Impact

The measurement of outcomes tracks the change experienced by beneficiaries. The measurement of impact, properly understood, counts these outcomes, and then makes the necessary adjustments for the context of change. These adjustments take account of deadweight (what would have happened anyway), displacement (negative effects taking place elsewhere as a result of the outcomes, and which offset them), attribution (the contribution of other factors to the outcomes), drop off (outcomes that are initially observed but do not sustain), and unintended consequences (other effects of the organisation’s activities). The organisation can only claim to have made a positive impact and created real change in so far as it exceeds the ongoing changes taking place within a dynamic context.

In making these adjustments, the organisation needs to decide how deep it wants to go into the analysis of the context of change. As discussed in the relevant section, the issues involved can be complex and lengthy, and it is up to the organisation, with oversight from the investor, to determine what is and what isn’t ultimately material to the adjustment. This sets the bounds of materiality. Effects that lie beyond are deemed not significant; effects that lie within are either calculated or estimated, and factored into the account. Once these have been adjusted for, the result is the impact that the organisation is claiming — the real change it can confidently say has come about as a result of its activities, and represents the net positive effect.

Social purpose organisations can find measuring their outcomes hard, and be reluctant to make adjustments that decrease the impact they are then able to claim. It can feel a little like adjusting for inflation and deducting tax when calculating real income growth. It is nevertheless necessary to confront these issues. Measuring change without ensuring: that the change is real; that it’s your change that you’re measuring; and that it’s not being offset by something else — can make the whole measurement exercise rather futile.

Once the necessary adjustments have been made, and an understanding of the impact arrived at, it is useful to relate the impact back to the original mission, and the problem the organisation sought to address. This serves as a check that there is “mission furtherment”, or meaningful progress being made. Impact is chiefly apparent as the direct impact on beneficiaries, and the wider impact on the community, the sector and society at large. There is also the investor impact, generated by the investor’s relationship with the organisation, and by the capital itself. This can be related back to the initial investment objectives, and the investor’s own mission.