Measuring
Social Impact – Significance, Challenge and Opportunities
The development sector has been growing since the
United Nations was formed after World War II. However, more than ever before,
donors and investors now want increased clarity on accountability and
performance excellence of the venture they are funding. Therefore, organizations
are going in greater detail of what the path to success looks like, how it will
be achieved and what are the ways of measuring it. Often the social challenges are so large that it is necessary
to increase efficiency in conducting the project and to improve impact of the
financial and human resources being invested.
To address this concern,
big data is being used to understand social impact. Approaches in conducting
data analyses may vary from organization type and size but the need for better
clarity on mission and the proper data to evaluate performance is an
expectation of most investors. Marc J. Epstein, coauthor of the new book titled Measuring and Improving Social Impacts: A
Guide for Nonprofits, Companies, and Impact Investors explains the
importance of developing a clear logic model that carefully defines their
inputs (resources and constraints), processes (organizational activities),
outputs (results), outcomes (intermediate effects), and impacts (progress on
social issue).
Similar to this book, the
article published in Stanford Social Innovation Review titled “Calculate
Impact” takes a quantitative approach in calculating expected return to get a
better understanding of expected outcome. The reading gives insights from
Acumen’s model of evaluating the impact of a potential model by comparing it to
the Best Alternative Charitable Option (BACO). The idea is to calculate the
expected return of the BACO and comparing to it to the expected return of the
new social venture. The article gives examples of ways that can be used to
quantify qualitative outcomes such as the impact on the health to a community
by measuring the benefits of the project in terms of “people years of malaria
protection”.
The fundamental challenges
that face measuring social value are lack of standardized parameters to regularly
measure impact. Many social metrics are unreliable as they are produced by the organization
that are biased to show a higher impact that the organization is making to
continue receiving funding. Creating a theory of change model and social return
on investment model mitigates this bias. These models establish objectivity and
transparency which give investors a clear picture of the impact and performance
of the venture.
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