The European Venture Philanthropy Association (EVPA) has released ‘A Practical Guide to Measuring and Managing Impact’.
Anna-Marie Harling, senior research associate at EVPA, says professionals may find two aspects of the guide “surprising”. First, she says that there is a general desire for standardised indicators for impact measurement. However, what emerged from their work with the expert group is that the thought process should actually be the other way round. “Rather than thinking top down about indicators, organisations should work bottom up to set objectives, analyse stakeholders and only then think about measuring results (via the assignment of indicators),” she says, adding this ensures that whatever indicators are set are aligned with the overall objectives of the organisation and are thus useful.
Secondly, she says, organisations that have embraced the five step process outlined in the guide have commented that working through the process is as, if not more, important than actually reaching an “impact number” at the end. “By embracing the impact measurement process, organisations can learn so much about their own operations.” They can learn where they are effective and where they are less so in achieving impact. In doing so, the operational processes can be reassessed and refined to give the organisation direction in achieving even greater impact.
Anna-Marie explained that the guide is targeted specifically at venture philanthropy organisations and social investors, but is also applicable for impact investors, foundations and other funders interested in generating a positive impact on society.
“It should be useful both for beginners in impact measurement, who are considering how to get started, and more advanced investors who are struggling with how to better integrate an impact focus into everyday investment management decisions,” she says. The manual can be used as a reference for key decisions on topics such as resource allocation, deal selection and investment management.
The guide is a resource that distils best practice in impact measurement into five steps and provides tips and recommendations for how impact measurement can be implemented at the level of the social investor and in the social sector organisations they support. It also explains how impact can and should be managed by organisations.
The process includes the following five steps:
- setting objectives;
- analysing stakeholders;
- measuring results – outcome, impact and indicators;
- verifying and valuing impact; and
- monitoring and reporting. A detailed description of these steps can be found in the guide.
The topic of effectively measuring social impact is important to all stakeholders in the venture philanthropy industry, but merely measuring the impact is not enough. The data must be used to also manage impact by refining and improving programmes, informing decision-making and maximizing impact, according to EVPA. The guide helps to create a roadmap to help organisations steer through the labyrinth of already existing methodologies, tools and databases on social impact measurement., Its objective is to initiate a push towards best practice when it comes to measuring and managing impact.
The venture philanthropy and social investment sectors have been extremely supportive of this initiative, she says. A diverse expert group—comprising venture philanthropists and social investors, consultants, academics and other networks such as GIIN and AVPN— was complemented by a wider group of practitioners and investees who were involved in the consultation period on the first draft of the guide.
The guide can also be entirely applicable to venture philanthropy and social investing in the Asian context without tweaking, according to Anna-Marie, because it does not take a stand to recommend a particular tool or method – rather, it attempts to extract best practice from the different ways social impact is measured and managed.
Download and read the full guide here.