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Mar 22, 2017

How Important is Measuring Impact?

I just finished a great mind meld with the folks from TechGrowth Ohio at Ohio University Voinovich School and Measurement Resources Company.  We were comparing notes on what we have learned about impact measurement and its relative invisibility in social enterprise investment and grant-making.

Impact measurement has the potential to be a powerful marketing tool for social enterprises and nonprofits as they work to attract customers, investors, and donors.  But recent interviews conducted for us by a dedicated team of executives at Cardinal Health reveal a surprising preference for stories rather than numbers as validation of the “social” value of social enterprises and nonprofits.

Why?  Our hypothesis:  stories can work without numbers; numbers cannot work without stories; stories are more credible with numbers.

A lot of work has been done on impact measurement methodologies by the governments of England and Scotland.  It is very sophisticated, perhaps too sophisticated.  A policy analyst may thrive on sophisticated methodologies.  But we were surprised in Cardinal Health’s work to find that investors and corporate donors were not demanding impact measures.  They were demanding stories as validation of social impact.

Research on why people give has also revealed that the more people “research” a cause or nonprofit, the less likely they are to give.  Perhaps numbers take the joy out of many of us!

A sophisticated social return on investment (SROI) can be too abstract: what does a 200% SROI tell me about how the needle is being moved by social impact?  It certainly is an impressive number to “justify” investing in social impact.  But the Cardinal team’s findings suggest that impressive doesn’t validate.

I think impact measurement needs to be practical, where I define practical as a demonstration of the value proposition of a social enterprise or nonprofit.  It needs to be tangible, and clearly connecting a problem with progress on a solution.

20% SROI or 25 tons of construction materials diverted from landfills?

150% SROI or 92,000 meals provided to the hungry?

12% SROI or housing and solid work experience for four ex-felons?

I go with the second measure over a SROI percentage, but combining these measures with a story would be even better.

Go look at the social impact profiles in our social enterprise directory and email what stories you would like added to make you want to buy from or invest in these social enterprises.

Want to learn more about social enterprise and how it uses business to create positive change in our community?  Follow our blogtweetsFacebook, and webpage.

Allen Proctor, President & CEO

Center for Social Enterprise Development