The Challenges of Measuring Social Impact

April 13, 2012 at 1:48 pm

Read the full article at Sustainable Brands.

Social ventures are launching rapidly across the globe and striving to build sustainable business models that drive social or environmental progress. Yet to achieve progress through enterprise, social entrepreneurs must confront a challenge that has long plagued the nonprofit sector – quantifying and tracking social impact.

Substantive impact measurement can be costly and complex, but it’s critical for social ventures pursuing greater scale and efficacy. Recently, sector heavyweight Ashoka launched an open resource that will encourage and facilitate impact tracking across the social change sector – to the benefit of social entrepreneurs, ventures, funders, and investors globally.

Colleen Poynton

Post by Colleen Poynton, Manager of Business Strategy and Development at Investing In Communities

When we talk about measuring social impact, we generally mean measuring social or environmental outcomes – i.e. the result of implementing a program, producing a good, or consuming a product or service.  Outcomes are distinct from outputs – the amount of goods produced or products delivered.[1] While traditional business is concerned with profitably generating outputs, a social enterprise must produce outputs profitably (or at least sustainably), while also advancing a desired social or environmental outcome.

Unfortunately outcomes are not as easily quantified as outputs. They are messy results of numerous variables, only a few of which a social enterprise can hope to influence effectively.[2] The measurement challenge that social businesses face is to demonstrate a connection between output (say, # jars of honey made by formerly incarcerated workers) and outcome (i.e. increased employment and reduced local recidivism rates), and to describe that connection quantitatively (i.e. “Our operations lowered recidivism by 15% relative to control populations over 5 years.”). Quantifying and tracking this relationship is costly. It requires greater data collection and analysis upfront (before launch) as well as over time….

Read the rest of Colleen’s article at SustainableBrands.Com

 

Sources

[1] Ebrahim, Alnoor and V. Kastury Rangan. The Limits of Nonprofit Impact: A Contingency Framework for Measuring Social Performance. Harvard Business School Working Paper. 2010. pg 10-15.

[2] Hanna, Julia. “The Hard Work of Measuring Social Impact.” Harvard Business School. http://hbswk.hbs.edu. June 2010.