On Thursday (24th), I’m one of the panellists for The Challenge Of Measuring Social Impact event at The Hub Westminster. The organisers have asked us to blog our thoughts in the run up to the event, so these are my initial responses to the questions we’ll be attempting to answer on the night – although obivously I can’t promise not to have changed my mind by Thursday.
My fellow panelist, Dr Pathik Pathak, has already blogged some of his thoughts.
What is social impact and how can it be measured, does it influence funding decisions and how do small organisations with limited resources manage to do this?
For social enterprises and social entrepreneurs, social impact is generally short for ‘positive social impact’. It’s the positive change that takes place – or that we hope will take place – as a result of what we do.
Monitoring and evaluation – which has always been part of the voluntary sector landscape, at least over the 12 years that I’ve been voluntary sector professional – can be a way of measuring social impact but isn’t always.
Keeping a record of how many people have turned up to use your service – for example, a creative writing course delivered in your local community – and who they are is monitoring but is not social impact measurement. Measuring the impact of your course might involve asking the participants some questions at the beginning of the course – do you they enjoy writing? are they confident about writing sonnets? – and then asking the same questions at the end of the course.
Opinions will be divided on the level of social impact delivered by some people in your local community being more confident about being able to write a sonnet. Is society a better place as a result? It’s (relatively) easier for people who services involve working directly with people to stop them doing crime to explain how their work delivers positive changes for society and (often) harder for people whose services are websites that provide people with generic information.
The promise of social impact definitely does influence funding decisions. Most grant funding applications have questions about why the thing you’re promising to do is needed and what will happen as a result of you doing it. In terms of commissioning, wider social impact – beyond the idea that the service that (usually) a public sector body is paying to deliver, delivers positive social change by virtue of its existence – isn’t currently of interest to most commissioners. Many social entrepreneurs hope The Public Services (Social Value) Act 2012, which comes into force this month, will begin to change that.
For small organisations, the danger is that they get bamboozled by questions such as ‘what is our theory of change?’ and miss the the underlying point that demonstrating social impact means explaining why what you do is useful and why someone, whether it’s a customer, a grant-funder or a public sector commissioner should give you money to do it. And also, equally importantly, knowing yourself whether your work is succeeding or whether you’re wasting your time.
Being small is not an excuse for not being able to do that at all. You don’t necessarily need to set up complicated measurements system but you do need to have some way of working out whether what you do is working.
Social investors state that measuring the impact of the products or services is just as important as increasing the capacity of an organisation to actually deliver the product or service, but what does this mean in practice?
The premise of this question is slightly optimistic. While Nesta’s impact fund, Joe Ludlow is on the panel, is an honourable exception, the vast majority of social investors do not yet have a specific commitment to supporting organisations that deliver measurable social impact (as opposed to being organisations committed to doing social good in a general sense). As the recent Big Lottery-backed report Investment Readiness in the UK noted, when discussing the perceptions of voluntary sector organisations seeking social investment: “Investees appear to think that their ability to create social impact will be more significant to investors than seems to be the case on the evidence of those who have received investment. This perception amongst potential investees appears to weaken as they get closer towards securing finance.”
There is a way to get money if you can deliver positive social change but can’t do so as part of a sustainable business. Apply for a grant. So far, the social investment market is far less sophisticated than the traditional grant-funding market in terms of defining the connection between measurable impact and cash.
There are difficulties on both sides. There are (so far) very few social investors who can currently explain what effect, if any, investees’ ability to measure social impact will have on their investment decisions. There are equally few trading charities and social enterprises who are measuring their social impact in any meaningful way. Although clearly there’s also no agreement on what ‘a meaningul way’ might mean. It’s a chicken and egg situation but with a lack of clarity about what exactly a chicken or an egg might look like when either or both arrives.
How are organisations developing the evidence that a particular product or service is having a positive impact, to ensure that what is being funded is making a difference?
Some (relatively) large social enterprises produce social impact reports. HCT Group is one of them. FRC Group is another. Matter & Co’s RBS SE100 provides an annual guide to the social enterprises who are best at measuring social impact (and have entered their competition).
I’ll have a bit more to say on this on Thursday. A few further questions, though, that I think are important are:
Is it useful for social impact to measured using systems – such as SROI – that attempt to put cash figures on the social impact generated by particularly activities?
What role does social impact measurement play in the overall battle for resources? Should resources be targetted at generating the greatest possible volume of positive social impact – if we were in the position to agree on what that meant – or are certain types of positive social impact a higher priority than others?