Theory of Change, Impact Management Project or KPIs are foundation but Impact Metrics is the glue to data collection and reporting
Impact Metrics are critical in defining an organization or program change that you are seeking. They are also crucial for communicating progress to the funders. Often standard metrics should be used to describe if you are making actual progress towards impact statement. For example, impact investors often use IRIS metrics; corporations use GRI or SASB to designate materiality; charity often uses Guidestar, and so on.
While standard indicators are often useful, they are not sufficient. Often many internal impact metrics, operational indicators need to be complimented before you complete a selection. These metrics lead to the right impact measurement and impact management of your portfolio.
Quality of indicators
While Indicators are useful, the Quality of indicators is even more critical.
- Are they measurable?
- Are they definitive?
- Are you going to have the right balance between quantitative vs. qualitative indicators so that you can understand causality or correlation?
Context of Indicators
While impact metrics are defined from one particular lens, it may mean different things to different partners using the same metrics. For example, the number of low-income stakeholders may mean a different thing in different parts of the world.
- Hence, it is essential to specify definitions, sample responses, help link with detailed explanations on how to calculate low-income stakeholders.
- Is it $2.0? Which is most common in low-income wages is $2/day in developing country and $15/hr in San Francisco?
- Which standard is most appropriate for reporting results?
By definition, a metric is a quantifiable measure that is used to assess the result of a specific process. Selecting the right metrics can be hard, so many organizations end up measuring the wrong things, which results in a misrepresentation of their impact.
By measuring what matters, your organization will gain credibility with funders, donors, and the public. Not to mention, all the insights you will gather to plan for potential risks and make well-informed decisions.
There are two ways to define your metrics - selecting them from well-known standards or creating bespoke metrics.
First, let’s dive into the standard metrics. Do you know how to select the right standard for you? Try the following guidelines:
What changes are my programs or projects generating?
For example, if your impact strategy claims to be creating quality jobs, ask yourself if the jobs generated are really “quality”. It’s not enough to measure how many new jobs you are creating. Are the jobs paying enough to have a quality life? Do employers offer relevant benefits like healthcare? In this example, you have to define what you consider a quality job in the context of your beneficiaries.
Who wants to know the result of my programs or projects?
Are you collecting data insights for external audiences such as your beneficiaries, funders, and the public? Or, is it for your internal audiences such as staff and volunteers? Every one of them may like to know the result of different metrics.
Should my metrics be quantitative or qualitative?
I’ll give you the answer to this one: both. Numbers are helpful to show improvement over time and see trends, but they are not enough to tell a complete story. Supplementing quality data with stories, images, and testimonials helps build credibility.
Should I measure outputs or outcomes?
Remember that impact refers to a systemic change, which is hard to measure. However, outcome metrics can serve as an indicator of the change happening when analyzed over time. You will find it easy to select activity and output metrics, but always make sure to include a few relevant outcome metrics as well.
Do you have the financial and human resources to collect the metrics results?
While selecting your metrics, don’t forget to ask if your organization has the necessary budget and capacity to collect the results for those metrics. Remember, we are not selecting metrics for the sake of it; we want to measure what matters and be able to back up the results with reliable data.
- Now, as I mentioned before, different standard metrics have been defined by organizations like the Global Impact Investment Network and the United Nations. These organizations dedicate resources to research and refinement of these metrics, so you have a reliable source of information.
- So, what the different standards out there, and who uses them?
Different sectors tend to use different standards.
First, you must know about the United Nations 17 Sustainable Development Goals, commonly known as S-D-G. The SDG has defined indicators for poverty alleviation, education, health, environmental care, etc., and are the result of years of international negotiation.
- IRIS metrics by the Global Impact Investors Network (GIIN) are designed to measure the social, environmental, and financial performance of impact investments.
- Guidestar is a gold standard for nonprofits in the US.
- Global Reporting Initiative (GRI), UNEP Sustainability Metrics, and SASB are focused on sustainable production and governance.
Now you may ask, what if these standard metrics fail to measure some of my specific outcomes?
You can always design your bespoke outcome or output metrics, but to do effectively, we recommend you involve an impact measurement expert to make sure you indeed measure what matters.
So, to recap:
To make sure that you are selecting or using the right metrics, ask yourself:
- What changes are my programs or projects generating?
- Who wants to know the result of my programs or projects?
- Should my metrics be quantitative or qualitative?
- Should I measure outputs or outcomes?
- Do you have the financial and human resources to collect the metrics results?
You can always start by selecting a group of standard metrics that are outcome and output-oriented and then make modifications to fit your context. If these metrics don’t fulfill all of your needs, you can complement with relevant custom metrics.
How to select effective impact metrics?
In the last video, Impact Metrics - Measure What Matters, Chris Gains gave us the best practices choosing impact metrics. While the quality of metrics is essential, organizations do not need to start from scratch. Many organizations that we have worked take months or even years to find the right kind of impact metrics. Often internal or external alignment reduces the progress of choosing the right impact metrics.
Whether you are looking for charity metrics, impact investment metrics, CSR metrics, sustainability metrics, or international development metrics, chances are you will find a leading standard that aligns with your needs. We have reached a point where we not only well-defined impact metrics today, but now we have impact theme or SDG aligned core metrics getting defined for impact, sustainability, and other segments.
In this video, I will give a walkthrough through Impact Cloud and demonstrate how to select the impact metrics in a short time. Impact Metrics is not just a metrics description, but it is a foundation to collect results of program, product, or services.
You will see that high-quality results collection and impact scorecard or performance measurement starts with a well-designed impact metrics.
So today, in this session, I will give you a walkthrough of the impact metrics selection process. Impact Cloud has over 4000 impact metrics and continuously growing. So, let’s look at various examples,
Impact Metrics Practical Example
How to align the impact metrics with theory of change
How to choose standard impact metrics