Measuring better, not more

When LuxAidBusiness4Impact began supporting innovative businesses through the Business Partnership Facility (BPF), the LuxAid Challenge Fund (LCF) and the LuxAidg Development Fund (LDF), flexibility was seen as a strength.

Each company operates in a different context, tackles different development challenges and pursues impact through its own business model. As a result, monitoring frameworks were designed to be highly tailored, allowing businesses to define a relatively large variety of indicators that reflected their unique objectives.

Over time, however, this flexibility revealed its limits. With dozens of co-financed innovations across sectors and geographies, the programme found itself managing a growing number of different indicators, many of which were measuring similar outcomes in different ways. On top of that, the large number of indicators per co-financed company made reporting increasingly burdensome, while aggregating results at portfolio level proved difficult.

We realised that while we were collecting a lot of data, we were not always generating evidence that could be easily aggregated and analysed. The challenge was not collecting more information but collecting the right information in a consistent way to get a sense of the change to which our co-financing contributes. (Ben Wandivinit, LuxAidBusiness4Impact Evaluation and Monitoring Officer)

A shift towards simplicity

Following a review of its monitoring and evaluation approach, LuxAid Business4Impact introduced a more streamlined results framework designed to reduce complexity while strengthening the quality and comparability of impact data.

One of the most significant changes was the introduction of a cap of ten indicators per co-financed project. The programme also established two core LuxAidBusiness4Impact indicators that now apply across all three funds, and which, in the beginning, were not consequently used :

• the number of additional users accessing and using the co-financed product or service;

• the number of additional people whose livelihoods or quality of life have improved as a result of that access and use.

At the same time, commonly used indicators—such as additional investments mobilised, annual revenue and jobs created—were standardised to ensure that results can be aggregated and analysed across the portfolio. Companies can also define up to two project-specific indicators that they consider most relevant for measuring progress, provided that the required data can be collected easily and reliably.

The changes go beyond the indicators themselves. Discussions on impact measurement now take place much earlier in the selection process, during due diligence and pitch preparation, helping companies and programme teams agree on realistic targets and reporting expectations from the outset.

Making impact measurement work for businesses

A key lesson from the review was that the most sophisticated indicator is of little value if the underlying data cannot be collected reliably and easily.

Rather than requiring companies to establish new and often burdensome reporting systems, the revised framework prioritises indicators that can be measured using processes and tools businesses already have in place. The programme is also actively moving away from a heavy reliance on company-led surveys, favouring operational data and clearly articulated impact assumptions whenever possible.

For higher-value or higher-risk innovations, a tiered monitoring system allows for closer follow-up without imposing the same level of reporting requirements on every project. The result is a more proportionate approach that balances accountability with practicality.

Five lessons from the field

After two years of implementation, several conclusions stand out.

• First, less is often more. A smaller number of carefully selected indicators tends to produce higher-quality data and reduces the administrative burden on companies and programme teams alike.
• Second, measurability matters. Indicators must be grounded in data that businesses can realistically collect and substantiate.
• Third, standardisation is essential. Without common definitions and methodologies, meaningful portfolio-level analysis becomes difficult, if not impossible.
• Fourth, timing makes a difference. Defining indicators before project approval creates clearer expectations and more realistic reporting obligations.
• Finally, support remains critical. Most companies focus primarily on growing their business and serving their customers. Monitoring and evaluation are rarely core areas of expertise, making ongoing guidance an important component of successful impact measurement.

Looking ahead

For LuxAid Business4Impact, the experience has reinforced a simple but important principle: effective impact measurement is not about tracking as many indicators as possible. It is about generating robust evidence that is credible, comparable and useful for decision-making.

By simplifying its results framework and focusing on a smaller set of meaningful indicators, the programme is strengthening its ability to demonstrate how business-led innovations contribute to sustainable development—while reducing the reporting burden on the entrepreneurs driving that change.

Interested in learning more?

Contact Ben Wandivinit, Monitoring & Evaluation Officer, at ben.wandivinit@luxdev.lu