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Is Impact Measurement Worth the Financial Strain?

Impact Management

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The founder of Ektta, and co-founder of SoPact, Hetal holds a deep passion for establishing enduring impact management practices in social sector to have a built in learning and accountability.

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Posted on 2017-07-06

As a rule, commercial organizations measure their success by financial returns (profits), while mission-driven organizations measure success by their ability to address social and environmental challenges. Financial return is purely quantitative and as a result is relatively easier to measure. More than 97% of recent GIIN survey respondents agrees that impact data has substantial business value, i.e. can improve financial performance of portfolio companies and inform future investment decisions. The research found five common ways impact data can be used to drive value: 1. Revenue growth 2. Operational effectiveness and efficiency 3. Investment decisions 4. Marketing and reputation building 5. Strategic alignment and risk mitigation. All of these value adds to the financial return to an organization.

Measuring the social impact of an organization can be complex. Nearly all mission-driven organizations track a metric such as “number of people reached” or “number of lives impacted.” But does this go far enough for assessing impact? On its own, the "number of people reached" metric is insufficient. 

There is a common misconception among mission-driven organizations that social impact measurement is complex and cost-intensive. To ease the complexity there are multiple resources and frameworks - it's just a matter of putting these tools into practice (which sometimes does requires capital, just maybe not as much as you feared).

In this article, I will point out that social impact measurement is not necessarily expensive if we change the way we approach it by leveraging the available research and tools.financial strain of impact measurement - challenge and solutionNo need to reinvent the wheel. For organizations who are wondering how to get started, Actionable Impact Management (AIM) offers a series of four guidebooks that lay down a path that starts with Volume One: Groundwork. Each guidebook is designed to move you through the process of establishing your own unique impact framework. The series includes: 

  1. Groundwork
  2. Metrics
  3. Data 
  4. Communication

Another resource is Acumen's Lean Data for social enterprises. It is designed to find cost-effective ways and technology of collecting data from beneficiaries on the ground.         

Change takes time and so does measuring impact. For example, investment in the education of a community may take several years before graduated classes enter the workforce and the full extent of benefits begin accruing. Efforts of ongoing evaluation may bring valuable insight for mid-course iterations that save significant resources. So think of impact management as a long-term game.

pexels-photo-530024.jpegProof of impact attracts funders. Capital will flow to where an impact is well demonstrated. Social accountability through impact communication will engage existing funders while attracting new ones. 

As Marc J. Epstein (co-author of the book, Measuring and Improving Social Impacts: A Guide for Nonprofits, Companies, and Impact Investors) said in one of his interviews, 

"There is an increased interest among both donors (of nonprofits) and investors (of for-profit social enterprises) for greater accountability for the money intended to be used for social purposes. Donors and investors want the accountability and performance excellence that they expect in the for-profit world. And they want evidence that they’re making a difference."

Leverage technology tools for social impact measurement: 

Mission-driven organizations too often aren't using available technology for data collection. Many are using a collection of various excel sheets which can be very time consuming and complex. Also, Excel was never meant to be used for impact management. It is a powerful technology tool for handling data but outcome mapping to analyze and visualize is nearly impossible. This heightens the likelihood for human error in data reporting. They also often use what feels like hand-me-down technology that requires experienced IT person to customize it and trained staff. 

By using available tools such as Impact Cloud™ to collect data, streamlining the impact framework from the very beginning, you can build an enduring and more data rich process. 

To conclude, it is clear that by managing (and not just measuring) impact data with available research and technology can not only make measuring affordable but it can mean GROWTH for your organization.

 See Impact Cloud