What Is Impact Measurement? A Simple Definition

Impact measurement stands for the process of quantitatively and qualitatively evaluating the impacts of an organization.

Different Perspectives On What Impact Measurement Means

Impact measurement is a concept that can be used for many purposes, at different stages of development initiatives or programs. What impact means slight changes according to the entity and the context – it depends on who says what. The Method Lab stands out 5 main different ways of looking at impact measurement:

1 – Definition Of Impact Measurement From A Counterfactual Analysis

This means measuring impact by making a comparison between what would have happened differently in the absence of a certain output and estimating a cause-effect relationship. Ultimately, this way of looking at impact sees it as the extent to which an action has a particular effect. Note that due to the complexity of certain outcomes, it’s not always intuitive to distinguish the output that created it.

2 – Assessing Impact From A Results Chain Perspective

Under this perspective, impact measurement is seen from a perspective of outputs (the direct effects of an action/intervention) and outcomes (short and mid-term changes). This view usually allows for a visual map with multiple chains – a characteristic of the theory of change methodology. Moreover, different spheres of influence can also be identified: from the sphere of control, to direct and indirect influence. Impact seats in the sphere of indirect influence, which means it falls beyond any specific development program.

3 – Impact Measurement, A Definition Without Any Borders

The OECD-DAC defines impact as a <positive and negative, primary and secondary long-term effects produced by a development intervention, directly or indirectly, intended or unintended>. This is a broad definition of impact, where outputs (actions – either isolated or part of a program) have a core set of goals meant to be fulfilled that end up encompassing multiple side effects.

4 – Impact Appraisal In A Sustainability Context

Impact measurement can also be seen as a contribution to the achievement of the SDGs (sustainable development goals). This means having positive effects on the economy, the environment, and social wellbeing via the contribution to the UN’s 17 goals until 2030: from ending poverty to protecting life underwater or creating resilient cities. Therefore, actions and programs aiming to have an impact around this area need to be framed regarding how they are contributing in favor of social and/or environmental goals.

5 – Definition Of Impact: A Colloquial Perspective

Put plain, impact can also be used as a way of referring to the general effect of something. “Getting at work by bike had a huge impact on my well-being”. Or “my dad getting fired had a huge impact on our family” are some examples of these, usually non-fact based and not accurately measured, judgments of impact.

Measuring Impact: An Often Expensive Task

Measuring impact can be a hard and expensive process. Prioritizing which outputs (activities) to measure, how to measure them, which tools to use, how to analyze the data collected, how to interpret it correctly or whom share it with and under which content format. Plus, social issues can be hard to address and human behaviors can be painful to predict and to objectively assess too.

However, the good news is that as organizations measure their impact and monitor it, the information collected will allow for a constant evaluation of progress and adjustments can be done more frequently and effectively.

Impact Measurement, ESG, And The Sustainable Development Goals

ESG (a criterion used to evaluate businesses’ environmental, social governance) overlaps with impact measurement. By having information about ESG criteria, investors are able to identify companies that are well managed and more likely to pose fewer risks to them and to other stakeholders. The same happens with the Sustainable Development Goals (SDGs) methodology or the Global Reporting Initiative Framework – we will go deeper into these right away.

Example Of A Process Of Impact Measurement

  • 1. Define the change desired (vision) and how to create it (mission). The cause-effect relationship becomes more obvious and clear if a theory of change methodology is followed;
  • 2. Create your theory of change diagram and understand what activities, resources, partnerships or programs need to take place in order to make your vision come true. For this process, focus first on defining the organization’s impact vision and which outcomes encompass it. Start going backward in the matrix and define what outputs will result in your desired outcomes. Then create define what resources, partnerships, stakeholders the organization needs.
  • 3. Understand which of the ouputs of your matrix are the most important to measure (taking into consideration your resources – tools, time, location) and select the best indicators so measure each output. You can choose standard indicators such as IRIS+, GRI or SASB, allowing stakeholders to better compare your impact with other organization’s impacts – as they share the same labels. You can also pick your own indicators. And you can go for both as well.
  • 4. Think of the best methods (from surveys to counting subscriptions or attendances) of measuring your indicators and choose the metrics you will use to collect data.
  • 5. Review the information collected against your key goals and assess whether your data (which represents in a qualitative way your activities/actions/programs, as an intermediate step to your long term impact vision) is in line with the impact you want to create. As a consequence, review your work, reflect on what else you need to do, what needs to change and share the results you got (combining them with the SDGs framework) with the right audience.
  • 6. Keep improving your theory of change model and measuring the intermediate outcomes that altogether will further allow your goals, vision and desired impact to come true.

Impact Measurement: Defining Indicators And Metrics

Some important guidelines to keep in mind regarding the quality of the indicators your organization are:

  • Combining standard indicators with internal impact metrics and operational indicators;
  • Set assumptions in case your indicators they aren’t definitive;
  • Try to have a balanced combination of quantitative and qualitative indicators;
  • Exaggerate when specifying what your metrics truly mean to you and leave no room for different interpretations – you can do so by using definitions, linking broader relevant information or giving more context;
  • Combine the data sources you’ve collected with your impact metrics, which allows measuring the progress of key indicators.

Who Are The Stakeholders Interested In Social Impact Measurement?

  • Impact investors and finance directors: they want to make better capital allocation decisions by understanding how social impact affects can affect the ROI;
  • NGOs: who want to understand what contribution they can have to social causes at a global and/or local level;
  • Corporate social responsibility (CSR) leaders: who want to measure the social impact of their existing programs and operations;
  • Communications & marketing departments: whose staff wants to share the organization’s social impact to all interested stakeholders;
  • Policymakers: who want to quantify the expected changes in society as they evaluate and pick the most interesting projects to get public funding;
  • Real estates: looking to assess the potential impact of future investments in specific places.
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