Five Dimensions Of Impact
Did you know that 62% of companies mentioned the SDGs in their reporting, 37% of companies selected priority SDGs, 79% o...
Read full articleThe latest global trends in social impact measurement, management
Are you a mission-driven organization looking to build impact data strategy, where do you start? This article gives a practical and step-by-step process that you can follow based on your organization's stage. The purpose of this article is not to show you a finish line, but to demonstrate how to take a step-by-step journey. The truth is that most organizations remain at an early stage, rather mission-driven organization should build a long-term iterative strategy to continuously improve and come closer to your mission and vision.
The key benefits of taking this approach are:
Let's say that your organization is just starting with the first impact report, where do you start? Starting from the data is not the right way. The foundation of high-quality impact reporting always begins with an impact strategy. So the next question is, how do I define my strategy? Depending on your impact perspective, you can start with the theory of change, logic model, logical framework or the Impact Management Project dimensions. And based on that, design the indicators to measure performance.
While 95% of social sector organizations use Excel or Google docs as data management tools along with other third party reporting dashboards such as Google Data Studio or Tableau, this strategy is likely to create a broken process. First you must design a data aggregation strategy. Tools like Excel or Google docs are easier to use but they create many data management challenges such as:
Average social sector organizations have anywhere from 1 to 50+ data sources internally. Each of them may have different types of stakeholders with varying requirements of reporting, such as:
Management should strive to build a robust data warehousing-like application, to improve high-quality impact data evidence and reporting. Most Excel or Google docs-like systems will lose data integrity over time. Instead, a system that can provide high-quality reporting is needed.
A well-designed stakeholder survey is the foundation to start building an impact management journey. The key to successful stakeholder listening requires:
The following customer impact report helps you understand the methodology, questions, and results for a publicly-traded company & community development institution.
While the first generation of the survey can be quantitative, a well-designed approach may include qualitative data. An excellent example of a qualitative approach is the interview. Specific well-designed open-ended question will offer a real insight into what stakeholder thinks. A closed-ended question often fails to capture the stakeholder sentiment as they focus on what the organization wants to learn and not what the stakeholder wants to say.
There are many different ways to learn what the stakeholder says. A few examples are:
A well-designed approach can capture real sentiments at the individual stakeholder and group level. The following example gives the overall summary of critical emotions:
By linking qualitative response with quantitative or closed-ended question results as seen in the scorecard below, you can quickly understand causality or correlation between crucial indicators.
While qualitative sentiment analysis is valuable in understanding beneficiary voice. The real value comes after analyzing and correlating qualitative and quantitative analysis. Following example impact scorecard gives an in-depth understanding of how you can analyze and communicate results effectively:
The mission-driven organizations should clearly define critical indicators that are key to measuring the overall success of the program. These indicators may be activity and/or output-oriented, but they must refer to the overall progress to evaluate internal performance.
Analysis can often be derived from existing results tracking systems such as educational scores of students. Key to such analysis is to conduct the study under similar conditions, with a non-biased approach.
In this example, we are able to gather learnings like:
Target audience: Impact Analyst, Evaluation Team
In this specific case, it may be necessary to look at the patterns of improvement between multiple stakeholders, to see if a particular approach is working better for individual students.
Target Audience: Impact Analyst, Evaluation Team
Funders may be looking to learn more about social, economic, and financial results. Before starting, funders must define a clear hypothesis of the improvement that they are seeking, such as:
Often this requires comparing multiple metrics and filtering/grouping by specific criteria such as gender, district or education level. If they do not see necessary improvements, funders can initiate an action or strategic plan using the impact scorecard.
The Impact Management Project has made significant progress by bringing different impact practitioners together to agree on a standard definition of impact, and the dimensions of performance that matter for impact measurement, management and reporting across the value chain. While this approach is likely to be well-adapted in the impact investment industry, we believe that it could and should be adopted by the philanthropic organizations. On the other hand, businesses and ESG investments are already paying attention to this approach.
Enterprise or mission-driven organizations might want to start by understanding who is their stakeholder by collecting data on their demographics. Often time, this information is already available in their own internal systems such as student enrollment, loan management systems, etc. Generally, demographic information should be collected based on appropriate data collection for each of the stakeholders (WHO) and not based on a selected survey.
Enterprises need further data on which impacts are most important to the stakeholder. They also need to assess the degree of change (How Much) that impact has occurred for each of the stakeholders.
What | |
Impact Category | Commentary |
Outcome in period | The outcome experienced by the<stakeholder>when engaging with the enterprise. |
Threshold for positive outcome | The level of outcome that the<stakeholder>considers to be positive/good enough. Anything below this level is considered negative/not good enough. |
Capital type | The type of capital that the outcome relates to. |
SDG | The Sustainable Development Goal that the outcome relates to, along with the specific target and indicator. An outcome may relate to more than one SDG. |
SDG target and indicator | |
Importance of<outcome>to stakeholder | Stakeholder’s view of whether the outcome they experience is important. Where possible, the people experiencing the outcome provides this data, e.g. through direct surveying, although third party research may also be included. For the environment, scientific research provides this view, such as the work of the Stockholm Resilience Centre. |
Social Return on Investment (SROI) defined by Social Value International is a pioneering approach to engage in stakeholder-based social value accountability. Social return on investment (SROI) is a principles-based method for calculating a social return valuation. This method allows to evaluate the impact on stakeholders and create a better performance measurement for investments.
SROI accounts for the stakeholders view of impact, similar to Impact Management Project (IMP). However, unlike IMP, it requires financial 'proxy' values on all those impacts identified by stakeholders which do not typically have market values. The challenge, however, is that the 'proxy' is often context-sensitive and finding standard proxies may not be easy and may require additional cost. On the other hand, SROI does give a great amount of guidance to an investor if they are able to define high-quality proxies considering the stakeholders views.
It is important to understand that SROI is one of the mechanisms to demonstrate impact but it should be compared and valued against other alternatives described in this article.
There are many ways to demonstrate social impact of your mission. Depending on the maturity of your organization you can start your journey and build a step by step strategy to learn and demonstrate impact. We demonstrated following commonly used techniques that will surely put you on path to raise impact capital from your mission.
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