI lens.
The main factor influencing the speed of implementing EDI practices is organization size.
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Large impact investors and social impact accelerators formalize their EDI practices — while less agile, many policies and practices are institutionalized and made explicit.
23% more likely than small organizations to have a budget for EDI initiatives in place
Have team sizes 3.5x the size of small organizations on average
But 23% fewer large organizations than small organizations actively aim to invest in, or recruit ventures led by, equity-deserving founders.
Impact investors and social impact accelerators encounter practical and ethical challenges when collecting self-identified disaggregated data, which is still not a widespread practice.
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Practical challenges include a lack of standards and common practices.
Participating organizations do not view or prioritize the practice of tracking self-identified data in a uniform way.
Organizations do not agree on consistent terminology on gender, ethnicity, sexual orientation, and disability, and a single, reliable source for terminology has not yet been identified.
Ethical challenges include risks in categorizing individuals according to sociodemographic profiles.
While some attributes can be visible (gender, ethnicity, and age), other information (sexual orientation, disability) are often invisible, requiring self-reporting.
Even with anonymized data, coupling certain responses can also lead to identification of specific individuals – leaving them open to be targeted or undermining their privacy.
Impact investors and social impact accelerators lean on external sources when identifying and developing EDI targets and benchmarks.
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This is likely a result of:
A lack of internal resources.
13% of all participating organizations surveyed have hired an EDI consultant.
60% more large organizations than small ones have enlisted the services of EDI specialists.
42% of all participating small and large organizations have signed on to at least one EDI challenge or pledge – but some organizations express doubt about their utility when not accompanied by tangible goals.
A lack of expertise.
Organizations often do not believe they have the knowledge or skills needed to implement EDI practices into their operations.
Organizations should also contextualize EDI goals within the geography, sector, and communities where they operate.
Desire to mitigate reputational risk.
Organizations often hire consultants for many reasons, particularly the fear of not approaching challenges in the “right way."
But there is no consensus on what does and does not work in EDI – as supporting research suggests some approaches like unconscious bias training may be counterproductive and consultants’ approaches vary.
Impact investors and social impact accelerators identify a challenge in recruiting diverse talent, with sector-specific skills, who are also representative of the communities where they operate.
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There is a widespread desire to improve - but more needs to be done.
48% of participating organizations are prioritizing equitable recruitment practices.
However, organizations report they find it difficult to find and recruit candidates with technical skills needed in social innovation or social finance, particularly from equity-deserving groups – reflecting a disconnect in the pipeline between candidates and employers.
Recruitment practices need to be addressed.
Common recruitment practices can sometimes cause inadvertent discrimination by hiring managers against people who are not like them.
Focusing on candidates’ key personal qualities, rather than skills alone, can help improve EDI among candidates while potentially aiding recruitment.
The path forward
“Systemic discrimination isn’t intuitive unless you experience it directly, and only becomes widely visible through data analysis.”
— Shakil Choudhury
The Canadian social innovation and social finance sector has an opportunity to transform and lead how equity is centred in its work and its impact, by:
Amplifying effective practices;
Clarifying and exposing what is not effective;
Building mechanisms for accountability;
Committing human and financial capital over the long-term.
We can move out of the dark.
Our recommendations
1. Collect disaggregated demographic data on the leadership teams at impact investment funds, social impact accelerators, and social ventures.
Partner with New Power Labs to collect sociodemographic data on leadership teams with ease and privacy, disaggregating these to better understand and measure diversity and progress on EDI.
2. Create structured, standardized,
and inclusive recruitment processes.
For access to anti-bias interview resources (such as interview questions and rubrics), contact Social Innovation Academy.
New Power Labs will continue to aggregate and synthesize existing and emerging research, and share emerging practices to improve EDI in the sector through our website and networks.
3. Participate in benchmarking organizational policies and practices related to EDI.
Work with New Power Labs to benchmark organizational policies that are related to EDI, and map and address relevant policy gaps. Learn more about this emerging work by contacting New Power Labs.
4. Join a community of peer organizations committed to sharing their EDI knowledge.
For organizations operating within the social innovation, social finance/economy sector, we invite their teams to join the Solidarity Working Group.
Impact investors and other organizations deploying capital can join the New Power Labs Catalyst Network to learn from peers and stay engaged.
5. Embrace the journey.
Driving meaningful change in equity, diversity, and inclusion requires a sustained, long-term commitment and the adoption of both small-scale changes and transformative actions.
Read the full report