Social Impact Measurement

It is critical that we measure the social impact of any programs with a social purpose. As a society, we need to be able to demonstrate that the investment being made in social services is making a real impact in the lives of vulnerable Australians. It is also important that these programs are delivered in a cost-effective manner, so our limited resources can be used to create the greatest social impact possible.

To do this we need a way to measure social impact that is rigorous, yet achievable for any sized organisation. Using a consistent approach to valuation and impact measurement makes it possible to compare the social value created by different types of programs. Being able to understand the net benefits of a program can help inform future investment decisions based on impact.

Why measure social impact?

Wellbeing of Aboriginal Australians

The Age 11/12/04 – Photo: Nic Ellis

The need to measure social impact is now more critical than ever before. Government resources are limited; one of our biggest concerns is our ability to sustain the welfare system. An ageing population is resulting in less tax revenue being collected and an increase in pension payments and health spending. It is clear to see that based on current trends our welfare system is unsustainable.

Alongside this is an ever-growing list of ‘wicked’ problems such as; climate change, the obesity epidemic, inter-generational welfare dependency, rising  mental health issues, lack of housing affordability and systemic disadvantage experienced by our First Nations People.

As a result, the funding environment for social services in Australia is changing. We are under increasing pressure to attract investment from sources other than government. As a result new funding models are emerging, such as Impact Investing, Social Impact Bonds and Payment by Results for example.

Philanthropic, corporate and government investors are looking to get the best social return from their investment. Social procurement is rising as large buyers are encouraged to leverage increased social impact through their purchasing power.

All of these changes make it critical for us to embed outcomes measurement alongside the work that we are doing. We need to be able to clearly demonstrate that any investment being made in human services is creating social value; that it is having a positive impact in the lives of vulnerable Australians and providing a good social return on investment.

Moving forward, social impact measurement is going to be the shared responsibility of government, philanthropic, corporate, for-purpose,  not-for-profits and charities alike.

5 Reasons Social Impact Measurement is a Priority

What is Social Impact Measurement?

What is social impact measurement?

There is no standard definition of Social Impact Measurement. It is commonly thought of as a process to understand how much social change has occurred and can be attributed to the activities undertaken by an organisation. This is why many organisations will simply count the number of social outcomes that have been achieved by participants in a particular program.

Here at the ASVB we define Social Impact Measurement as assessing whether a program, intervention or action is in society’s best interests. Any program, intervention or action that is in society’s best interests, creates social value.

In order for an organisation to create social value we need to understand how an intervention or action impacts on the quality of life of people in society. Quality of life (QoL) refers to people’s overall levels of wellbeing. People’s wellbeing is affected by many things covering economic circumstances, the environment and social issues such as education, health, employment and crime. We therefore need to account for the impact of all of these outcomes on people’s wellbeing to understand social value.

Based on this definition we believe that ALL activities, not just social-purpose programs, and particularly those that require large investment, should undertake a Social Impact Assessment prior to moving forward with the activity. A Social Impact Assessment will take into account the environmental, social and economic impacts of an activity and determine if it is in society’s best interest to move forward with the activity.

This approach is routinely used to assess large infrastructure developments, by governments in Australia and across the OECD, to determine whether projects should move forward.

If the NBN and Snowy Hydro 2.0 were value for money, would we know?

Why use Cost-Benefit Analysis

Why is measuring social impact so hard?

Why is measuring social impact so hard?

Whilst we know it’s important to measure our social impact, the reality is that most organisations find it hard, and there’s some pretty clear reasons why.

The biggest barrier to social impact measurement is the amount of time and resources it takes. This is especially true for small to medium sized organisations who have a very limited supply of both.

The lack of time and resources is further compounded by the lack of knowledge and skills across the sector. There is a steep learning curve with social impact measurement which means it takes time for staff to get up to speed.

In most organisations social impact measurement is an add-on to someone’s role, which means their limited time is going to be taken away from other important tasks, like direct service delivery.

The third major barrier  is the fact that there is currently no accepted standardised approach to social impact measurement. This means that there is no clear guidance on how organisations should go about measuring their social impact. Instead organisations need to consult with experts or conduct research and understand a variety of methods themselves, to then choose the approach that is right for them. However this of course takes time and resources which many organisations don’t have.

Some organisations who have the financial resources have tried to bring consultants in to develop and implement their social impact frameworks. However, it is a common experience to find that the necessary expertise and passion required to continue data collection and impact measurement have left the building with the consultant. This then becomes a costly exercise on your impact measurement journey.

Funder Perspective - Benefits of the ASVB

Which social impact measurement approach is best?

Which Social Impact Measurement Approach is Best?

As we’ve already stated, measuring social impact can be difficult. There are many different social impact measurement approaches, all with varying degrees of rigour.

When considering which is the right approach to measure the impact of your program, we recommend considering the following points:

1. Is the Social Impact Measurement approach proportionate?

This questions both the amount of resources allocated towards measurement and the level of rigour that is required or appropriate.

For example, if the investment in the program is very large, or the intention is to scale the program so that the intended future investment is very large, then it is appropriate that you spend a proportionate level of money on evaluation and aim to achieve a higher level of rigour.  However, if you are wanting to measure the impact of a program run on a very small budget, then it doesn’t make sense that more money is spent on evaluation than delivery of the program.

You can see a wonderful example of how the NSW Government determines what, how and when to evaluate in their NSW Government Program Evaluation Guidelines – January 2016.

Evaluation - What percentage of your budget should you spend?

2. Is the Social Impact Measurement approach useful?

This question really asks you to consider what you will be using the results of your social impact measurement for, and whether the results of your approach will meet this need.

For example, if you are wanting to use the results of your impact measurement purely for internal program improvement, then developing a Theory of Change or Program Logic, choosing indicators and counting the number of outcomes the program achieves, may well suffice.

However, if you want to report your social impact to a diverse range of stakeholders then communicating in dollar terms is likely to be more effective, so approaches which monetise social value, such as SROI (Social Return on Investment) or Cost Benefit Analysis (CBA) are better options.

Similarly, if you want to make decisions about where you should allocate investment or resources, then these approaches will allow you to compare programs with different outcomes in common terms, providing a consistent methodology is used to monetise social outcomes.

If you are seeking funding, then the best approach is one that  allows you to forecast the potential social value that your program could create given a specific amount of investment. In this instance Cost Benefit Analysis is the preferred approach of governments across the OECD.

You also need to consider what your funders/investors are asking for. If they are yet to prescribe a particular methodology for measuring impact then you will be able to influence how you report your social impact back to them.

In the case of Government funded initiatives, the different states and territories are at varying stages of developing their outcomes measurement frameworks. It is important to stay abreast of these emerging developments, particularly for those who deliver national programs, as these differing requirements may influence the social impact measurement approach you need to use.

Aligning to Government

Further reading:

3. Is the Social Impact Measurement approach achievable?

This final question asks you to consider if the social impact measurement approach is achievable for your organisation given your resources, skills and capacity. You should also consider, given the resource requirements, if the approach is sustainable in the longer term.

One of the most disheartening things you can do as a leader of a project or organisation is to rally your team towards measuring impact and then choose an approach that sets them up for failure.

It is at this point that many organisations consider bringing in impact measurement consultants. Just as, whenever you buy in expertise of any sort, you need to weigh up the pros and cons of whether this is the best option for your organisation given your current restraints.

A word of advice if considering this option, make sure you choose a consultant who will educate and increase the social impact measurement skills of your team, and support you to embed impact measurement into your culture. You also want to be clear from the start whether the approach your consultant is recommending will require their ongoing involvement to be sustainable into the future, so that you can budget accordingly.

We believe that the best social impact measurement approach is one that meets your needs, has a sufficient level of rigour, is comparable, and that you are able to continue into the future. This is because we want to ensure that we are achieving the positive social impact we intend and that our programs are providing good value for money.

How to create your own solution to social impact measurement?

Why use the ASVB?

Nine out of ten community organisations cited lack of funding as a key barrier to measuring the outcomes of their work

Ami Seivwright, Paul Flatau, Sarah Adams and Claire Stokes, The Future of Outcomes Measurement in the Community Sector in Western Australia, The University of Western Australia, Centre for Social Impact 2016

The Australian Social Value Bank offers a proportionate way to measure your social impact that is robust, yet accessible and achievable to everyone.

Further to this, traditional approaches used to value social impact do not provide you with the ability to compare the value of one program against another.

As a provider of Community Housing, are you better off allocating more resources to ensure that your tenants are not living in housing that is overcrowded, or spending that money to promote good relationships between neighbouring tenants? Which of these options will have a greater impact on your tenants’ wellbeing?

With the introduction of the Australian Social Value Bank we now have a way to be able to answer these types of questions based on evidence, rather than ‘gut-feeling’.

Using a shared language based on the wellbeing of individuals, the ASVB allows you to compare the value of different programs at both a service and procurement level.

Why should I use the ASVB instead of another social impact measurement tool?

The ASVB is the only social impact tool in the world that can measure the value created for individuals, for example increased sense of safety, improved job readiness and improved overall health, as well as the benefits for secondary parties, such as cost savings to the state.

Daniel Fujiwara, Founder of Simetrica

See Also