1/5/2023
Measuring Social Impact
SOCIAL IMPACT
the ability to measure and
communicate the impact of a
venture’s efforts still remains a
significant challenge for most social
firms
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Background
Social entrepreneurs often have difficulty coming up with a precise and
measurable indicator that can accurately represent the amount of social
return generated by their ventures
(Saul, 2004; Trelstad, 2008)
Measuring ROI of Social Venture
how should we measure the “return on investment” of better health,
cleaner air and water, families having nourishing food on their tables, or
children receiving education they would not have had access to
otherwise? As expressed by Stannard-Stockton (2007),
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Challenges in measuring social impact
• lack of maturity in social program evaluation
Many important benefits that occur as a result of social programs are not monetized and the
dollar values of outcomes do not consistently capture the full range of societal benefits or
costs, thus resulting in a variety of errors in the final answers
• The variety of purposes that organizations have for conducting these
analyses
lack of consensus about how one should use cost-related impact data to make certain
investment decisions
THE BENEFITS OF LEARNING HOW TO MEASURE SOCIAL IMPACT
• Clear picture of the measurable results of the organization’s work
• able to make a stronger case to your stakeholders that your
organization is achieving its mission
• identify themselves and the organization with the cutting edge of
the industry
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STEPS TO MEASURING SOCIAL IMPACT
• 1. Define Your Social Value Proposition (SVP)
• 2. Quantify Your Social Value
• 3. Monetize Your Social Value
1. Define Your Social Value Proposition (SVP)
• SVP is a brief description of the social venture’s organization, the value it provides, and
the impact it can have on individuals and society
• 1st step – communicate social venture’s stakeholders
■ constituents or beneficiaries of your work;
■ board members;
■ key leadership of your organization;
■ key partners;
■ affiliates or chapter leaders;
■ government officials;
■ individual donors;
■ institutional funders
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1. Define Your Social Value Proposition (SVP)
the types of questions the social entrepreneur will want to ask to different
stakeholders include:
• How would you define success for the work we do?
• What outcomes do you value most about our work?
• Do you think we were successful last year? If so, why? Or if not, why not?
• What’s the ultimate impact that you value from our work? For example, in five
years’ time, how will the world look different if we are successful?
• What do you think the project needs to accomplish over the next one to three
years to achieve this longer term impact?
• What data or evidence would you need to see that would convince you that our
work has been successful?
2. Quantify Your Social Value
• choose the top three or four measurable social indicators that are
aligned with the conversation and interests of the stakeholder
E.g.
■ number of solar panels installed per fiscal year;
■ percentage of panels installed that replace other forms of energy
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3. Monetize Your Social Value
• reason for monetizing is that it not only increases the credibility of the
social venture and its mission, but also establishes metrics that can be
used to evaluate a venture’s effectiveness in achieving the desired
social impact
• facilitating planning and communication with socially minded investors
and stimulating short-term and long-term capital flow
3. Monetize Your Social Value
Integrated approaches
1. Cost-Effectiveness Analysis
2. Cost–Benefit Analysis
3. REDF’s Social Return on Investment (SROI)
4. The Robin Hood Foundation’s Benefit–Cost Ratio
5. The Acumen Fund’s Best Available Charitable Option (BACO) Ratio
6. The William and Flora Hewlett Foundation’s Expected Return (ER)
7. The Center for High Impact Philanthropy’s (CHIP) Cost per Impact
8. The Foundation Investment Bubble Chart