An Intro to Asset Liability Management in Regards to Social Impact Credits
My aim is to make this brief. Let us begin with our current understanding of market premiums when purchasing shares of companies. We employ ALM techniques to understand and quantify risk. The asset risk as we know can be affected by common expectations such as company x reaching quarterly sales targets or uncommon events such as an executive of company x deciding to publicly expose their political ideology or will towards managing a nations social services in a corporate fashion. The question is what are key factors that go into the quantifying the market premium on social impact credits (SICs).
The factors I am discussing here include, savings to society, and capitalization of development costs. I am leaving out tangible assets of a social development organization (SoDev) in order to avoid the expiring vs non expiring credit conversation. This discussion relates to both. I aim to stay neutral in this paper between the expiring vs non expiring debates. If you have heard me speak you probably know where I stand.
First of why is this conversation necessary?
Risk mitigation. When we all start on an even playing field we can avoid over speculation on SIC valuation. History tells us that each time a new asset class comes into play or a new industry that requires an alternative asset assessment methodology emerges a bubble is formed due to excitement and misunderstanding of the real factors which affect the assets’ market premium.
There are two key factors and recurring threads in the world of SIC research, expansion and delivery. The first is savings to society or the general economic impact. The short end of savings to society is simple. How much would society be spending if the actions of the SoDev never occurred, and how long will society be spending that amount of money.
When you assess in broader terms the general economic impact, you are then also bringing into view the larger picture on how the economy is impacted beyond the immediate direct public program expenditure. For example the Margaret and Wallace McCain Family Foundation commissioned a study on the impact of investing in early learning and child care. The report highlighted impact factors such as labour market participation, reduction in income inequality, and a decrease in the need for special education. The estimate was as high as for every $1 invested there is an economic impact as high as $5.8. And, that is part of the ROI when investing in SoDevs.
Now, lets move on to capitalization of program development. In short, think tech, think of developing a valuation on a technology application that has not entered into its first sales cycle. Here it becomes easy to see. We know that there is a high development cost and removing that development cost from product or service valuation will create disinterest in further developing technological innovation.
In the same vein in order to create better and more effective social service programs the same methodology that has kept developers in Silicon Valley and other tech centres around the world, building and creating mass amounts of economic returns, must also be attributed to programs that social development organizations produce. The incentive for a SoDev becomes, getting the job done right, and getting the job done effectively. This is a market approach.
Although I aimed to stay neutral in the debate between expiring vs non expiring credits, there are clues as to which system works better than the other when transferring an intangible asset created by a SoDev to a tangible asset that can hold liquid value.
The combined value of savings to society or economic impact and capitalization of development costs will provide that baseline number, that is required to understanding when a credit is reaching a state of being undersold or oversold.
Written by Delali Hotsonyame
An Intro to Asset Liability Management in Regards to Social Impact Credits © 2026 by Delali Hotsonyame is licensed under Creative Commons Attribution 4.0 International. To view a copy of this license, visit https://creativecommons.org/licenses/by/4.0/
