Making Impact Measurement Work: Enabling Resource-Allocation Decisions

Date

May 14, 2018

4 min read

Summary points

  • Despite increasing convergence on measuring impact, practical application remains very variable and resource allocation decisions are rarely influenced.
  • The people who are expected to benefit from activities designed to create social impact, cannot hold those responsible to account.
  • We urgently need a different approach to managing impact in practise if we are going to contribute to increasing wealth and income equality. Glean insights at the AVPN Conference 2018 panel, “Making A Difference? Making Impact Measurement Work”,

While there may seem to be many ways of measuring social impact, the truth is that there is increasing convergence in the approaches being advocated across different sectors. The Social and Natural Capital Coalitions, predominantly aimed at corporates are very similar to the Impact Management project, mainly aimed at impact investors, which is very similar to the principles of Social Value supported by Social Value International. This convergence has not yet filtered through to increasing practice and even less to the use of data to influence decisions.

Barriers to Effective Impact Measurement
This is a significant problem as, in general, the people who experience social impact cannot hold those delivering it to account – At least not to the same extent as is the case with financial impact. Managing financial impact has an ecosystem that protects investors – from standard approaches to accounting, audit and analysis, to active press coverage and well-developed legislation. This system has been key to unleashing the increase in wealth that we have seen over the last century and yet we appear unwilling to implement a similar level of accountability for those experiencing social impact. Not only to protect them but also to ensure that, like finance, we are creating as much social value as we can with the resources we have.

Increasing Performance Against Goals
Despite increasing convergence, it is still common to measure impact in relation to goals. This can lead to reporting levels of impact that are not as high as they could be and miss opportunities from continuing to seek user (beneficiary or stakeholder) insight as the gold dust that can drive the changes that will increase value.

In the world where investors can hold organisations accountable for the value being created, it is financial accounting that provides the information so that investors can make decisions. In effect, financial accounting measures the effectiveness of organisation in responding to their investors, in making changes to their business model to increase the value they are creating. As a result, it has been funders who have required information on impact and their approaches have predominantly been designed to ‘prove’ impact by reference to a theory of change.

In the absence of being held accountable by the people who get the social returns, we need a proxy to measure how well we do this. There are perhaps two simple measures we could consider.

Responding to Feedback
Firstly, whilst we will continue to collect some data on change in people lives, even if it is nothing more than the number of lives improved, we could also collect data on how we have considered, responded and made changes because of feedback. This would be liberating as there may be opportunities to do this with virtually any data. The test is no longer the rigour of your data, it is the extent to which you have used it. It is relatively easy to measure, compare and aggregate responsiveness and more inspiring to be able to tell stories about how we have changed what we do.

Secondly, responding to people’s views is also more likely to force us to recognise that we only contribute to part of the solution and encourage us to support activities that, though perhaps riskier, may lead to systemic change. The decisive factor will lie in the extent to which the organisation is working with others to codesign services.

At the AVPN Conference
On 5th June, I will be exploring these issues with fellow panellists, Ushnisha Ghosh (Acumen), Frank Hubers (NUS Business School), Lilian Lehman (IDInsight), and Clara Barby (Bridges Fund Management) at the session: “Making A Difference? Making Impact Measurement Work”. This session will reflect on investors have maximised their impact, consider the importance of accountability to beneficiaries of impact, and think about systemic change and responsiveness in their own decisions.


About Author
Jeremy Nicholls
Jeremy Nicholls Chief Executive Officer Social Value International

Jeremy Nicholls is the chief executive of Social Value UK and Social Value International, which are membership organisation for individuals, organisations and companies supporting principles and standards in accounting for social and environmental value.

He is also a director of the FRC Group (a social business based in Liverpool), a member of the IRIS advisory committee, a contributor to the Social Stock Exchange admissions panel, on the ICAEW Assurance Panel, and a member of the Social Impact Measurement Sub-group of GECES for the EU. He has lectured at several Universities including the Said Business School at Oxford University; Hult International Business School; and the University of Western Australia.

After qualifying as a chartered accountant, he spent time working as Finance Director for Tanzania Railways, in Liberia for the national Water company and in Nicaragua for Cafenic. In 2004 he set up Urban Strategy associates, an economic development consultancy. He also set up the BETA Model, an online database of trends in UK business stock and then, with FRC, the Cat's Pyjamas which ran events to promote the value of social enterprise. REDF was included on a Cats Pyjamas visit to the United States and encouraged Jeremy to bring SROI to the UK. On his return he began work on SROI with nef.

He has written' There is no business like Social Business' with Liam Black, 'More for your money, A guide to procuring from social enterprises' with Justin Sachs and worked with others to write a number of SROI guides including, most recently, the UK Government supported 'Guide to SROI'. He also writes a column for Pioneers Post.