How and why to measure social impact

What is social impact?

Social impact is the positive change that your organisation has created or affected over time.

This change could be social, economic and/or environmental. As a social enterprise, creating positive social impact is at the heart of what you do and you must be able to identify, understand and capture the full value of the impact of your activities.

Understanding, measuring and communicating impact

Understanding, measuring and communicating impact is extremely important for marketing purposes and to win new contracts and secure existing funders and customers. The impact is also central to your organisation’s strategy as it helps you know whether you are meeting your mission and vision in the long term.

Measuring your social impact will help you understand, manage and communicate the social value that your work creates in a clear and consistent way. This information can be used for a number of very beneficial purposes, the principle of which are:

1. Helping you better understand, and target, your social work: Detailed information about the impact your time and investment is having upon your social goals will greatly improve your ability to put your precious resources to best use. Social impact assessment helps organisations to plan better, implement more effectively, and successfully bring initiatives to scale. For instance, you can target activities that prove to be particularly beneficial, or identify and evaluate areas where your investment is not showing the return you expected.
2. Attracting investors and retaining investor confidence: Social investment has generated great hopes among many investors, but it is going to have to demonstrate measurable returns, comparable to financial yardsticks if it is to retain investor confidence. If the social investment is to become as important as financial return, the measurement of social impact must be comparably easy to understand and communicate.
3. Tendering for public sector contracts or selling goods and services: Social enterprises must be able to advertise their business in a way that is quickly and easily intelligible to public service commissioners and consumers alike.

Your organisation probably already has an ‘impact attitude’ – where you are regularly thinking, talking, telling and questioning the impact you make. Building on this foundation and more formally planning, measuring and communicating your impact will help you to get to the truth about what your organisation achieves in the world.

Communicate what your organisation achieves in the world

There are many different ways to think about your impact; however, the starting point should be asking yourself:

• What are the longer-term changes for people, the environment or the economy that our organisation creates or contributes to?
• What are the most important things we need to know about? You can find this out by asking what impacts if we were not achieving them, would stop us from meeting our mission?
• Are there any other things we need to know about – such as unexpected impacts of our activities (either positive or negative)?
• Who do we need to tell and in what form do they need to know (e.g. report, funding framework, video, flyer, talking…?)

Tools for measuring social impact

Measuring social impact can be both complex and expensive. These are some of the tools that can be used to do that:

1. Social Accounting and Audit

Originated in the 1970s as a way to compensate for the focus of traditional financial accounting on shareholders and other financial providers to the exclusion of a wider range of stakeholders and as a way to document and ‘account for the social impact that organizations have.

It has been defined as the ‘systematic analysis of the effects of an organisation on its communities of interest or stakeholders, with stakeholder input as part of the data that are analyzed for the accounting statement’. This is a process of three steps: planning, accounting, and reporting and audit.

2. Logic models

Or the Logic approach to program design and evaluation emerged in the 1970s as a response to the shortcomings of many program evaluations that were being conducted. The focus of program assessment tended to be on ‘outputs’ rather than ‘outcomes’ and evaluation was not built into the project design process.

The advantage and attraction of Logic models are that they provide a framework that enables organizations to embed evaluation and performance assessment into the program design and life cycle process of the program.

3. Social Return on Investment (SROI)

Is a method for measuring and communicating a broad concept of value that incorporates social, environmental and economic impacts. It is a way of accounting for the value created by our activities and the contributions that made that activity possible.

It is also the story of the change affected by our activities, told from the perspective of our stakeholders. SROI can encompass all types of outcomes – social, economic and environmental – but it is based on involving stakeholders in determining which outcomes are relevant. There are two types of SROI:

1. Evaluative SROIs are conducted retrospectively and are based on outcomes that have already taken place.
2. Forecast SROIs predict how much social value will be created if the activities meet their intended outcomes.