Impact Assessment for Social Enterprises

Whys and hows of measuring impact

You probably have already heard policy-makers, academics and practitioners in the field of social innovation mentioning the importance of “assessing” impact. As a matter of fact, in a world where accountability is becoming key, it is critical for both public and private organizations to evaluate the social and environmental impact of their interventions. Same goes for impact companies too. So, in this article, we are going to discuss the whys and hows of impact assessment for social enterprises.

Defining “impact”

First things first. Let’s begin by defining “impact“.

As we discussed in other articles, “impact” can be summarized as “a significant or lasting change in people’s lives, brought about by a given action or series of actions“. Whether it’s about creating positive social or environmental impact (or a mix of both), the notion of impact relates to radical, long-term improvements in the lives of individuals or wider communities.

Today, public authorities, entrepreneurs and citizens are all increasingly being asked to think about sustainability and impact, taking actions accordingly. Unfortunately, many of them are provided with no actionable means to understand if the decisions they make truly contribute hitting the goal. Something that paves the way to worrisome phenomenon such as “impact washing“.

So how to avoid that? That’s where “impact assessment” kicks in.

What is “Impact Assessment”?

Broadly speaking, “impact assessment” is the systematic process used by public and private entities to evaluate the social effects of their interventions.

Impact assessment is becoming a priority for stakeholders of all kinds: policy-makers, foundations, investors, social entrepreneurs. Many frameworks are being undertaken today to assess the impact generated on local communities and society as a whole. As a matter of fact, we could count dozens of different methods and models to use. It is possible to classify most of them in two main categories:

Quantitative approaches, focusing on non-numerical information and using social sciences disciplinary frameworks
Qualitative approaches, mostly driven by numerical data.

This said, none of those can be enough by itself, with some claiming that frameworks only focused on economic return may be a dangerous way to measure impact. Because of that, practitioners agree that qualitative and quantitative methods are more powerful when combined together.

Pillars of impact assessment for social enterprises

If you want to dig into each one of the numerous attempts to establish common guidelines and metrics for impact assessment, well.. best of luck with that! But if you’re an aspiring change-maker who only wants to understand the basics first, then stick with us for a bit longer 🙂

As said, impact assessment is the process of understanding whether or not a project achieved its desired outcomes and impacts. And for social enterprises, impact creation is at the heart of what they do. It’s indeed at the very core of their mission. Thus, it’s important to grasp the basics of analyzing and measuring it. Here are some of the main principles for you to keep in mind.

Logic models

To begin with, impact assessment builds on logic models. A logic model is a set of hypotheses and assumptions linking expected causes and effects, eventually leading up towards desired long-term outcomes to achieve.

Logic frameworks such as Theory of Change can enable social enterprises clearly define beforehand (“ex-ante“) the roadmap towards impact. Without that, organizations are unlikely to chose the right inputs, activities and business models to successfully achieve their ultimate goals. So, make sure you build your own one before even starting.

Impact dimensions

While creating the logic model, it’s important to define the so-called “impact dimensions“. Here, the Impact Management Project’s “Five Dimensions of Impact Framework” suggests using five different lenses:

What – namely, the outcomes sought and/or achieved
Who – namely, the targets who experience such outcomes
How Much – depth, duration and scale of impact
Contribution – to assess whether the changes occurred (or will occur) because of the project or due to external, independent factors
Risk – in terms of negative consequences associated to all the above

We believe this framework is great as it provides a concise – yet effective – way to help social firms begin understanding to which degree they may impact people and the planet.

Setting up the stage for measuring

Then, social enterprises should carefully design metrics, tools and procedures to collect data and analyze their interventions. If you don’t know where to start, free databases such as IRIS+ will provide you with catalogs of potential indicators to choose from, sorted out by industry and category.

Remember: impact assessment is a way to understand the true performance of a social enterprise. Because of that, collect data periodically (it’s not a “once in a while” sort-of-thing!) and be honest and transparent about it.

Measuring vs Evaluating

Practitioners already know that: there’s a time for measuring and a time for evaluating.

Impact measurement happens indeed during the intervention, as a way to monitor the project while is going on. Conversely, impact evaluation is an “ex-post” overall analysis, run after the intervention is completed. As you may guess, one without the other would do little to no benefits in truly understanding outcomes and impacts actually generated. However, organizations often fail in taking care of the latter.

Thus, involving third parties or external experts to validate and assess findings, even long after the project or program is over, may be crucial to evaluate long-term, lasting effects.

Dissemination

Bridging the gap with communities and target audiences is a priority for social enterprises. Because of that, impact assessment cannot be considered completed until the company disseminates and shares project results outside its boundaries. A clear, detailed dissemination plan can help firms reach the right people, at the right time, using appropriate formats. Only when local communities and the public are informed, true understanding and opportunities for replication can take place.

Why impact assessment is so important?

Based on the above, you probably already know the answer to this question. Still, let’s see why social entrepreneurs should care about impact assessment.

There are at least three main reasons for that.

First, without impact assessment, it is impossible for entrepreneurs to know whether they are truly fulfilling their impact mission or not. Simply put, it’s the only way they have to assess the true effectiveness of their projects and activities.
Secondly, social enterprises operate in ecosystems. As such, they must be accountable for their actions both to internal teams and external stakeholders, including the ultimate beneficiaries of their interventions. In this regard, some acted proactively, whereas others will eventually adjust to new, emerging regulations, asking companies to disclose detailed information on the way they operate and manage social and environmental risks.
Lastly (but strictly connected to the above), public as well as private investors are increasingly shifting their funding schemes, providing economic resources only to those organizations able to provide validated data about the outcomes achieved. Without frameworks and tools for assessing impact, social enterprises could potentially fail in accessing such funds.

Conclusion

In this article, we discussed the importance and some of the main principles of impact assessment for social enterprises.

When it comes to impact assessment, we know indeed that it’s not always clear for social entrepreneurs where to start, what to prioritize or what data to collect. Moreover, we know that in most cases it can become a long, complex and costly activity. Nevertheless, as some would say, “it is better to be roughly right than precisely wrong“. Therefore we hope both aspiring and current social entrepreneurs will choose to embrace the challenge and learn their craft along the way, by spending time and effort to truly assess the impact achieved by their organizations.

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