This week we will deepen the knowledge on social impact evaluation which is based on the Theory of Change. As we have seen the theory of change
is a social scheme that answers the question: What is the change you want to achieve and what must happen in order to achieve it? The evaluation process, measures if this change has occurred. Nowadays, there is an increased pressure for organisations to improve the methodologies for measuring their social and economic impact.
Evaluating is useful because: It helps to identify activities with more social impact and adjusts the destination of the resources. it generates detailed information about the company’s activity and its environment. It helps the decision making process for strategic evaluation. It helps to understand and communicate the social value generated with the activity. First, there are two key concepts that we should clarify. The first is ‘impact’ and the second one is ‘impact investment’. Impact refers to the changes generated by the organization’s’ activity, without taking into account what would have happened anyway. When measuring this impact it is important to isolate it from other variables that can also influence Change.
On the other hand, impact investments, refers to private capital in social enterprises that generate financial returns as well as measurable social and environmental returns. Social Business do not qualify for impact investments because financial returns are not allowed. When we talk about evaluation of impact, we refer always to ‘impact’ that the organisation’s activity has. To understand the process, let’s look
at the Impact Value Chain: The Inputs are the resources needed so that the social Enterprise can function.
For example: money, personnel, and assets. The Outputs are the indicators that the management can measure directly.
For example: number of persons that have participated in a project.
Outcomes: specific changes in the attitude, behaviour, knowledge… It can be for instance avoiding being sick (reducing absenteeism) or reducing toxic emissions, being able to find a job. Impact is the difference between the Outcomes and the results that would have happened anyway if the Social Business activities had not existed.
Goal alignment: that is the process of evaluation to see if the objectives have been achieved and determine any required future changes.
There are three types of impact that we can measure: Economic, Social and Environmental. Depending on the activity in which the social business operates it will have to consider instruments to measure one or more of them. Another aspect that needs to be taken into account is the impact in all of the agents (both internal and external). There are many tools to evaluate social impact, we will use one tool or another depending on what it is we want to measure.
We need to take into account two factors: As I said before, the areas of impact that needs evaluating, that can be Economic, Social or Environmental. Secondly, how deep the social business wants to do the analysis (depth of analysis).
The first level would be social accomplisment: Using some general indicators that business can prove that it’s arriving to the area of impact.
Demostrate social impact: Using this methodology we can prove the impact that the social business is generating, in case that the business had not existed. Finally, monetizing the impact. With this methodology there will be an economic value, showing the efficiency of the investment and the resources used. Let’s see an example, a social business that deals with improving employment for disabled people through training programmes. The area of impact that needs evaluating is mainly social.
On the first level, which is social accomplishment: the business can create indicators on the number of disabled persons that have received training and the number of disabled persons that have obtained a job. On the second level, Demonstrate Social Impact, the company could measure if the visits to the doctor have decreased, using questionnaires to measure the quality of life of disabled persons participating in the program before and after the training, also the impact on relatives. Finally, on the third level, the company would measure the economic resources saved to the administration. For example, if the number of visits to the doctor have decreased 10% and also the medication prescribed, this could be, for instance, 5.000 € of savings to the administration.
There are over 50 different tools to evaluate social impact. In the previous table we showed just a sample of them. We can always classify them according to the variables we have seen before. In the following activities you will have the opportunity to see in more detail one of these tools.