October 13

Kimberly Parker

Connecting the Dots through Social Impact Measurement

It’s not enough anymore to count how many people in a village show up at a seminar on water sanitation. Instead, you need to connect the information delivered in your seminar to a reduced rate of waterborne illness in the village. It’s also advisable to connect the reduced rate of illness to economic benefits for the village, and/or the larger community.

Measurement is supposed to be a meaningful way to connect actions with results, but when is it meaningful and when is it prohibitive? What tools are being used and designed to accurately reflect and communicate impact? Why is it important to measure your impact and will measurement become an integral part of the development field?

Last week, the 2010 Social Enterprise Conference at Columbia Business School presented a panel called Connecting the Dots through Social Impact Measurement, joining the ongoing conversation that has surfaced in recent conferences such as SOCAP10 and ANDE. The panel, moderated by Antony Bugg-Levine, the Managing Director of the Rockefeller Foundation, represented a diverse set of interests. Panelists included Patricia Devaney, Director of Impact Assessment at the social investment fund Root Capital, Sarah Gelfand, Director of IRIS at the Global Impact Investing Network, and Diego Gonzalez Carvajal, social entrepreneur and founder of Interrupción, a stakeholder community working to build a sustainable future.

Why can’t we just tell a good story of social impact, send a picture and expect an investment in return? Patricia Devaney responded to this question by expressing the internal and external pressure received at Root Capital for social impact measurement, discussing the growing thirst for information among investors, entrepreneurs, and stakeholders. It was reiterated throughout the conversation that measurement was a way to make the development field more attractive to potential investors, those who have not taken a leap of faith because they strongly believe in the cause, but instead require direct measurement to understand their social (aside from financial) impact.

But Bugg-Levine prompted the panelists to imagine how this effort could go all wrong. A few scenarios were discussed: Rigid measurement could hide the nuances behind the projects supported by social investors, forgetting that there is a qualitative side to progress, and reducing people to numbers. Organizations could scale too quickly, responding to numbers and losing quality in the process. Quantity over quality and numbers over the immeasurable benefits provided by organizations that are working to make a difference – this is what could happen if we reduce social investments to a simple numbers game.

The tools being developed and used in the field, including IRIS, GIIRS, and PULSE, are intended to build a comprehensive view of social impact and hopefully put the marginal dollar in the hands of the best problem solvers. One of the concerns raised by using these tools was the appended cost. Also, can metrics lead to appropriate benchmarking, or will this lead to incongruous comparisons?

Patricia and Diego said that for their organizations there was actually little cost associated with adding social impact measurements to operations, because these measurements were already integrated into what they do. In the case of Interrupción, the basis of the business is supporting organic farming and fair trade. According to Diego, if Interrupción is doing these things, they are making a positive and tangible impact. The cost may increase for other organizations which will need to hire another employee to calculate social impact measurements, but these costs could be offset by the additional investments these metrics would ideally provide. It is still important, however, to think about how SIM can be incorporated into the daily operations of an organization, keeping budget in mind.

Benchmarking is an important topic to think about when intending to incorporate standardized tools into the very diverse field of developmental enterprise. As the demand and supply of social metrics increase, benchmarking too will increase in relevance.

Most of us desire tangible results from the projects on which we work and in which we invest. Especially when you are on the outside looking in, it’s these results that allow us to connect to what’s happening on “the ground”. The need to connect those not involved in the day-to-day operations of an organization will ensure that social impact measurement remains a necessary tool for social enterprises and development organizations.

These tools also seek to grow the field of impact investing by building a reliable context in which organizations can be presented to potential investors. In any organization seeking to do good, however, some of the benefits will always be immeasurable, and it’s important to balance the numbers with the stories we have to tell.

What do you think? How can we use these tools but not get too carried away, thereby ensuring the quality and compassion for which social enterprises and development organizations are known?

Editor’s Note: For additional background on the topic of social impact metrics, read Elly S. Brown’s Harmonizing Tools to Measure Social Impact, and Jake Samuelson’s Metastasizing Metrics.

Entrepreneurship, Impact Assessment
Impact Assessment, measurement, metrics, social enterprise, social impact