Everyone involved in social enterprise agrees that demonstrating your impact is important, but not many are actually doing it. Is this simply because it can't be done?
There are many approaches to measuring social impact. The government's impact measurement framework of choice, Social Return On Investment (SROI), is defined by nef as: "An analytic tool for measuring and accounting for a much broader concept of value, taking into account social, economic and environmental factors."
SROI is used to come up with quantifiable figures for the social value generated by products and services. For example: "£1 invested in high-quality residential care for children generates a social return of between £4 and £6.10."
"Whilst the principles behind SROI are sound, for many SROI is an extremely ambitious goal," concluded a Demos report on this topic. "There ought to be a more achievable social value measurement target set for the third sector as a whole."
Although organisations who obtained funding by SEIF were required to use SROI to measure their social impact, most had other ideas. The Department of Health's Social Enterprise Investment Fund (SEIF) is a prominent example of organisations not using SROI in large numbers.
By the time the fund was evaluated, only 30% of organisations funded by SEIF were using SROI. "Whilst some organisations were aware that SROI was part of SEIF funding requirements, their interest in it 'fizzled out'. This was often due to the practical constraints of undertaking SROI, including time, resources and money constraints." Explained researchers from Third Sector Research Centre (TSRC).
A previous TSRC report highlighted the cost issues, noting that: "Gordon (2009) found that smaller SROI projects would cost between £12-15,000 each with larger ones rising to £40,000. Lyon et al. (2010) found SROI studies ranging in size from £4,000 to several hundreds of thousands of pounds."
It's clear that measuring social impact, whether using SROI or one of the other approaches available, can be expensive and time consuming. However this is not a good reason to avoid doing it.
The SROI Network, a group of SROI practitioners, recently published SROI, Myths and Challenges – as an attempt to tackle "a variety of misunderstandings" about their approach.
While much of the document is taken up with responses to the objections of think tank experts and academics, it also provides some useful hints as to what SROI is actually for: "If you get a group of people to consider what questions they would need to ask in order to know how much of a difference they have made, they generally come up with things like: who has been affected or changed? What were the effects or changes? How did we decide which effects or changes to account for (and so manage)? How much change occurred that can be attributed to our activities? What common measure will we use in order to aggregate the difference and so start discussions about how we can make more of a difference?"
Whether or not your social enterprise is in a position to measure its impact using SROI, or publish an annual social impact report such as those carried out by HCT Group – you should work at what you're trying to do and take time to decide how you'll judge your social success.
These range from Level 1, where an organisation able to explain what their product or service does, and provide an explanation to why it might have a positive social impact - to Level 5 where a product or service can deliver a proven social impact at scale, while remaining financially viable.
Different approaches will be suitable for different social enterprises, but there's no excuse for not measuring your impact in some way. The growth in social investment and the introduction of the Public Services (Social Value) Act means that some social enterprises will be under increasing pressure to demonstrate their social impact to other funders and commissioners, but that's only part of it.
The key issue is that, as social enterprises, we need to know what we're trying to do and whether it's working. If we, as people, don't have the time and resources to work out what we're doing and how it's making the world a better place, we probably don't have the time and resources to run an organisation at all.