From dealflow to a lack of education, this week leaders in social finance addressed some of the key barriers preventing the UK market from flourishing. Last month Antony Bugg-Levine, the chair of the Global Impact Investing Network, told delegates at London’s Critical Mass conference that in the world of social finance there were “hypers, haters and […]Read More ›
Social Impact Measurement for Social Enterprises
Two University of Toronto graduates attempt to find the “silver bullet” of impact measurement across a broad portfolio, and discover the opportunities and challenges that exist to this elusive (and impossible) goal in the process.
In Ireland, this process is particularly crucial. Just beginning to emerge from the doubly devastating effects of the global recession and the demise of the “Celtic Tiger,” Irish government is currently placing a heavy emphasis on job creation and alternatives to traditional forms of employment and social impact. The impediments to this process are also more difficult. Ireland’s relatively small population and financial difficulties impact the nascence of the social impact field within the country, with its subsequent measurement lagging even further behind its development.
We were approached by Social Entrepreneurs Ireland, or SEI, as part of an innovation course we were taking with the Munk School of Global Affairs. SEI supports a diverse range of social entrepreneurs. Some dedicate the majority of their resources to improving the mental health of a small number of people, while others provide assistance to a much greater number of people by, for example, creating job resources or implementing creative writing programs in school. Some bring acute health care to rural populations, while others make activism more accessible through online engagement. Some entrepreneurs rally for systemic and policy change, and others provide support to particular groups, such as those who suffer from Parkinson’s or prisoners who have recently been released.
Seán Coughlan, the Chief Executive of SEI, presented us with a problem: how does one measure social impact across a broad portfolio of social entrepreneurs, using as many outcome-based metrics as possible, providing meaningful indicators that represent true impact from relatively new organizations, while still being short and easy-to-administer for busy change-makers?
We found that while an SROI (social return on investment) framework was the most comprehensive tool available for such a broad portfolio of organizations, it was prohibitively time-consuming and expensive for SEI’s purposes. After much research, we decided to base our framework – a questionnaire with several tiers for diverse impact – on B Analytics and IRIS, the impact reporting and investment standards catalogue. Although both of these metrics are designed for for-profit companies, they are the most comprehensive and globally standardized metrics available for impact measurements. We selected appropriate questions from these catalogues, changed them to better reflect SEI’s values and mandate, and added in questions as necessary, to ensure our framework captured the full breadth of impact taking place.
Currently, there are three “tiers” to the framework that has been developed: Core indicators, Sector-Specific Indicators, and Sub-Sector Indicators. ‘Core Indicators’ are questions that every organization must answer, regardless of their sector. This section has general questions, such as whether the organization engages with stakeholders for feedback, or tracks key performance metrics or indicators.
Recognizing that the organizations that SEI supports represent a diverse portfolio of enterprises that operate in different sectors, the second “tier” of questions is sector specific. As such, four key sectors for social enterprises have been identified: Health, Education, Community, and Empowerment. Dependent upon which of these four sectors an organization operates in, the entrepreneur will answer a different set of questions that is specifically tailored to that particular sector. Lastly, there are “Sub-Sector Indicators” for the health sector in particular, to capture the diversity in service providers in this area. The three sub-sectors under health are: mental health, chronic illness, and acute/emergency care.
Sub-cluster questions were not developed for the other sectors, as we felt that the questions in their current form reflect the impact that social enterprises could have.
For consistency purposes, all questions ask about numbers and events that have happened in the past 12 months. Also, wherever possible, our questionnaire also tries to qualify all indicators used. For example, the footnotes in the questionnaire provide definitions (mostly taken from the IRIS catalogue) of what it means to be a youth, short-term or long-term unemployed, or a disabled person.
Given that there is no standardized measurement tool for social enterprises that exists anywhere in the world, the model we have developed can be implemented to measure impact outside of the Irish context as well. The baselines and indicators are based strongly in IRIS and B Impact Assessments, giving the tool global credibility. Given that this is a new sector with emerging best practices, our tool can be built upon and improved to reflect the changing needs of the sector.
The ability to measure social impact means that service providers and governments have the ability to improve social outcomes in the future, which leads to a stronger social innovation sector, and improved societal outcomes. Also, since IRIS is a dynamic catalogue that accepts widely used third party indicators, there is the possibility that some of our indicators and questions could be added to IRIS in the future. This could mean that in the future, IRIS would not be aimed just towards for-profit entities, but also to social enterprises. With social enterprises become increasingly popular, this would be a great development for the social impact measurement sector.