Conducting social impact assessment is increasingly becoming important for determining the value of social enterprises. Demonstrating triple bottom lines increases access to capital, indicates good corporate governance, portrays the organizational story to stakeholders and measures how much of the organization's mission and purposes is being achieved.
So “how do you conduct social impact assessment?” becomes a question that most social organizations must answer.
Social enterprises align purposes of revenue, corporate social responsibility, environmental sustainability and social good to achieve profit, environmental, social and governance (ESG) objectives.
Therefore, social impact assessment is driven by the social and environmental objectives that are integral to the organizations strategy that affect the wellbeing of target individuals or communities.
This can range from counting the number of beneficiaries participating or purchasing in the program, change in access to finance, education or livelihood opportunities, to increasing land under conservation.
Innovations for Poverty Action have created an approach called the Goldilocks principles that sets about ways for which organizations can go about picking and choosing metrics and what data they need to evaluate.
The idea is to create appropriate systems that can be managed by the respective organization, sustainable and most importantly useful. It is driven by the following principles of monitoring and evaluation
These principles can help organizations determine metrics that are relevant to measuring and monitoring its impact. Single metrics cannot capture the unique values that organizations deliver to their beneficiaries, therefore determining the most relevant, cost-effective and timely indicators that can help guide and assess their performance are essential.
The metrics may also be driven by the needs of the most important stakeholder in their business, usually a funding partner that use these criteria to value a company's ability to measure and scale impact.
Often this drives a discord between funding partners and enterprises, however a stakeholder-based approach can be used to mitigate this conflict by capturing the different needs and expectations of social enterprises, plus the explicit demands for accountability and social impact metrics.
Fundamentally, a good impact measurement system equates to the idea of proportional measurement, where data and analytics contribute to sound decision-making and improvement practices, and where costs do not outweigh the importance of the decision.
Additionally, how to determine these metrics and which tools to use to measure impact can be overwhelming and confusing, and is exacerbated by the use of monitoring and evaluation jargon of differences between output and outcome indicators, activities and impact. For example, The Foundation Center lists over 150 tools, best practices and methods for assessing social impact.
Furthermore, some of the more popular tools in this space have folded the best practices of various methods and tools into their impact assessment efforts. These standardized reporting tools are important because they are developed from a common dictionary therefore allow the indicators to be compared between projects, and constitute of industry vetted best practices.
Organizations pick the tools on costs and capacity to use them, time factors and the ability to make decisions, demonstrate impact and raise capital.
Some of the more popular tools used in the industry are
These fall across a spectrum of the logic model (a strategic model that allows organizations to measure the effectiveness of a program by evaluating the progress towards specified outcomes), that commonly constitute the framework of monitoring and evaluation systems.
Each system offers specific measurement strength:
The utilization of tools used is determined by an organization's capacity to implement it, partner (funders, donors and governments) requirements and their monitoring needs. In Sub-Saharan Africa, IRIS is used by 63 organizations, out of which 25 are solely direct investors in companies and 7 are solely social enterprises.
Sample data indicates that organizations on average use 24 IRIS metrics to measure their impact. Overall, a total of 350 distinct metrics have been used to demonstrate impact within the 63 IRIS organizations within Sub-Saharan Africa.
On average, #socialenterprises use up to 24 #IRIS #metrics to assess their #impact. #socimp #socent
Some of the more popular measurement metrics are the number of individual clients served, number of individual female clients served, net income, total number of permanent employees in the social enterprise, EBITDA, number of full-time employees, value of outstanding loans, jobs created at directly supported/financed enterprises and total assets.
Each of these relates to a dictionary index on the IRIS website, description of what it means, methodology, and other tools that the metric may map onto. It is easy to see that some of these metrics are more obvious and can be easily determined from payroll or sales data, whereas some more complex information such as poverty factors may require significant expertise and rigid sampling initiatives. The selection of these metrics are also driven by an organization's overall objectives.
As can be demonstrated, social impact assessment is an overwhelmingly complex process with various tools and metrics to be considered, driven by agendas of stakeholders and determined by the capacity to implement these systems and leverage the data and analysis to make valuable decisions that further drive the triple bottom line.
Critical to conducting social impact assessment is ensuring that these indicators are a part of everyday practices and covered within operational budgets. They should also be cost-effective, easy to understand and ultimately be determined by an organization's mission and values.
is an Impact Catalyst at Converge in Kenya who partner with organizations that drive social and environmental impact, to tackle complex problems using data analytics, capacity building and strategy development to create solution-oriented systems and mindsets. Converge works with startups, social enterprises and non-profits to scale impact, primes institutions to be certification and investment ready, and advises on the right funding path for growth opportunities.
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is a Programs Manager at the Amani Institute in Kenya, a new model of higher education to better prepare talent to address 21st-century problems. He has a passion for Innovation and solving the world’s challenges using technology, education and business for which he spent 2 years studying technology for innovation in Japan.
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