In the Impact Now series, Alexa explores impact measurement methods.
One of my main goals in starting Novel Hand was (and is) to explore how to know that our efforts to do good are actually creating change. How can I know that when I volunteer at a certain nonprofit, donate to support a movement, or dedicate my career to a cause, I’m having a real impact?
To that end, I’ve been exploring specific issues like financial inclusion and the justice system. But I want to take a step back and look at how I actually assess impact.
In this series, I’ll look at several impact evaluation methods and apply each to a cause that I’m passionate about. While the theoretical and quantitative side of impact evaluation isn’t the most exciting thing you’ll read this week, I think it’s more than exciting that evaluating impact can help us to understand what actually moves the needle in terms of sustainable and equitable change. By understanding outcomes, we can multiply our impact and do more good.
What is the Impact Management Project?
To my last point, I will acknowledge that “Impact Management Project” is not a fascinating name for an impact evaluation framework, or for anything for that matter. But stick with me here.
The Impact Management Project (IMP) is a global forum on measuring, reporting and managing impact. Over 2,000 organizations, from to Bank of America and Barclays, share best practices for impact measurement. Sixteen organizations, including B Lab (the group that certifies B Corporations) and the United Nations Development Program, set standards and coordinate to report impacts on sustainability.
Their framework allows organizations to measure both positive and negative impacts on people and planet. According to the IMP website:
“Impact management is the ongoing practice of measuring, assessing and improving impacts on sustainability issues. It is relevant for enterprises and investors who want to manage environmental, social and governance (ESG) risks, as well as those who also want to contribute positively to global goals.”
Businesses, non-governmental organizations, and every organization in-between can use this framework to assess- and improve- their impacts.
A Shared Understanding of Impact: Five Dimensions
IMP uses a set of “impact management norms,” the shared understanding of impact of an outcome amongst its practitioners.
Impact is defined as follows:
“Impact is a change in an outcome caused by an organization. An impact can be positive or negative, intended or unintended.”
To understand this framework, I’ll use the example of a social enterprise restaurant that employs people transitioning out of homelessness. We’ll call it “Novel Cafe.”
IMP uses five dimensions to measure impact.
WHAT
First, IMP looks at the outcome, or the “what”. Specifically, one might consider whether the outcome
- Is positive or negative, intended or unintended
- Meets the needs of the stakeholders
- Surpasses a nationally or internationally-recognized threshold
- Maps to the Sustainable Development Goals and associated targets
Our social enterprise intends to create positive impact for those experiencing homelessness by providing them with steady employment. This meets their need of employment. The employer might also meet other needs of its employees, such as a housing program or healthcare. This employment should meet the minimum wage and living wage standards. This program coincides with SDG 1: No Poverty and SDG 8: Decent Work and Economic Growth.
WHO
Next, this framework considers the stakeholders who are affected by an outcome. This includes who the stakeholder is, where they are located, how much of the outcome they had experienced before the intervention or interacted with the enterprise, and the characteristics of the stakeholder(s).
Novel Cafe employs those transitioning out of homelessness in the Nashville metropolitan area. Before this program, the employees were not employed, so the outcome has been significant; they hadn’t experienced this intervention prior to working at Novel Cafe. The stakeholders are adults, and may have specific characteristics as determined by the program.
HOW MUCH
This impact dimension measures “how much” or how significant the outcome is. Specifically, three components are critical:
- Scale: the number of people experiencing the outcome
- Depth: the degree of change experienced by the stakeholder
- Duration: the time period for which the stakeholder experiences the outcome
It likely has a staff of 20 full- and part-time employees. The degree of change has been substantial– many employees likely went from being unemployed for several years to having a full-time job. The employment program at Novel Cafe might be a three-year rotational program, allowing the stakeholders to work in several parts of the company and receive job skills training before ‘graduating’ from the program.
CONTRIBUTION
Next, IMP considers the contribution of the intervention or enterprise. Would the outcome have happened without this action or program? What would have happened otherwise?
Two components are critical: depth and duration. Depth is the “estimated degree of change that would have otherwise happened” and duration is the “estimated duration that the outcome would have otherwise endured.”
Novel Cafe’s contribution seems to be significant. Without this employment opportunity, it was likely difficult for the stakeholders to secure a full-time job. Without this opportunity, they would have continued to experience homelessness.
RISK
The final dimension assesses “the likelihood that impact will be different than expected, and that the difference will be material from the perspective of people or the planet who experience impact.” Risk assessment is a critical part of business, and risk assessment within impact is no different. To assess risk of impact, enterprises look at the type of risk, the level of impact risk, and mitigation strategy to reduce that risk.
One potential risk is that with the goal of high employment outcomes, Novel Cafe might hire those with the highest likelihood of succeeding in employment. As a result, the Cafe might hire the employees with the highest skills and therefore would not be helping those who need it most. IMP would also assess how likely this risk is.
Understanding the impact of this employment model allows Novel Cafe to assess how much good it is actually doing. Our Cafe can assess where there is room for growth and can compare its impact with those of other social enterprises, government programs, or nonprofit interventions that seek to provide avenues out of homelessness. Social enterprises like Unlocked and Thistle Farms use similar employment models.
We’ve only looked at one impact of Novel Cafe– the employment that it provides to those experiencing homelessnes. Our social enterprise also has environmental impacts as a result of its food and the building that it uses. And there are other social and economic impacts of Novel Cafe.
IMP is just one method that an organization can use to assess its impact. In the next part of the Impact Now series, we’ll look at Theory of Change.
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