Economic development organizations can have a powerful and transformative impact on their stakeholders’ lives. Based on our experience in the field, many organizations aren’t capturing the full extent of this impact. In this article, we’ll talk about economic development organizations and the steps they should take to improve their impact data for more effective impact evidence. We’ll cover:
- What is Economic Development?
- 5 Ways economic development organizations can enrich impact data
What is Economic Development?
Economic development includes the policies and practices that seek to improve a community’s economic well-being. This economic development impact can be at the transnational, national, regional, or neighborhood level. Policies and practices focus on various issues, such as taxes, job creation, poverty alleviation, small business development, investment, etc.
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Economic Development Organizations
An economic development organization can be a government or private sector organization. They often work together. Economic development organizations use a variety of tools to strengthen the economic position of their stakeholders:
- Research and data
- Access to resources such as a social impact fund
- Promoting policy
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Economic development organizations can have a profound impact on their target community, but often the measurement of this impact sounds like this:
- $1 million funds distributed
- 1500 participants
- 35 grant-supported events
These stats merely report on program activities rather than showing real economic development impact. That’s not the full impact story. Here are 5 ways economic development organizations can enrich their impact data for effective evidence.
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1. Use Existing Research
No need to reinvent the wheel. Economic development often gets preferential attention regarding policymaking and social impact funds. As such, there is plenty of academic research and policy analysis in the published literature. Odds are there is robust data available on similar economic programs to yours. Good sources of existing research are the OECD, and US Bureau of Labor Statistics, and academic journals. Policy institutes are also great sources of research but may not be politically neutral.
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2. Align with the 5 Dimensions of Impact
The term “impact” is used in various ways in different industries. To clarify and standardize what impact is, the Impact Management Project global forum developed 5 dimensions of impact:
To measure your impact accurately, follow the right framework. Make sure what you’re measuring efficiently covers all five dimensions.
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3. Use Clear Criteria
There’s no limit to the impact criteria you can set for your program. Set criteria that make sense for your program and the stakeholders you’re trying to reach. Many impact-driven organizations use established frameworks such as SDG goals or IRIS+ to help set their impact criteria.
An innovative example is the 2x Challenge, focusing on impact investing for women. The 2x Challenge determines four general criteria for investments to be “Gender-Smart Investing” (GSI):
Each criterion is paired with specific indicators and scoring systems to determine if the investments are women-centered.
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4. Use Impact Experiments
Impact experiments are small-scale, time-bound tests of your product or service. Like a trail run. These are common in the tech industry but catch on in the development sector. Impact experiments improve your impact data because you can test your service, look for gaps, and try again. This framework allows data collection to gain richness during each experiment phase.
5. Establish Causality
A big challenge of impact reporting is establishing causality. That shows that your program or service led directly to the outcome you’re measuring. When it comes to economic development, this can be challenging because there are external factors.
The best way to establish causality is to build a transparent logic model such as a theory of change. Once you’ve established a theory of change, you will need data from multiple sources and a clear relationship for better insight.
More Than Money
Economic development is critical because we understand the profound impact it can have. Not just in dollars invested but in lives changed for the better. Practical and robust impact management and measurement should capture the latter. How are lives being improved, and where’s the data to prove it? Take these steps to follow industry best practices and enrich your impact data. SoPact has the expertise to ensure that your economic development organization is doing impact measurement correctly. Contact us to get started.