Depending on the maturity or your organization, size, resources, etc. there are different ways to start getting involved in this outcome-oriented Impact Measurement & Management.
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- DEFINE IMPACT STRATEGY
Many organizations are ready to start thinking about an Impact Strategy, and whether you are a funder or an organization working on the field, you might want to align to multiple frameworks, such as IRIS, Impact Management Project, and Sustainable Development Goals.
You can decide to use a Theory of Change model, a Logic Framework, or the 5 Dimensions of Impact. What is really relevant is to be clear about the Outcomes or Effects, meaning, what is changing in the community because of your intervention.
Primary User: Defining a strategy is the perfect option if your organization has been around for some time but has only collected operational or financial data so far. For example, loan data. It also works well for young social enterprises and new funds.
Reason: Defining the impact strategy will dictate how your organization collects and aggregates data. Who are your stakeholders? Maybe grantees/investees, or maybe the end beneficiaries. What are the KPIs that we need to observe over time?
Benefit: Having a strategy shows funders and donors that you know what you’re working to accomplish and gives them a way to monitor how far are you of your community improvement goals.
Challenges: You have to be ready to start allocating some budget towards data collection and reporting tools. Whether you collect data from your grantees/investees or from your end beneficiaries, don’t underestimate the effort that goes into collecting high quality outcome results.
- PROGRAMMATIC REPORTING
Primary User: Organizations that may have collected data on stakeholders such as demography, which includes race, sex, locality, religion, etc and or financial data. If your organization doesn’t have the resources to undertake a completely new Impact Strategy, you can still use the data collected currently to derive some insights into your program’s performance.
Reason: You have to start somewhere, and your funders and donors will appreciate the fact that you are at least making an effort to understand who are your stakeholders and what direct benefits they are receiving from your services.
Benefit: You will get a basic understanding of your beneficiaries and what should be measured as outcomes in the future when your organization is ready.
Challenges: You might require expert help to figure out a way to transform programmatic or output data into relevant KPIs.
- STAKEHOLDER VOICE
Primary User: If your organization has experience collecting quantitative data, you might want to grow into collecting other types of data as well.
Reason: It’s very important to understand if our stakeholders have the same perception of our services that we think they have from the quantitative data we collect. Sometimes we find surprises.
Benefit: Collecting this kind of data helps you understand what they are saying, thinking, feeling about the services that you are providing them. At the end, numbers don’t mean anything if we are not able to alleviate the problem we’re addressing.
Challenges: This requires a well thought-through questions that will really give valuable information, which again might require some expert help. Also, you need a good balance between qualitative and quantitative questions, stories from the field, or Asset Manager annotations to fully understand the context.
- PERFORMANCE IMPROVEMENT
Primary User: Incubators and accelerators that have a short term relationship with the underlying entrepreneurs.
Reason: In this case, it might be hard to define outcome metrics, since the contact happens for such a short period of time and in a very early stage of the entrepreneurs.
Benefit: Measuring the performance of the incubator or accelerator in terms of how useful their intervention is to get funding, to acquire new business skills, or to get in contact with advisors, might be enough at this stage.
Challenges: It still requires well-defined metrics that will be applied at the beginning of the intervention as a baseline and then at the end or 6 months after the intervention is over to understand what improved for the community development organization during that time.
- OUTCOME IMPROVEMENT
Primary User: Organizations that work directly with the stakeholders and collect data from them to measure outcome performance overtime.
Reason: It is important to understand the impact we have on a group of people, as well as pointers on how the impact is experienced by individuals, is very helpful in some cases. For instance, using averages to derive understanding on impact is dangerous because its can skew the result toward the positive.
Benefit: While cohort analysis helps us in understanding the overall impact the services had on the people, individual performance gives us a deeper understanding of how the analysis may be skewed when the impact is seen only from the perspective of the cohort.
Challenges: This is not simple. A thorough analysis process requires knowledge on sophisticated tools and methodologies that lets you learn from the data you may have collected. A lack of such tools and methodologies can quickly discourage an organization from thinking in that direction altogether.
- IMPACT MANAGEMENT PROJECT
Primary User: Organizations, large and small, looking at ways to start their Impact management journey. Dutch government wants to create jobs in coconut and palm oil industry in East Africa. For new impact investments to flow, the industry expects impact evidence. One of the organizations we are working with intends to adopt IMP 5 dimensions to holistically collect and report on impact evidence to attract these investments and help the farmers to establish a sustainable business around coconut and palm oil business.
Reason: Virtually every successful organization, primarily motivated by high financial outcome, puts a lot of effort behind understanding how their product benefits its stakeholders. The same level of rigor is ideal for Impact driven organizations as well. To be successful, learning about is no longer optional.
Benefit: This methodology helps the organization to concentrate on the stakeholders and Impact it has on them rather than thinking about how to measure the impact they have on them.
Challenges: It may seem complex for an organization to start measuring Impact. However, they could now get started in a seamless manner by following IMP 5 dimensions of impact.
- SOCIAL RETURN ON INVESTMENT
Primary User: This is a good option for more mature organizations that already have a robust stakeholder data collection.
In the case of Asset Managers, it only makes sense if you are enabling your entrepreneurs or grantees to collect high quality data, aggregate it, analyze it, and perform all the calculations in a not so overwhelming way. Also, it’s mainly used to compare investments that are completely different but you still want to compare the “amount of impact produced by each of them”
In the case of organizations working directly with stakeholders, in only makes sense if you have the resources to define high quality financial proxies that are relevant for your geography.
Benefit: It gives a financial valuation of the impact generated by an organization, which is easy to understand and compare to other very different organizations.
Challenges: The process to get to that valuation is very time consuming and requires a person with enough knowledge of the SROI methodology defined by Social Value International.
- AGGREGATING RESULTS FROM PARTNERS
Primary User: Asset Manager and Asset Owners
Reason: For these kind of organizations, it can be hard to create a strategy that involves data collection directly from the end beneficiaries or even defining outcome metrics. It is important to understand the level of maturity of their underlying organizations. If we’re talking about entrepreneurs with just a few years in the Market, it is possible to start with some output metrics that can tell us at a high-level the number of jobs created and gender distribution in management positions, for example. If we are talking about organizations with more experience in data collection, you can jointly create a strategy by Impact Theme that will have the 3 or 4 basic metrics per theme to understand the portfolio impact.
Benefit: Collecting this results directly from the partners ensures that they also have a process in place to obtain this data from their communities.
Challenges: The level of granularity of the metrics will depend on the level of maturity of the underlying organizations and the relationship with the Asset Manager/Owner.