November 16

Diana Hollmann

Net Impact 2009: Social Impact Measurement Frameworks

Simply judging by titles, less than a handful of panels at this year’s Net Impact conference dealt with metrics and impact measurement. I found this quite surprising considering the intensive discourse and current initiatives underway in the sector (Rob and others have reported quite extensively on NextBillion lately). Most panels, however, were intractably tied to the question of how to measure non-financial impact; no matter if talking about the evolution of corporate philanthropy or about getting beyond socially responsible investing.

The Net Impact panel on “Social Impact Measurement” aimed to help uncover approaches to measuring social impact. Eileen Yang, a Consultant from Mission Measurement, and Drew Tulchin, Managing Partner at Social Enterprise Associates (SEA), discussed the issue with facilitator Gautam Kaul, a Professor of Finance at the Ross School of Business.

Eileen gave a general introduction to a few central questions institutions ask themselves: How do we measure social impact? How do we know if we progress into the right direction? How do we articulate measurements and how do we communicate them to our stakeholders?

Institutions should not get stuck with trying to find the perfect set of metrics but rather define proxy measures and consider measurement as a valuable management tool. Metrics should be kept simple and practical: “Don’t measure just for the sake of measuring!”

To instill awareness for measurement mechanisms in an organization a top-down approach ensuring the buy-in from the top management is more likely to be successful than a bottom-up approach. However, also intrapreneurial initiatives that take results of a pilot project in social impact measurement from a team level to advocate among top management could contribute to a change in organizational measurement culture.

Drew went into more detail on the question “how to measure?” and outlined ’Social Return On Investment’ (SROI) as a potential mechanism to measure social impact. He gave an introductory overview over a toolkit SEA and theSocial Venture Technology Group had developed for Nemours, a Delaware non-profit that addresses child health issues. The toolkit includes:

  • an SROI calculator employees can use to determine the strategic relevance, the potential impact and the priority of projects,
  • a tool to track performance relative to a set of objectives, as well as
  • an SROI analysis to visualize outputs, outcomes and impacts relative to the investment made.

Drew reminded us that the SROI is not a uniform construct and includes different data types – narrative, qualitative, quantitative, monetizable and financial information. The weighting of each component in the overall SROI essentially depends on the needs of the audience. In order to interpret the data it is crucial to identify a benchmark or to create a base case and to track data over time.

As the panel showed, measuring social impact is a hot topic for sustainable ventures. Continuing to think about what and how we need to measure, we move towards increased effectiveness and efficiency. Every step towards improved measurement will have a substantial impact on the sustainable venture sector – it will help to translate grants with seemingly little or no return into investments with a social return.

The Q&A session covered a very broad spectrum of issues reflecting the different levels of familiarity with the topic among the audience. Even though the panel didn’t go into substantial depth, it was a great opportunity to reflect on central issues related to social impact measurement. It would be great if we could build on this panel, see how its content and recommendations are aligned with other metrics efforts in the sector, and see a more targeted discourse at next year’s conference.