When buyers use their purchasing power to achieve social outcomes beyond the products and services they require, they are undertaking social procurement. Social procurement is a strategic approach to procurement which allows organisations to achieve multiple outcomes through their procurement spend including:
• The creation of employment for marginalised groups and those excluded from the labour market; and
• Regenerating of local economies; and
• Ensuring fair work practices in developing countries.
Social procurement is gaining traction in Australia and internationally as governments and the private sector come to realise that greater value can be extracted from the procurement process. In the last five years:
• Advocates for social procurement have become more active;
• Supplier networks have been created to make it easier to buy from disability organisations, indigenous businesses and social enterprises;
• Guidelines and tools have been developed to support procurers to ‘buy social’;
• Research has been carried out into corporate and government buyers;
• Networks have emerged in NSW and Victoria; and
• There has been an increase in the amount of social procurement occurring.
This edition of Knowledge Connect utilises recent literature from Australia and overseas to explore social procurement as a tool for delivering social impact, and in particular to better understand what social value is created through social procurement.
Some interesting conclusions can be drawn from the review of literature on social procurement, particularly in identifying that the value created through social procurement differs for private buyers, public buyers, government finances and beneficiaries; the evidence for social procurement is compelling but sparse in relation to some outcome areas; and the critical role of enabling legislation and targets.
Social procurement generates different types of value to the different stakeholders involved. Corporations engaging with social procurement are generally driven by reputation enhancement and the associated community relations benefits. While government also enjoys these benefits, there are also significant benefits generated through employment and community wellbeing that often translate to savings for government. The value for beneficiaries ranges from marginal to life-changing.
The presumption that the value of social procurement is self-evident is unrealistic. There is implicit value in social procurement but there is implicit social value generated in all procurement. As such, capturing the added value is critical in building the evidence and broader adoption of social procurement. Social procurement is being evaluated in different ways, extensively in some fields and sparsely in others, and this is a critical challenge for social procurement. Different social objectives required different approaches, for example buying fair trade is different to buying local which is different again to bringing marginalised people into the labour market. This is not a barrier to all buyers but it often is for some government buyers and Treasury departments who are trying to demonstrate added value.
Social procurement in Australia does not require enabling legislation. Existing legislation does not prevent social procurement, however it does not encourage social procurement either. Nelson and Pound assert that there is a need for targets and benchmarks for social procurement in the UK. Targets and affirmative action through legislation in the US has driven over $100B per annum in government social procurement, creating employment opportunities for people with disabilities and economic inclusion for minority groups.
In this edition, we connect you with some of the most recent thinking on social procurement inspired by Social Traders’ recent research into Corporate Social Procurement in Australia and the social enterprise procurement exchange being established by Social Traders (the need for which was identified in the report). It provides a precursor to The Social Marketplace event – presented by the Centre for Social Impact – which will feature a stream on social procurement.
Editor, Knowledge Connect, Winter 2014
Mark Daniels has been involved, engaged and excited by social procurement since designing and awarding a cleaning services contract, containing social clauses, on the Atherton Gardens (Fitzroy) public housing estate in 2002. The contract required the successful tenderer to employ 35% of their labour force from unemployed public housing tenants living on the estate. Overnight, 15 public housing tenants got jobs and the estate’s joblessness rate went from 95% to 93%. With continued social procurement initiatives and job creation schemes the jobless rate at Atherton Gardens reduced to 81% by 2008. As well as being a buyer, Mark has worked in social enterprises delivering on socially procured contracts. Over the last six years he has been a social procurement advocate brokering many contracts between social enterprises and buyers in his role as the head of Market and Sector Development at Social Traders, a specialist social enterprise development organisation. Mark Daniels will be speaking at The Social Marketplace 2014.
Chris Newman is the guest editor for this edition. He came to social procurement through strategic procurement work he was undertaking with local government, where he saw community issues and needs on one side of council and procurement decisions on the other side and never the twain shall meet. The disconnect was not just about silos, it was about poor strategy. Chris now advises organisations across Australia on procurement practice and strategy through Arc Blue.]]>
The NSW Social Procurement Action Group (SPAG) came together in late 2011 with a specific agenda – to increase understanding and activity in the growing field of social procurement. Across NSW there were some exciting examples emerging, with Government at all levels using procurement as a strategic tool to drive social outcomes, particularly in generating employment for disadvantaged communities. Yet the activity was being done in isolation, without a common language or body of work to underpin it. Representing seventeen State, Federal and Local Government agencies, SPAG emerged as a Network of practitioners and interested agencies. The critical task identified was to develop Guidelines for good practice, supported by local case studies and legal advice relevant to any public service agency looking to socially procure.
Social Procurement in NSW (‘The NSW Guide’) focuses on four critical elements of social procurement. The first section sets out the business case and the context. The guidelines highlight the scale of activity in NSW, where State and Local Government procurement expenditure alone is estimated at $27bn/ year, representing enormous market power to drive Government’s strategic objectives. As Procurement Roadmap and Accreditation Programs are rolled out across Government, procurement is moving from an administrative low level activity to a critical strategic role, and Government is increasingly understanding the role that procurement can have in helping to address some of our most challenging social, environmental and economic problems.
The second section of the NSW Guide provides a step-by-step approach to making your organisation ‘social procurement ready’, addressing topics ranging from: engaging senior management, to developing appropriate policies and procedures, to education, training, and opportunity analysis. The NSW Guide provides a detailed model to help any organisation to set themselves up to ensure social objectives are considered as an integrated part of their procurement practice.
Section three provides a detailed approach to the integration of social procurement into each stage of the procurement process, from procurement planning, specification and evaluation criteria development to contract monitoring, evaluation and reporting. The NSW Guide is designed to respond to the need expressed by many for practical guidance to help those looking to incorporate social objectives into their procurement practice in a robust, balanced and effective way.
The final section provides a question and answer section followed by 17 pages of detailed legal advice demonstrating conclusively that as long as processes are transparent and followed appropriately, social procurement is not only legal, but ‘good practice’, ensuring Government’s social and economic objectives are properly considered in its procurement practice.
The content in the NSW Guide is supported by 17 diverse case studies and a range of diagrams and models designed to help generalists looking to introduce new approaches to addressing social challenges, as well as procurement practitioners looking for structured guidance and examples of social procurement application. Many of the case studies reflect the way social procurement is being used as a key tool to effectively address issues such as employment creation in areas of place-based disadvantage in metropolitan and regional NSW, and the provision of job pathways to disadvantaged communities, with a particular focus on indigenous, people with a disability and long-term unemployed.
While the NSW Guide specifically addresses social procurement in the public sector in NSW, it can be picked up and applied by any private or public sector organisation throughout. Launched in Western Sydney, the Illawarra and the Central Coast to over 250 people, the NSW Guide is proving a vital tool to support the implementation of the goals of NSW SPAG, (now a chapter of Social Procurement Australasia) in driving the uptake and effective implementation of good practice social procurement for the long-term benefits of the people and communities of NSW.]]>
This piece of research is the first report of its kind in Australia and quite possibly in the world that seeks to specifically know more about corporate social procurement including what’s being done, how it’s being done, what the impediments are and how corporate social procurement (CSP) can be supported to grow.
The report is timely in that it has been able to capture social procurement at a time when there are some really good case studies and a growing appetite for CSP as evidenced in the report where participants identified that five were socially procuring in 2012 but by 2014 30 of the 31 participants would be socially procuring. Whilst this report does not claim to represent the views of corporate Australia and many of those who participated in the research were already engaged or undertaking social procurement, it reflects a shift in the corporate landscape towards integrating the creation of positive externalities into their supply chain.
The research identifies that this trend has been supported by the emergence of practice and movements such as Fairtrade – ensuring high labour standards in developing countries, Minority Suppliers – prioritising suppliers run by minority groups, Sustainable Procurement – initially used to advance the environmental agenda it can also be applied to addressing social issues, Social Enterprise – the emergence of this model as a supplier to corporates and Shared Value – the belief that doing good can actually solve business problems and create greater value.
In trying to understand if social procurement creates social value it is important to reflect on the audience. For corporate Australia, the drivers for social procurement are largely business drivers. CSP is a way of building brand capital through community relations and corporate citizenship. Interestingly CSP is also seen as a positive employee engagement tool for procurement staff, a profession with high staff churn.
The areas providing the greatest benefit were in the areas of local economic development, and employment and training for disadvantaged groups but there were many other well supported motivations. The motivations reflected business specific issues as well as the social and community context in which they operated, but also highlight the flexibility of social procurement to deliver different and multiple social impacts in different settings.
Corporates tended to prefer working directly with social benefit suppliers who are set up to deliver goods and services and social impact such as indigenous businesses, social enterprises, fair trade suppliers and women owned business. This is quite distinct from government where they are generally required to run open tender processes even where a social benefit is being sought. Corporates were not as constrained and they made use of social benefit supplier networks. The benefits to corporate branding were seen to be greater by having social benefit suppliers as first or second tier suppliers rather than having mainstream suppliers delivering social benefit directly. In some instances buyers have actually worked with community to develop social benefit suppliers that can meet their business and social needs.
Corporates identified that growth is occurring in this space, but accelerated growth requires social procurement to be more highly valued by society (business customers), easier (better access to social benefit suppliers, information and tools) and endorsed and supported by government so that business is being recognised for the benefits they’re providing.
To the question of social impact. The report profiled five case studies of leading social procurement from companies out of the ASX100. Between them they are socially procuring over $900 million. Many of the organisations are not measuring the social outcome and those that are tends to use methods such as spend with a particular provider or jobs created for a specific target group. Most continue to talk about their impact through stories of lives changed as a result of gaining a job, corporates did not identify measurement as a significant constraint on the growth of social procurement.
The value of CSP to business is quite different to value of social procurement to government, in both cases there is a critical alignment between procurement and the mission of the organisation. Where this isn’t present social procurement is usually not occurring. For corporates, the social impact of CSP is part of the story to staff, customers, communities and shareholders about the values of the company, it is also about the creation of shared value. It is underpinned by an inherent belief that Social Procurement is good, its impactful and it is worth doing procurement differently for. Of the 31 participants in the research, Rio Tinto represented 95% of the CSP occurring despite a procurement budget only three to four times the size of an Australian Bank. This suggests that CSP is still at the margins of most businesses and there is significant scope for growth in numbers and volume.
With the support of the Ian Potter Foundation, Social Traders is developing a Social Enterprise Procurement Exchange which will link corporate Australia to a supplier network of accredited social enterprises. The exchange is designed to scale the growth of social procurement.]]>
The rise in interest in social procurement is international. In the financially austere environment facing the UK there is a need to find new ways of creating employment for the most marginalised. The Joseph Rowntree Foundation undertook research to understand the role of public procurement in creating employment opportunities for those that are currently outside of the labour market and living in poverty.
The research found that the UK has a supportive legislative environment. The Social Value Act (2012) enables buyers to seek ‘additionality’ to capture the role of procurement in creating social value beyond the goods and services required. This is supported by the UK governments sustainable development framework requires all departments to report on economic prosperity, including median income; long-term unemployment; and poverty. Public procurement cannot contribute to all of these elements, but through the targeting of job and training opportunities that arise from public procurement government can increase opportunities for the most socially disadvantaged. Social procurement is growing in appeal in the UK but simply having policy has not resulted in widespread adoption.
Measurement of the impact for social procurement is problematic; approaches such as SROI and LM3 would be useful in making the case for social procurement but are impractical in terms of data collection for procurement teams. Value Wales has developed a Community Benefits Tool which has to be completed for contracts valued at £2 million or above. This collects output data for ten sustainable development measures from clients and contractors/suppliers, and uses a local multiplier to measure the impact on the economy of Wales. How well the data is verified depends upon the contract management team.
Perhaps the most important and transferable lesson is that the best outcomes will be achieved where the principles of good procurement are applied to social benefit requirements, including adopting a clear and ideally measurable social specification; bidders who are able to deliver; give weight to the social /community benefit requirements in the award process; and enforce the contract requirements. Good process results in good outcomes.
Based on a range of case studies the research proposes a model for procurement be adopted nationally based on the Birmingham City Council experience whereby 60 person-weeks of paid employment is provided for a new entrant trainee per £1 million in invoiced contract value. If the $150 billion public procurement spend in Australia created 1 job for every $2,000,000 of spend this would create 75,000 jobs for long term unemployed Australians (there are currently 83,000 long term unemployed Australians. To support this sort of target there is also a need for cross government targets so that the likes of infrastructure and transport are equally obligated to deliver social outcomes as housing departments and disability, who tend to be more predisposed as their clients will often be the beneficiary of social procurement.]]>
Having looked at impact measurement for ‘local buy’ and Fairtrade social procurement, both of which have been heavily evaluated, we come to social procurement delivering employment to marginalised groups. A number of welfare and advocacy organisations have pointed to the value of increasing employability through social procurement but there is scant information available in that directly captures the benefit created by this form of social procurement. This paper by AMES stood alone as a qualitative and quantitative analysis of social procurement as a creator of employment for those marginalised in the labour market. It captures the added value created when the Magic Green Clean social enterprise was awarded the contract to deliver cleaning and grounds management services of the Kensington Redevelopment – a public/private housing estate in Melbourne.
The economic impacts
The cleaning contract value is based on the market rate of $350,000pa. The business employed an Intermediate Labor Market (ILM) model, whereby unemployed tenants were provided with a job for 12 – 18 months in a social enterprise after which they were supported into employment in the mainstream market. The research utilises a Cost-Benefit analysis to estimate the added value created through delivery by Magic Green Clean Vs a mainstream commercial provider, looking at total wages, total income taxation, retail expenditure and associated flow-through expenditure (due to the multiplier effect of the retail expenditure). Most of the gains are premised on the assumptions that employees of the social enterprise will transition out of the social enterprise and into mainstream employment to be replaced by unemployed tenants.
Over a period of 20 years the social enterprise will provide added value of:
• $10.4 million in wages.
• $10 million in taxes.
• $4.5 million in unemployment benefit savings.
• $13 million in retail and multiplier expenditure.
Over 20 years, $7 million in contract value creates $38 million in total value, for every $1 spent, $5.42 is returned.
The research suggested that the use of labour from the estate resulted in a more preventative approach to maintenance which in-turn is extending the useful life of finishes, fixtures and fittings. An increase in the useful life of 1-3 years based on a 15 year life could equate to $2.3m.
The research is valuable because it shines a light on the added value that can be created through social procurement designed to provide pathways to work. The multiplier effect generated through bringing the long-term unemployed into the labour market via social procurement is profound and it is useful to be able to arrive at a multiplier built on the well understood LM3 methodology. When extended out, this line of thinking identifies the important role that social procurement can play in bringing the long term unemployed and other difficult to engage groups back into the labour market.
The lack of comparable research is concerning, there is a need for more research in this field to capture the experiences of different social enterprises, other social benefit suppliers as well as private businesses responding to social clauses in contracts.]]>
With €2.9 billion euro p.a. spent on Fairtrade products in 2008, socially aware consumers and organisations are big business. Fairtrade seeks to eliminate exploitation from the supply chain and generate lasting benefits in the producer communities. Most of the understanding of the impact of Fairtrade comes through stories and output measures such as the number of famers and communities participating. This research, commissioned by Fairtrade Foundation and carried out by Greenwich University, seeks to understand the economic and social impact of Fairtrade on producers, using academic and development agency reports.
The economic benefits of Fairtrade
The research recognises how difficult it is to generalise about Fairtrade, due to different products, local conditions and supply chain experiences. This extensive review of the literature finds strong evidence that Fairtrade provides a favourable economic opportunity for smallholder farming families that are able to join farmer organisations and can provide products to market specification. This translated to higher returns and stable incomes and in some cases dramatic improvements in livelihoods. However, there are several studies where producer families are still only surviving and covering basic needs.
The social and empowerment impacts of Fairtrade
There was overwhelming evidence of improved self-esteem, confidence and market knowledge resulting in increased buying power amongst supplier groups. Many Fairtrade co-operatives are becoming stronger, often showing greater ability to survive in difficult times and becoming more able to provide important services to their members.
There is no attempt in the research to generalise or quantify because the experience is so variable. This research challenge isn’t unique to Fairtrade but it does make it difficult to communicate to institutional buyers the value created by the Fairtrade premium.
The more common reporting from corporate buyers identifies the number of farmers benefitting, the increased price and some of the programs now available in those communities ie: schools. The strength of the Fairtrade brand seems to contribute significantly to the credibility of this form of social procurement as it provides an accreditation standard which removes exploitation from the production process, a fact which is perhaps more important to buyers than the undoubted (as evidenced by this report) impact that their spending is having.
Measuring the impact of social procurement is obviously important. Whilst stories, intuition and outputs are enough for some to engage with social procurement, policy makers and government require more evidence. Due to the diversity of social procurement approaches, benefits and industries there is no universality in how and where the impact of social procurement has been measured. This web article and the subsequent two reviews capture some of the body of evidence that has been developed in support of social procurement as well as demonstrating how social value differs for different approaches.
The ‘buy local’ movement has become a powerful force in informing the community about the value created through the purchase of goods and services through locally owned businesses as opposed to through multinational businesses. The Local Multiplier or LM3 impact measurement tool has been used extensively to capture the added value of buying local. It captures the total economic impact of spending a dollar with a local business as compared to an absentee owned business.
Total economic impact is determined by measuring three components: the direct, indirect, and induced impacts, further defined here:
• Direct impact is spending done by a business in the local economy to operate the business, including inventory, utilities, equipment and pay to employees.
• Indirect impact refers to the conventional multiplier that happens as dollars the local business spends at other area businesses re-circulate.
• Induced impact refers to the additional consumer spending that happens as employees, business owners and others spend their income in the local economy.
The simplest study undertaken by the Institute for Local Self Reliance explored how much of a dollar spent at a local independent store is re-spent in the local area in the form of payroll, goods/services purchased from area businesses, profits spent locally by owners, and donations to area charities. The study found each $100 spent at local independents generated $45 of secondary local spending, compared to $14 for a big-box chain (three times the multiplier).
The more labour intensive, the greater the multiplier as there is a greater component of the cost that will be spent in the local community, as opposed to retailer selling product sourced elsewhere.
The research is robust and has been replicated in many different countries, industries and population densities with similar outcomes. We know that ‘buy local’ can generate economic benefits and there are procurers in Australia such as the City of Gold Coast Council (GCCC) that are embracing this approach in order to address high levels of local unemployment. GCCC has also recognised that there may be costs attached to this due to reduced competition, but they see the benefits outweighing the costs and exclude non-local businesses for contracts under $200,000 ($250 million spend) and attach local weighting to contracts over $200,000.
There is enormous untapped potential for ‘buy local’ in addressing declining economies or place-based disadvantage in Australia. Government procurement legislation differs between states, the Victorian Industry Participation Policy, for example enables this approach as a vehicle for ensuring high levels of local labour content in contracts. We are seeing similar thinking in the revitalisation of Geelong, Western Sydney and Elizabeth in South Australia.
Social procurement has gained attention in modern public management however, considerable differences exist in understanding what social procurement actually is.
This confusion has inhibited the growth of social procurement internationally and in Australia. The term has multiple meanings which are all explored in this paper.
Barraket and Furneaux identify that social procurement is not new with many examples from the 19th Century in the US, France, and England related to job creation in times of depression as well as for marginalised populations, such as the disabled, following World War I. Social procurement has grown to include other activities particularly with the rise of welfare purchasing by the state and even more recently through responsible procurement.
The research identifies four types of social procurement:
1. The acquisition of social services (ie drug and alcohol counselling, disability support) directly from third sector organisations.
2. Procurement of public works (with indirect social outcomes). The intent of the procurement process is to directly purchase a specific outcome, often a physical asset such as a building, or a service such as building maintenance with an additional indirect social outcome embedded in the contract.
3. Allocation of a percentage of work to a social enterprise. Like type two above, there is a package of procurement such as a new building or maintenance, but a portion of this work is allocated to be undertaken by social enterprise.
4. Corporate social responsibility (management of supply chains) the management of supply chains in order to ensure that ‘they do no harm in relation to social indicators such as labour conditions and human rights of workers’.
Acknowledging the breadth of social procurement communicated through this typology, the intent of this Knowledge Connect series is to focus on type two and type three social as outlined above: where social benefit is intentional and indirect.
The indirect nature of the social benefit is exciting because it presents procurement as a vehicle to create added social value. Whilst the idea is not new, this evolution has moved away from the strategic use of procurement in response to economic and social turmoil to the strategic use of procurement to create positive externalities at any time, by any procurer and for a range of different social benefits.]]>
Capitalism is the focus of Geoff Mulgan’s latest book. In a wide-ranging argument, Mulgan argues that capitalism, rather than being an immutable fixture in our lives, is part of a process of ongoing social evolution and progress. The real power of capitalism lies in its flexible and responsive nature, in its ability to adapt, colonise and regenerate. He argues that we can all play a key role in shaping capitalism’s future for the better.
At the heart of the capitalist system, he argues, is a particular approach to value. Essentially, the system is constructed around exchangeable representations of value, and maximising this value remains the key driver of all behaviour. Value can be maximised in two ways. The value held or made by others can be captured by predation (as by locusts) or it may be created by innovation and industry (by bees). These two forces represent respectively the worst and the best of capitalism.
Mulgan argues that recent crises within the capitalist system, like the GFC, are driven by an imbalance of predatory behaviour over creative. But he also points to an ongoing crisis of meaning, which paradoxically is particularly concentrated among those who have benefited most from capitalism’s power. Mulgan considers that the persistence and visibility of predation in capitalism drives incessant discontent and critique, which capitalism is (usually) able to absorb or resist.
In the aftermath of a crisis of predation in the GFC, Mulgan argues we have an historic opportunity to unleash the creative forces of capitalism. He considers the spread of entrepreneurship into the social sector (social entrepreneurship) as an example of this creative, beneficial behaviour. He also argues that we should channel capital and wealth into creative, useful activities and use them to incentivise and nurture innovation. This connects investment with creativity, and positions social impact investment as a powerful creative force to improve capitalism. He reminds us, however, to “make capital a servant, not master” (p. 245), echoing the similar sentiments concluded by Burkett, discussed earlier in this review.
Overall, he paints a very optimistic picture of our capitalist system, and even more so, of our own ability to shape its future. Written in Mulgan’s lucid and engaging way, there are many shrewd insights and thought-provoking anecdotes here. Some readers may find his endorsement of the spread of capitalist ideas and tools into our social spheres challenging, but none will put the book down without some new knowledge or renewed hope for the future of capitalism. It is a great read for understanding how a social marketplace can fit into a broader agenda of a better Australian society.
n.b. If you haven’t time to read the book, you can see Mulgan discussing his ideas here in a YouTube clip published by RSA:
Social purpose is at the heart of impact investment. A credible and robust marketplace for social impact needs accounting approaches that reflect this central social purpose. The lack of a generally-accepted impact measurement taxonomy is consistently identified as a major barrier to the growth in scale of the social impact investment market. A dominant response to this issue argues for standardisation in metrics of social impact; however this response largely reflects the needs of investors and funders.
This 2010 paper by Ebrahim and Rangan provides a compelling and sensible counterpoint to this dominant argument. It provides a framework for impact measurement that is grounded in the reality of social purpose organisations. The starting point for the analysis is the well-established logic model for social change, as shown below:
The conventional wisdom around this model is that for organisations to show that they are ‘social purpose’ and actually create social impact, they should extend measurement practices as far down the chain as possible. Ebrahim and Rangan argue that this approach is not feasible, or desirable, given the reality of social impact creation. Instead, they propose a framework for measurement that links measurement to the goals and strategies of social purpose organisations.
This contingency framework is based on two dimensions: the complexity of operational strategy and the complexity of theory of change.
The first dimension – theory of change – considers how complex the causal logic is behind an intervention. A focused theory of change refers to interventions where there is a defined and well-understood relationship between cause and effect. An example of this would be emergency care – where providing shelter, food and water meet immediate and basic human needs. Activities with a more complex theory of change includes cause-effect relationships that are only weakly understood, or where effects may be caused by multiple, interdependent causal factors. This may include efforts to change public policy and public opinions, where the results of an intervention may be shaped by a constellation of actors and factors.
Secondly, they consider the complexity of organisational strategy. Focused operational strategies concentrate on a highly specific task or intervention – such as providing ambulance service to transport patients. This task alone can often not be reasonably associated with the achievement of a distinct social goal, but it plays an important part in achieving social change, alongside other interventions. Organisations that provide an integrated series of interventions – such as an integrated suite of healthcare solutions- are instead considered to have a complex operational strategy.
The paper maps these dimensions in a contingency framework, and links these areas to the types of measurement those organisations may reasonably pursue. Some of these findings are summarised in this table:
Theory of Change
|Institutional Results||Ecosystem Results|
|Measure outputs and influence||Measure outcomes and impacts|
|e.g. changing societal norms||e.g. economic development|
|Niche Results||Integrated Results|
|Measure inputs, activities and outputs||Measure aggregate outputs and outcomes|
|e.g. basic and emergency services||e.g. service delivery|
Ebrahim and Rangan use this framework to suggest organisations operating in different quadrants of this model should be trying to measure their impact in different ways. For example, those in the niche quadrant – with a linear theory of change, with a narrowly focused organisational strategy – should focus their measurement efforts on inputs, activities and outputs.
Importantly, this framework suggests that only under the limited set of circumstances known as ecosystem results (complex theory of change; complex organisational strategy) should organisations seek to measure impact. This conclusion is qualified, however, by the concern that the organisation must control the results – that is, it cannot claim results that it is not sure it was responsible for.
Dividing the diversity and complexity of the social purpose sector into four distinct segments is, of course, an oversimplification. The authors acknowledge that organisations may not fit neatly into any of these quadrants, or that activities of any organisation may stretch across multiple areas. Nonetheless, this paper injects rationality into the debate, and encourages deeper consideration of the reality of social purpose organisations and their strategies for achieving social good. This article also intersects with the important issue of proportionality in social impact measurement: that the depth, complexity and resource demands of any social impact measurement should correspond with the depth, complexity and resources of an organisation. This approach places impact measurement in a cohesive conceptual framework, and at the same time allows scope for organisations to choose tools and techniques that suit their own needs and those of their funders. Meeting the needs of both is critical to building an effective and sustainable social marketplace.
n.b. For publicly-available discussion of these issues by the same authors, consider the following: