Measuring and improving social impact

Epstein, M. J. & Yuthas, K. (2014). Measuring and Improving Social Impacts A Guide for Nonprofits, Companies, and Impact Investors, Berrett-Koehler Publishers, California.

At a time when there is much discussion, rhetoric and theory around social impact investment and social impact measurement, Epstein and Yuthas’ Measuring and Improving Social Impacts is a very useful, clear and practical guide.

Mark Epstein (a Professor of Management at Rice University, Houston & previously of Business School, Harvard Business School, and INSEAD) is an international expert on sustainability, governance, performance measurement and accountability for non-profit and corporate organisations. Co-author Kristi Yuthas (the Swigert Endowed Professor of Management and Information Systems in the School of Business Administration at Portland State University) has expertise in accounting, financial analysis and information system development and measurement to address complex social issues. Together they have produced an easy-to-read book that helps different sectors understand why they should invest in, and measure, social impact.

Epstein and Yuthas establish a strong case for measurement. They challenge readers to answer questions like:  “You’re investing your money, your time, your reputation in worthwhile causes, but are you really making a difference?” and “Organizations talk a lot about the work they do and the number of lives affected, but are these people really better off?”. They point out the increasing expectations and requirements for accountability to funders and donors and that where governments are providing tax benefits to social investors, it is “reasonable to demand that the money be wisely invested to create as much social impact as possible”. With limited resources and increasing or unchanging social issues, there is also a strong imperative to invest in initiatives that can make a difference:

“Billions of dollars are spent each year by NGOs, governments, and foundations with the explicit intent to make positive social impacts. … Too much of this money is squandered. Yes, some is through waste and inefficiency, and that should be eliminated. However, much is squandered by well-intended yet failed attempts to deliver important social changes.”

Epstein and Yuthas also maintain that social impact is important for organisational viability and sustainability. Indeed, they argue that “Although budgets, fundraising, and efficiency are important, social impact is the new bottom line for the social sector.

To assist the reader to navigate and step through the measurement pathway, Epstein and Yuthas ask five overarching questions:

  1. What will you invest?
  2. What problem will you address?
  3. What steps will you take?
  4. How will you measure success?
  5. How can you increase impact?

This cyclic process means that improving and measuring social impact is integrated into the organisation’s/investor’s intent and purpose, strategic thinking, operational plans and their day-to-day processes; rather than seeing measurement as a separate responsibility for an arm of the organisation.

They also use an Impact Measurement Roadmap to guide readers through the process of preparing foundations for measurement (including the logic for change), considering how the results will be used, identifying impacts and metrics and developing a measurement system. Getting the foundations right is critical to ensuring measurement is effective. Without clarity on aims and how those aims will “realistically be achieved”, organisations are at risk of failing to have a social impact or being able to measure or articulate what their impact is. As Epstein and Yuthas reported:

“A common explanation for lack of effectiveness is that the organisation has not been clear enough about its definition of success and lacks a well-defined logic model that would likely lead to success. Too often we find serious gaps in the logic model and little evidence that activities are likely to lead to the proposed impacts.”

By clearly articulating aims and the logic for how these aims will be achieved and by establishing and implementing quality measurement and reporting, organisations can grow and increase their impact.

Kristy Muir
Research Director (Social Outcomes), the Centre for Social Impact

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