Image courtesy of kavalenkau on Shutterstock

Impact investing has been hailed as a powerful force for change — a way for financial markets to address global priorities such as quality education and decent jobs.  But for all its promise, a central challenge remains: how do we measure impact in a way that helps investors to compare and prioritize investments?      

At the Global Impact Investing Network’s (GIIN) Impact Lab, we’ve listened to investors, academic experts and practitioners seeking a better answer to that question.  Our new tool — the Impact Quantifier — offers a meaningful solution.  Built to be open-source and immediately useable, it helps investors understand the potential real-world impact of investments using a human-centric metric: improvement in the quality and length of life.  This approach enables impact investors to move beyond sector-specific due diligence and ask: where can my money do the most good?

The Challenge of Comparing Impact

Impact investing — defined as investing with the intention to generate positive, measurable social and environmental impact alongside a financial return — now accounts for an estimated $1.571 trillion USD of assets under management. Despite the field’s growth, impact measurement remains fragmented.   

For example, an education investment in India may improve lives just as much as a similar investment in the United States, or as much as an investment aiming to create decent jobs in India, but existing tools make it nearly impossible to meaningfully compare these disparate outcomes across sectors and locations.  Financial return can be benchmarked and compared across asset classes and contexts — whether it’s a private equity deal in an energy company or a fixed-income deal in consumer goods, both rely on standard metrics like ROI (return on investment) and IRR (internal rate of return).    In contrast, impact returns often remain siloed or are reduced to monetary values, overlooking the human complexity and nuance that they hold.   

This leaves investors forced to choose between incomparable outcomes, such as the impact of quality education versus the impact of responsible agriculture. 

A Human-Centered Metric for Impact: QALYs 

The Impact Quantifier seeks to change that. Its foundation rests on a simple idea with profound implications: that all forms of impact can ultimately be understood as increasing the length and quality of life.  

To capture this notion, the tool uses quality-adjusted life years (QALYs), pronounced /ˈkwɑːliz/. Widely used in health economics, QALYs offer a way to compare the benefits of medical interventions. One QALY represents one year of life in perfect health; a year lived in moderate health might be worth 0.5 QALYs;, while death is scored as 0. The power of QALYs lies in their ability to aggregate across people and time — two years of life at 0.5 each is still one QALY – making it possible for impact from entirely different sectors to be compared in a consistent, human-focused way.   

While QALYs are not perfect — they rely on assumptions and estimates in the same way that some financial metrics do — they provide a critical starting point for impact quantification.  Unlike monetization efforts that attempt to translate all outcomes into dollars and may have their place, QALYs keep the focus squarely on people. They reflect what matters most: the quality and duration of human lives.   

How the Impact Quantifier Works 

The Impact Quantifier is powered by a robust evidence base, including the open-source dataset compiled by LCA Consultants 2.0 and its long-term academic Dr. Bo Weidema, formally as a project for the United Nations Environmental Programme. Weidema and his colleagues conducted a meta study to measure the annual QALY losses associated with unmet needs across more than 160 countries. Their analysis spanned domains such as health, education, sanitation, income and environmental quality.  

The Impact Quantifier requires just a few key inputs form investors:   

  • Breadth – the number of individuals affected by an investment 
  • Depth – the extent to which their needs are met 
  • Theme and geography – to determine the QALYs gained (and lives saved) per investment, which are then aggregated at the total fund level  

Take an example: an impact investor considers a fund that improves education access for 5,000 underserved students, meeting 50 percent of their educational needs. The Impact Quantifier shows that each underserved child in India experiences an annual loss of .06 QALYs due to a lack of education.    

5,000 students × 50% of needs met × 0.06 QALYs = 150 QALYs gained 

The possibilities of the Impact Quantifier shine most when it comes to comparison across sectors and places. 

To use the tool to compare impact across geographies, suppose another impact fund provides the same services to the same number of children, but in the United States. The Impact Quantifier automatically adjusts for this value, reflecting that each underserved child in the United States experiences an annual loss of .02 QALYs due to a lack of education.  

5,000 students × 50% of needs met × 0.02 QALYs = 50 QALYs gained 

By this metric, the impact of the impact fund in India would be three times greater than in the United States. 

When comparing across impact categories, consider that instead of investing in the education fund, a different impact fund in India proposes to meet 75 percent of the needs of 250 individuals by providing decent jobs. The Impact Quantifier shows how this can be compared to the impact of education. In this case, each unemployed individual loses 0.05 QALYs annually due to the intrinsic harms of unemployment.

250 unemployed individuals provided jobs × 75% of needs met × 0.05 QALY = 9.3 QALYs gained

By this metric, the education impact fund provides greater impact. 

Why This Time Is Different 

Efforts to create comparative impact tools are not new,; however, the Impact Quantifier stands apart in three important ways:   

  1. It aims higher, consolidating human welfare across sectors into a single, meaningful value.  
  2. It moves past monetization, receiving  extensive stakeholder input from 94 organizations, it centers people instead of dollars.  
  3. It’s ready to use. Built in the GIIN’s Impact Lab, by practitioners for practitioners, the Impact Quantifier is open-source and free to use. It is designed to evolve through critique, testing and community input.   

One of the First Steps – Not the Final Word 

The Impact Quantifier is not a panacea. Like all models, it simplifies a complex reality.  But as statistician George E. Box said, “All models are wrong, but some are useful.”  We hope that this tool is both useful and provocative — a foundation for further innovation across the industry. 

QALYs are just the beginning.  They can support portfolio-level modeling, benchmarking, impact reporting and target setting. They can guide investment decisions at scale or at the margins.  More importantly, they invite the impact investing community to think more deeply about what it means to center human well-being in capital deployment.   

Impact investing has always been about more than just more money.  With the right tools, we can ensure it’s also about real results: measurable, comparable and life-changing. 

For access to the Impact Quantifier and its documentation, visit here.