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 Impact Quotient (IQ)DFC evaluates every project using its impact management tool, Impact Quotient (IQ), to measure, manage, and assess its developmental impact around the world.
 What is the purpose of the IQ framework?Impact Quotient (IQ) is a standardized, objective, transparent framework used to measure and manage the developmental impacts of projects over their lifecycle. IQ:Systematically measures DFC’s development impact at both the project and portfolio level, spanning a wide range of sectors and geographies.Helps inform decision-making during project approval.Establishes key metrics to measure each project’s development impact over time.Provides a balanced assessment that reflects both the positive and negative impacts of a project, within the context of the host country.Encourages initiatives to enhance a project’s positive impacts on its workforce, the environment, and/or the local community.Classifies projects into scoring tiers, which are defined below.As a founding Signatory to the **Operating Principles of Impact Management**, DFC ensured that IQ also aligned with industry best practices in impact management, and DFC received an independent verification of its alignment to the Operating Principles in 2021.How are projects assessed?IQ enables DFC to classify projects into scoring tiers based on its impact across three pillars:**Growth:** contributes to economic growth through infrastructure improvements, contribution to local income, trade benefits to the local economy, and job creation. Projects receive IQ points in this category based on the scale of anticipated impact, e.g., the total dollar value of direct local income generated by the project.**Inclusion:** advances inclusion by providing products or services, diversified workforces, and inclusive supply chains that benefit underserved groups including micro, small, and medium-sized enterprises, low-income populations, smallholder farmers, young adults, women and women-owned enterprises, people with disabilities, indigenous peoples, refugees, and ethnic or religious minorities. Projects receive IQ points based on the proportion of beneficiaries that are from underserved populations, e.g., the proportion of loan recipients that are expected to be women.**Innovation:** supports innovation through the advancement of new products or services, the use of innovative financial structures to mobilize private capital, knowledge or technology transfer, and benefits to the planet. A project receives points based on the extent to which it represents a new product, service, or business model and the extent to which it mobilizes private sector support, e.g., the piloting of a new fund model that is expected to mobilize a large multiple of DFC's funds in private sector capital.Each pillar contains standardized indicators and metrics that are aligned with the **Harmonized Indicators for Private Sector Operations** (HIPSO) and the Global Impact Investing Network’s **IRIS+ Catalogue**. Key indicators and metrics for each project are identified during the project approval stage and tracked over time. For a list of all IQ indicators and metrics, please see below:**IQ Indicators and Metrics**The specific indicators on which a project is scored are based on identifying the most relevant indicators that represent both a meaningful development challenge in the project’s geographic context and core intended outcomes of the project.Assessment of these indicators results in a score between 0 and 150, which then corresponds to an impact tier:**Tier****Points**Exceptionally Impactful127.5 - 150Highly Impactful112.5 - 127.4Impactful90 - 112.4Limited Impact37.5 - 89.9Indeterminate0 - 37.4The IQ score is one factor DFC considers when deciding whether to move forward with financing a project, alongside financial and foreign policy considerations as well as elements of development impact that may not be fully captured by the IQ methodology. In particular, projects labeled “Indeterminate” may have a structure or objective such that the IQ analysis is unable to fully reflect the project rationale.
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