The global impact investing market has expanded exponentially over the past decade, growing from a niche philanthropic strategy into a mainstream asset class managing trillions of dollars. Yet, as the capital flowing into environmental and social enterprises scales up, a foundational friction point threatens to undermine its ultimate potential: the uneasy marriage between data collection and human relationships. For years, impact organizations have struggled to establish a unified consensus on what metrics matter most. This fragmentation leaves capital allocators grappling with heterogeneous reports they cannot easily compare, while portfolio companies often view data collection as a compliance chore meant to satisfy investors rather than a vital tool for internal business growth.
Recent research reveals that this disconnect is not merely an administrative nuisance; it actively impairs investment decisions and limits the efficacy of sustainable portfolios. Industry leaders point to a compounding opportunity: when leveraged correctly, superior relationships can produce higher-quality data, and robust data can, in turn, foster deeper, more trust-based relationships that drive exceptional financial and social performance. To diagnose the depth of this systemic issue and chart a path forward, Impact Capital Managers (ICM) and impact measurement platform UpMetrics have collaborated to evaluate the structural bottlenecks holding the sector back, offering a roadmap for systemic alignment.
The Anatomy of the Disconnect: Insights from 2025 and Beyond
To understand the scope of the problem, one must look at how the data-relationships gap manifests across different tiers of the impact capital stack. In 2025, ICM—led by Executive Director Marieke Spence—published two landmark research projects: Impact Data as a Value Driver: Company Perspectives and Practice and Impact Allocator Perspectives: Impact Reporting Priorities in Theory and Practice. These studies illuminated the stark disconnect viewed from opposite ends of the investment spectrum.
On one side, portfolio companies express a strong desire for their impact data to do double duty: not only demonstrating external accountability and performance to investors, but actively informing internal operational improvements. On the other side, Limited Partners (LPs) and other allocators are desperate for greater comparability and context across their portfolios, without sacrificing the nuanced metrics that make individual fund managers and portfolio companies distinct. Positioned squarely in the middle of this dynamic are General Partners (GPs) and fund managers, who are uniquely situated to bridge the divide.
However, the cost of failing to bridge this gap is statistically staggering. According to ICM data, a decisive 68% of capital allocators report that they cannot effectively compare impact data across the various reports they receive from portfolio companies. Consequently, crucial capital allocation decisions are routinely made using incomplete pictures. The dynamic is equally troubling on the company side: while 76% of companies that collect impact data describe it as valuable, only 41% actually leverage that data to help secure their next round of funding. Companies clearly recognize the theoretical worth of their metrics, yet they lack the infrastructure and alignment necessary to utilize them to their full potential.
Recognizing these systemic challenges, UpMetrics—an advanced impact measurement and reporting platform led by CEO Drew Payne—has worked alongside pioneering investment firms such as Capricorn Investment Group, SJF Ventures, and HCAP Partners. By synthesizing real-world deployment with ICM’s empirical research, these organizations have helped identify three deliberate, actionable shifts that impact practitioners can make to close the data-relationships gap once and for all: defining metrics collaboratively, owning dedicated data infrastructure, and fostering continuous learning through shared analysis.
Shift One: Defining Metrics Cooperatively Before Reporting Begins
Historically, impact reporting has been characterized by a top-down approach: investors issue rigid templates and questionnaires to portfolio companies after the investment has closed, forcing investees to scramble to fit their operations into predefined boxes. Industry leaders argue that this model is fundamentally flawed because it prioritizes compliance over collaboration.
Leading firms are now rewriting this playbook. For instance, when Capricorn Investment Group sits down with its fund managers to discuss impact reporting, it explicitly avoids opening with a rigid checklist of mandatory metrics. Instead, Capricorn initiates the conversation with a foundational question: What are you already measuring? By partnering with each fund to define a balanced mix of standardized and custom metrics before data collection officially begins, Capricorn ensures relevance.
Mandira Reddy, Director at Capricorn, emphasizes the strategic nuance of this philosophy. "The goal isn’t to standardize every manager’s reporting into one template," Reddy notes. "It’s to build enough consistency to see impact across a portfolio without losing what makes each strategy distinct."
SJF Ventures operationalizes this cooperative philosophy at scale, co-creating bespoke custom metrics with individual investees while maintaining a unified baseline set of workforce-focused indicators across its entire portfolio.
Kelsey Jarrett, Director of Impact at SJF Ventures, underscores the operational hazards of unilateral metric assignment. "If I come in with a fixed opinion about where a company sits in our impact framework and assign metrics to collect, I may misinterpret what is driving value for that business, and the data won’t be useful," Jarrett explains. She adds that partnering with specialized infrastructure providers like UpMetrics allows SJF to house company-specific metrics and portfolio-wide workforce data in a single, cohesive environment, freeing up the investment team to spend time where it matters most: directly with their portfolio companies.
The practical takeaway for the sector is clear: define metrics collaboratively before reporting begins. Stakeholders must start with what the investee is already tracking, identify what the investor genuinely needs to understand, and formally agree upon metrics that serve both internal business execution and external accountability.
Shift Two: Moving Beyond Spreadsheets to Own Data Infrastructure
A secondary structural hurdle identified in ICM’s research is the widespread reliance on legacy, ad-hoc administrative tools for impact measurement. The data showed that an overwhelming 73% of portfolio companies manage their sensitive impact data in-house using basic software like Microsoft Excel—tools that were never purpose-built for multi-dimensional impact measurement. Unsurprisingly, 62% of respondents expressed a neutral or dissatisfied sentiment regarding the reliability and utility of these legacy processes. The industry has inadvertently built systems merely for storing static data, rather than dynamic platforms designed to help organizations derive operational insights.
The real-world consequences of inadequate infrastructure can be severe. TemperPack, a sustainable packaging manufacturer and portfolio company of SJF Ventures, experienced this friction acutely. Every time a new investor questionnaire arrived, it arrived in a completely different format. Once the data was compiled and submitted into various black holes, the numbers essentially vanished, leaving the company with no internal visibility or longitudinal way to measure its own operational progress.
TemperPack’s solution was transformative: the company consolidated its disparate metrics into a single, centralized digital system and appointed a dedicated internal analyst to oversee the data lifecycle. This structural pivot freed the executive team from the administrative burden of endless data gathering, enabling them to analyze and act upon the information. Today, TemperPack uses its impact infrastructure not just to satisfy external reporting demands, but to run its business with greater precision and profitability.
UpMetrics has observed this pattern repeatedly across the ecosystem. Whether an organization acts as an LP, a GP, or a portfolio company, building data infrastructure solely to check a compliance box leaves massive strategic value on the table. Sustainable data architecture must be engineered to serve internal stakeholders first, empowering management to run the enterprise more intelligently. External reporting should merely be a natural byproduct of robust internal systems.
The designated action item for organizations is straightforward: build data systems around the individuals who actually need to use the data to make decisions, not just the passive recipients at the top of the reporting chain. Firms must assign clear internal ownership, establish a rigorous review cadence, and design for longitudinal tracking.
Shift Three: Fostering Collaborative Learning Through Data Partnerships
When data and human relationships are effectively integrated, impact reporting ceases to be an isolated compliance exercise. Instead, it evolves into an engine of continuous learning, informing critical fundraising milestones and go-to-market strategies.
Private equity firm HCAP Partners utilizes this exact philosophy through its signature "Gainful Jobs Approach." HCAP collaborates proactively with portfolio companies and LPs to systematically improve job quality metrics for frontline workers residing in low- to moderate-income communities. During the preliminary due diligence phase, HCAP partners with target companies to co-create a strategic roadmap containing annual, company-specific job quality milestones that serve as formal conditions for investment closure. Post-investment, quarterly check-ins leverage real-time interactive dashboards to monitor progress against these goals and dynamically surface operational areas for improvement.
Tom Woelfel, Senior Director of Impact at HCAP Partners, highlights how dynamic visualization transforms portfolio management. "The exercise of impact reporting has become a powerful tool for collaboration with our portfolio companies," Woelfel states. "Being able to dynamically visualize company data in UpMetrics has helped management see where the opportunities are to improve job quality and enabled us to provide more tailored support to companies to enhance retention, increase productivity, and drive long-term growth."
Similarly, SJF Ventures treats impact discipline as a reciprocal street. The firm learns hand-in-hand with its portfolio companies, and then carries that nuanced understanding upward to its LPs—occasionally pushing back by telling an LP that a specific metric cannot be replicated if a portfolio company’s underlying business model has evolved.
"It’s this trade-off that lets our impact measurement be more about ongoing engagement than static reporting," Jarrett observes. "It’s important to us that the process centers on adding value to our portfolio companies, not just reducing our own reporting burden."
The prescribed operational action is to weave data directly into the fabric of ongoing business relationships. Stakeholders should review metrics collectively, interrogate what the data is truly revealing about operational health, and allow those insights to shape strategic priorities, executive decisions, and future trajectories.
The Road Ahead: Chronology, Collaboration, and Future Frameworks
The imperative facing the impact capital ecosystem is clear: organizations must explicitly decide what critical information they need to track, construct resilient digital infrastructure to utilize it, and intentionally carve out time to learn from those insights collaboratively. Capital allocators must define metrics in active partnership with fund managers, fund managers must treat their position as a two-way collaborative bridge, and operating companies must take active ownership of their data infrastructure rather than serving as passive submission vessels.
The ICM Institute continues to spearhead extensive research initiatives to address these systemic gaps. Following the foundational studies of 2025, a critical blind spot regarding private credit prompted the publication of Private Credit in the Impact Capital Stack, released in September 2026 in coordination with a select group of ICM member GPs. Looking further down the timeline, a second volume of Impact Allocator Perspectives is slated for launch in the first quarter of 2027, charting how allocator priorities, reporting burdens, and methodological standards have evolved over a two-year observation window.
Furthermore, in a monumental push toward sector-wide standardization, the ICM Institute—alongside allied organizations including Impact Frontiers, the Impact Convergence Forum, the Institutional Limited Partners Association (ILPA), the CREO Syndicate, the Operating Principles for Impact Management, and ICM’s LP Advisory Council—is actively helping to launch the first-ever Common Impact Due Diligence Questionnaire (DDQ). This collaborative instrument is explicitly designed to address lingering industry challenges around data comparability, contextual relevance, operational efficiency, and overall effectiveness.
Parallel to these academic and standard-setting efforts, UpMetrics remains committed to translating cutting-edge sector research into scalable digital infrastructure. By building tools that align data hygiene with human relationships, UpMetrics aims to help impact organizations bridge the theory-practice divide.
Industry analysts emphasize that rigorous research and advanced software infrastructure only generate genuine market value when the impact sector acts upon them collectively. Meaningful transformation cannot occur in academic or technological isolation; research must continuously be translated into action through deliberate, trust-based relationships. As the impact investing community navigates the remainder of the decade, practitioners facing these data and alignment challenges are encouraged to engage with industry pioneers like ICM and UpMetrics to share insights, refine best practices, and collectively codevelop a more transparent, efficient, and impactful financial future.
