We are in the fifth week of the Social Impact Accelerator, with impact management being a key component within the first few weeks. But what exactly does impact management mean? Why is it important? And how do you get started? We dove deep into these questions with each social entrepreneur, and have answered each of them in this blog post.
Understanding Impact Management
Impact Management is the process of measuring and managing the creation of social and environmental impact in order to maximize and optimize it. It includes and is based on your impact strategy.
Why Impact Management is Important
Having an impact management framework in place will help you to make decisions in line with your mission and increase effectiveness, accountability and transparency. It also allows you to clearly communicate your impact which in turn attracts funding from aligned partners. This is true for any company.
It is not only beneficial to your organization, but it’s also becoming a more inquired practice in the market. More and more companies are tracking their overall contribution to the UN Sustainable Development Goals (SDGs.) This makes it crucial for impact investors and funders to have a clear understanding of your impact strategy and measurements so they can make proper comparisons and objective decisions.
Where to start
The Impact Management Project (IMP) provides a forum for building global consensus on how to measure, manage and report impacts on sustainability. It has a community to share best practices and a network that aims to provide complete standards for measurement.
With the help of this community, the IMP reached consensus that impact can be looked at and measured across five dimensions.
- What tells us the outcomes the organisation is contributing to and how important the outcomes are to beneficiaries
- Who tells us which beneficiaries are experiencing the outcome and how underserved they were prior to engaging with the company
- How much tells us how many stakeholders experience the outcome, what degree of change they experience, and for how long they experience the outcome
- Contribution tells us whether a company’s efforts resulted in outcomes that were likely better than what would have occurred otherwise
- Risk tells us the likelihood that the impact will be different than expected
Set up your framework
Below is a list of the steps to take in order to set up your impact management framework.
- Develop your Theory of Change which serves as a backbone for the following steps
- Define impact targets
- Conduct a stakeholder analysis
- Choose indicators
- Analyse, value and verify
- Report on your impact
Theory of Change & Impact Targets
First, begin with the Theory of Change. The Theory of Change (TOC) is a widely accepted framework to build an effective impact strategy and derive impact targets.
You should start from the end by filling in the long term or indirect impact you hope to achieve. Then, work backwards by adding the intermediate outcomes that have a direct effect from your activities. If it is helpful for your organisation, you can connect these outcomes to the IMP framework with this template.
Make sure to check what long term impacts these outcomes contribute to, and make sure that they are aligned.
Your stakeholder analysis should identify your beneficiaries, customers, partners, communities, and anyone else who is involved or affected by your activities, both directly or indirectly. It is very important to communicate with selected stakeholders and understand the potential impact you have on all stakeholders. After mapping out the stakeholders, start to prioritize which one’s have a high relevance to your activities and therefore need to be considered in your impact management.
Your indicators should be chosen based on the assumptions you are making. In your TOC, you will make assumptions as you move from your outputs to outcomes, and your outcomes to your impact. You should set 1-2 indicators for each output or outcome, and they should all be related to your long term impact.
How to choose suitable indicators?
You can create your own indicators, or use standardized ones. The IRIS Catalog of Metrics provide metrics that allow you to track your contribution towards the SDGs. You should only use these metrics if it makes sense for your company. Sopact also has useful information regarding social impact metrics, and Guidestaris useful for non-profit organisations.
Analyse, value, verify & report
After having collected data you need to analyse it with regards to impact targets, verify and value it. Was your impact in line with your expectations? Would the impact have happened anyway without your activities?
Finally it’s important to report your impact to your stakeholders and the public. Does your data include insights, decisions and future recommendations? It should also align with your main stakeholders and your overall purpose. Providing case studies and telling stories will also help stakeholders to better understand your impact.
Examples of impact reports :
- Nebenan: https://impact.nebenan.de/pdf/nebenan_de_Impact_Report_2019.pdf
- Reach for Change: https://reachforchange.org/static/pdf/sir-2018.pdf
Developing your impact management can seem daunting at first, but with time and practice it will become clearer. Your Theory of Change and the components within it are likely to change and develop over time, which is normal. We will leave you with this final quote from Sarah Linder, Managing Partner & Impact Management Expert at SEIF.
“Developing your Impact Strategy should not be a burden, but should support you on the way to achieve more impact. Start simple.”
Other useful resources:
- SOPACT Academy: https://www.sopact.com/social-impact-courses
- Impact Management Project: https://impactmanagementproject.com
- Social Value: https://socialvalueint.org/
- Acumen Academy: https://acumen.org/lean-data/
- IRIS: https://iris.thegiin.org
- Guidestar: https://www.guidestar.org/