Impact Measurement and Management (IMM) is the discipline of measuring, monitoring, and managing development programs’ economic and social impact to understand better their social returns, return on investment, efficacy, and direct effects. And their limitations in the social sector.
Key indicators are measures that help us understand the social impact of a program or organization. In other words, they let us know how much of an impact an organization is having on society as much as basic assumptions like estimates of impact, the commitment of impact investors, community outcomes, impact thesis…
There are many vital indicators, and choosing which ones to measure depends on the type of work your nonprofit does. The following list includes some key indicators for measuring social impact. These are not all-inclusive as every program will have different needs and goals, which should be reflected in the measurement tools selected.
Why is it important to measure impact?
There are multiple benefits for organizations that measure their social impact, set impact goals and select metrics, and establish an impact measurement strategy and management system. These include:
Gives everyone a better understanding of your organization’s performance. You can adapt and improve your performance and show true impact by knowing how you are doing.
Capture opportunities to do more good with each dollar or other unit of resources that you spend. You will be able to identify those opportunities where the additional resources you invest will have more excellent dimensions of impact on your mission.
It gives you and your team the chance to learn more about your social returns. As a company, you are continually growing and maturing, which will provide you with the opportunity to adapt to a changing environment that may impact your performance.
Helps secure additional funding for your organization or project. If there is evidence of impact performance, you will have a better chance of securing additional funding for your organization or project.
Provides funding organizations with information that can be used to do their work more efficiently and effectively. Funders want to support programs and projects that are likely to be successful. By measuring your impact investments, you can demonstrate your effectiveness and make a case for further support.
Provides public service institutions with the data they need to make strategic decisions about improving social programs or delivering better services.
Solves problems more effectively. For example, by providing funding to programs that perform in a certain way or at a certain level, funders can use the data provided by organizations to improve performance and make more efficient use of money from impact investors.
What is Impact Measurement & Management?
Impact management is the systematic collection and analysis of information to track, assess and report on the performance of an organization concerning achieving its mission—its social impact goal. It emphasizes outcomes over processes or inputs and operates under a set of core assumptions about organizations, their environment, and their stakeholders. These core assumptions are that organizations have multiple functions or roles that can be assessed for both effectiveness and how they affect society at large. For example, a firm is measured to evaluate its impact objectives related to the provision of products and services, its impact on people’s lives through employment, and its impact on the environment through production and pollution.
Impact measurement means understanding how an organization performs as it affects various stakeholders. This understanding can be done in several ways, but these typically include the following types of data:
Brief description: This data provides quantitative measurements related to indicators such as financial performance (e.g., income, expenditures, sales, profits), operational performance (e.g., people served or impacted by the service), and social indicators (e.g., poverty rates, unemployment rates). However, this information is not enough to fully understand an organization’s impact since the comparisons or relationships between different measurements may be unclear.
Comparison: This data provides comparisons related to other analogous organizations and comparisons relative to external benchmarks such as best practices or models.
Feedback: This data provides information on the decisions or actions taken and how those decisions or actions affected the organization’s intended social impact.
The broader goal of impact measurement is to provide a basis for understanding and to improve organizational performance. In this sense, the term “Impact” refers to more than just financial performance but also extends to other areas such as service delivery, environmental impact, and human well-being (e.g., education level).
What is the social impact measurement framework?
The social impact measurement framework (SIMF) is a seven-step process for measuring an organization’s economic, environmental, and human impact. It provides a more systematic approach to calculating the organization’s social impact and is based on eight core “pillars”:
- Information: Defining data collection and data entry procedures.
- Measurement: Setting up baseline indicator values and developing measurement methodology
- Application: Evaluating indicators among all relevant stakeholders
- Maintenance: Developing procedures for maintaining these indicators to remain accurate and relevant to data collecting systems.
- Analysis: Identifying the different relationships between indicators and other organizations
- Research: Collecting new data on the organization’s indicators.
- Learning and growth: Building on insights from analysis to improve performance
How are companies using IRIS+ to measure & manage the impact?
IRIS+ advisors suggest companies consider these four considerations when determining how to allocate resources among the various topics that might be important to measure their organization’s performance.
How much time do you have to develop and implement an impact measurement and management framework?
The short answer is, “Not very.” While the process of building a comprehensive tool for measuring your organization’s social impact can take many months or even years, most companies can begin working on a pilot project within weeks. Once the pilot is in place, most companies can continue to refine and expand the tools they use for measuring their organization’s performance and the way they gather information. The only organizations that might need longer to develop and implement impact management practices could be those with a considerable scale, such as a university or government agency.
What is the size of your organization?
For most smaller or mid-sized companies, a social impact measurement framework can be developed within weeks, if not days. However, companies with multiple suppliers and partners might have more time to work on a social impact measurement framework due to the additional challenges of data gathering and analysis.
What is the type of organization you work for?
There are different aspects to consider depending on what type of organization you are working for. For nonprofits and philanthropic organizations, measuring social impact means developing indicators and types of impact metrics and critical outcomes that measure service quality and human well-being. These organizations are likely to define their mission or purpose in impact investing and will take a cooperative approach to gather data related to this goal. For public sector institutions, there is an additional responsibility to consider the positive impact of their programs on social equity and justice. These organizations may also work in partnership with private sector companies because they are likely to be the ones who can do these sorts of things better than the public sector institutions can, such as monitoring product or service quality or measuring human well-being.
What kind of team does your organization have?
The size and composition of a company’s team or a program staff might affect how much time it has to develop an impact measurement framework. For example, a social enterprise firm might not need a social impact measurement framework. Still, promoting public health or environmental quality would require greater attention even though they have such a small team that the process will likely take longer. Likewise, for a large nonprofit or philanthropic organization, the development and acceptance of an impact measurement framework are more likely to be accepted as the norm, for example, for financial returns and future investment.
