Impact Strategy allows social purpose organizations to design an effective impact management strategy to measure and manage the impact. Regardless of the impact segment that you represent, it is important to develop an impact strategy, target smart capital, and interact with investors/funders. And our view is that to be successful in executing that funding journey, you must first have a well-defined impact management strategy, which includes developing an effective social impact measurement framework.
WHAT IS A IMPACT STRATEGY?
In 2018, the impact investing sector roughly doubled in size. The Sustainable Development Goals continue to emerge as a preferred framework for entrepreneurs, investors, governments, and others. Other emerging trends include the interest in Opportunity Zones as affordable housing investment opportunities. Place-based impact investing and Social Impact Incubators are becoming popular too. Even businesses, nonprofits, INGO, and social businesses are seeing a strong interest in defining social impact strategy.
How to raise impact capital? How can a business demonstrate impact? How should philanthropy continuously learn and improve the social impact?
Start with choosing appropriate principles first.
Impact Strategy provides a foundation based on the most common frameworks. While there are many standards, frameworks, principles, or certifications, your goal ultimately drives the framework's choices, whereas principles ensure that you follow best practices associated with the goals. Principles or certifications are optional but critical as you mature your impact management or sustainability approaches.
Impact Strategy binds frameworks with eternal standard metrics, custom metrics, and SDG alignment. This alignment helps data collection, data aggregation, and impact reporting.
The table below provides guidelines for choosing different frameworks, principles, and certifications.
Asset managers, such as impact funds, grantmakers, social impact accelerators, or social purpose organizations such as nonprofits, social enterprises, B-corps, or social businesses or corporates focusing on social or environmental impact
Outcome Oriented Approach. Useful in reporting activity, output, and outcome data. Different organizations start with a framework such as below. Fundamentally each of them focuses on outcome, output, and activities.
- Theory of Change
- Logic Model
- Log Frame (Common in M&E background
- Results-Based Framework (Public Agencies)
Consider the following
Impact Investor, enterprise looking to raise impact capital or corporate looking to understand the impact (not sustainability)
- Want to align with Five Dimensions of Impact From Impact Management Project (Useful in learning WHAT, WHO, HOW MUCH, CONTRIBUTION and RISK)
- Align with sustainable development goals
- Understand the impact risk before investment
- Understand the impact evidence at an agreed-upon frequency (quarterly, semi-annual, annually)
Consider the following
Start here ➡️
Impact Management Project
Corporates looking to align business strategy around shared value principles
Consider the following
Start here ➡️
Theory of Change add KPIs to Output Metrics
SOCIAL IMPACT MEASUREMENT FRAMEWORK
Impact Strategy help practitioners define the impact management framework that is appropriate for their impact ecosystem. It delivers impact practitioners of mission-driven organizations a unique platform-based approach to create a step-by-step strategy, conduct data management, and refine impact communication.
Social impact ecosystem capital flows from Impact Funders (Asset Owners), Impact Managers ( Asset Managers), and Impact Makers (Assets). As we improve the flow of impact data from beneficiaries to funders, more capital flows towards social impact.
To be successful, each of the key impact ecosystems must develop.
- The common language of outcome
- Data trust
- A streamlined approach to understanding the impact
SoPact has developed a consistent social impact framework that can be uniformly applied across different types of organizations. Our goal is to give you a deep dive into a consistent process across all the sustainable organization types. The second part includes unique and advanced processes specific to different entities such as Impact Funds, Incubators, Asset Owners, Foundations, Businesses, and Mission-Driven Organizations.
IMPACT STRATEGY CHECKLIST
- Design an effective impact statement for your program from mission and vision aligned to impact ecosystem
- Design Theory of Change or Impact Management Project based Five Dimensions of Impact Framework
- Align goals with standards-based impact metrics or design custom metrics
- Make sure to align with the right framework described in an earlier section
- Choose an out-of-box impact strategy based on TOC or IRIS+
- Align metrics with custom goals or SDG Goals and SDG Targets
- Provide metrics results context such as REPORT FORMAT, Label, Usage Guideline, Help-Link, Example Answers, etc
STEP BY STEP IMPACT STRATEGYDevelop actionable impact strategy
Impact Statement starts with, “What is the problem that we are trying to solve?” Impact Statement is often derived from your mission and vision but is quite definitive. Impact Statement leads to Impact, Outcome, Output, Activities, and Input. Building this out creates a systematic theory of change. You can use our free actionable impact management eBook on the SoPact website, which gives you step by step guide for building program structure and theory of change.
Impact Strategy is a foundation for actionable impact management. Impact Strategy is an intelligent knowledge graph that automates data collection, data aggregation, and dynamic reporting. It is an intelligent taxonomy design that helps project or investment-specific data collection and aggregation. Because an Impact Cloud is designed based on a modern configuration-based approach, it allows an organization to improve the impact framework as their understanding of social and environmental impact grows over time.
THEORY OF CHANGE
The theory of change is a foundation to build an impact measurement framework. Depending on background, many organizations may use different terms such as
- Theory of Change
- Logic Model
- Log Frame
- Results-Based Accountability (RBA)
Regardless of whichever framework you use, the main goal for each of them is to define a systematic impact map (or impact chain) with measurable short-term, medium-term, and long-term outcomes (often called output, outcome, and impact).
While most organizations have a theory of change or a logic model as a starting point, they fundamentally do not connect outcomes of a theory of change (TOC) or logic models with their key indicators, data strategy, and reporting. This creates a massive disconnect between their actual mission & social change results.
IMPACT MANAGEMENT PROJECT
Impact Management Project is relatively new but gradually becoming popular. Thousands of impact practitioners are aligning around this framework. Impact Management Project gives better 'impact accounting' guidelines to both Investors and Enterprises. Most organizations can benefit from enterprise-specific impact management projects. At the same time, most impact investors may naturally find it easy to use; we recommend that others consider "Five Dimensions of Impact," which allows a better understanding of stakeholder's impact. By ensuring the right survey questions aligned to the following Five Dimensions of Impact, they can demonstrate impact better!
- HOW MUCH
- IMPACT RISK
EXAMPLE IMPACT STRATEGY
Depending on the relationships, the asset owner, asset manager, and the asset must develop an effective collective impact process. The purpose of the collective impact process is to enable a downstream organization better n to understand the outcomes, collect the right data, and share data with funders with a higher level of trust. So how do you build such an alignment?
Listen to Chris Gaines, Lead Trainer at SoPact, on how you can build a better alignment.
IMPACT FRAMEWORKS AND STANDARDS
SoPact Impact Cloud is the most innovative and transforming platform that aligns and transforms many leading bodies of standards, organizations, and metrics catalog. It transforms them into an easy-to-use impact knowledge graph. The real value will be even higher when impact investors and entrepreneurs can transform that into actionable form.
GIIN has been working on IRIS+ and Navigating Impact. This is a significant Impact Knowledge collaboration with over 100+ impact strategist globally. The new release of Impact Cloud will include all the Navigating Impact Impact Themes.
Impact Management Project (IMP): The IMP is a forum for building global consensus on how to measure, manage, and report impact. Impact Cloud is perhaps the first impact measurement & management platform to support IMP.
Social Value International: While Social Value International (SVI) has been a pioneer member network organization. In recent times, SVI is increasingly focusing on Impact Measurement & Management (IMM). Impact Cloud is a certified Social Return On Investment (SROI) application. SoPact is aiming to further align with SVI on the future IMM certification process. SoPact is one of the few partners of SVI and organization member both.
EVPA: EVPA builds a community of organizations interested in or practicing venture philanthropy (VP) and social investment (SI) across Europe. EVPA has recently published the Impact Strategy journey, which very well aligns with SoPact’s Actionable Impact Strategy approach.
TONIIC is the global action community of impact investors. Their vision is a global financial ecosystem that operates to create positive social and environmental impact. TONIIC T100 Project is a multi-year study of over 75 Toniic 100% Impact Network members' portfolios. It reveals new insights about the various paths towards and feasibility of 100% impact investing (impact first approach). Impact Cloud integrates mapping of TONIIC portfolio definition and SDG-IRIS Impact Map.
ALIGN IMPACT STRATEGY WITH EVIDENCE AND RESEARCH
The following guide provides the best way to build a robust case without a formal, longitudinal study and save tremendous research money!
- How effective is the investment?
- What outcomes does it generate?
- Which impact map will generate the best results?
- What are the core characteristics to drive impact?
- Campbell Collaboration
- Cochrane Collaboration
- What Works Clearinghouse
- Cost-Effectiveness Analysis (CEA) Registry
- PRIME Coalition on how they're thinking about measuring the future potential climate impact of early-stage impact