Impact has a very broad definition and it is used with many different meanings. For the purpose of this module, impact is defined as the “significant and lasting changes in people’s lives, communities or ecosystems brought about by a given action or series of actions” (Roche, 1999). As for impact measurement refers to the process of analysing, calculating and monitoring the changes, either positive or negative, that result from a given intervention (for example of an initiative, program, project or organization).
In order to evidence its impact the venture must engage in impact measurement. A systematic approach to impact measurement enables the organization not only to communicate real social return to funders, investors and beneficiaries but also to maintain an informed position on what it is genuinely achieving and to plan its allocation of resources and grow accordingly. It is important to be open to learn with the process and identify what may need to change so that you are able to maximise impact and/or optimize the allocation of resources to the activities that generate the most value.
Measuring impact serves three main purposes:
The benefits of measuring impact can be summarized as follows:
Improved internal management: greater efficiency in planning and in the implementation of the activities; efficiency gains through better management and allocation of resources and / or activities; Improved external positioning: more clarity of the social value created; better differentiation of the impact venture in relation to their peers; more attractive to investors.
There are several methodologies and tools to assess impact, which serve different purposes and different target audiences. So it is important to make an honest reflection about what is your motivation for measuring impact and who will be using the data and analysis. There are methodologies and tools more focused on the monetization of outputs and impacts often seeking some form of proxy from which financial comparisons can be drawn and others are designed to serve as a management tool and place a higher priority on performance indicators. In many cases, the nature of the data collected and how it is analysed is quite different for these two functions and, in all cases, the accuracy and nature of analysis should be tailored to the purpose that it is intended to serve.
In this module we will introduce and apply the Theory of Change, which is a tool that has inspired other methodologies such as Social Return on Investment. Social Return on Investment is an analytical tool for measuring and accounting for a much broader concept of value, taking into account social, economic and environmental factors.
The theory of change describes a strategy for achieving the desired change. It identifies the preconditions, pathways and interventions necessary for an impact venture’s success, explaining how early changes relate to more intermediate changes and then to longer-term change. So, a theory of change works mainly at the strategy level, mapping out the interventions required to create outcomes that will lead to the ultimate impact. Sometimes outcomes are closely related, or they may occur independently. These changes and connections are often represented visually, for example through a chart, or a set of tables.
The steps in creating the theory of change, starts backward from the impact goal:
Step 1. Determine impact goal(s) – what kind of change in society do you want to promote?
It is important to articulate the change you are seeking to promote. The temptation is always mentioning the outputs, for example, “we deliver bed nets in malaria-ridden locations”. However, there is an underlying impact goal. For instance, bed nets are presumably intended to reduce the incidence of malaria, improve health and possibly increase lifespan or reduce poverty. The desired impact should be clearly defined and stated in terms of the specific change desired and the specific population who will benefit. It should be also realistic and succinct.
Step 2. Develop a theory – what do you have to do to achieve the impact goal?
Once you have defined the impact goal, you should work backwards through the steps you think are needed to achieve it. To do this it can help to think in terms of outcomes, which are the changes that will contribute to achieve your impact goal.
Starting with the impact goal ask, “What outcomes must be brought about before we can achieve our impact goal?” These outcomes are placed directly underneath the impact goal. When you have captured that information, continue backwards mapping by repeating the process for each of the outcomes you just identified. In the process, you should define the pathways. A pathway is the sequence in which outcomes must occur to reach long-term goal.
Pathways can be depicted by vertical chains of outcomes connected to one another by arrows, proceeding from early outcomes at the bottom to longer-term outcomes at the top. Then link your activities to your outcomes and see if the flow makes sense. The theory of change rests on a number of assumptions that must be met for the chain of events in the theory of change to hold.
The change can occur in several levels with different deepness degree. Below you can find an example of the type of change that can occur and an example to illustrate:
Finally, you should list the outputs directly produced by the activities promoted and relate them to the outcomes of the solution. The outputs are the direct consequence of the core activities of the solution (eg. a direct output of a workshop may be the level of attendance, participation or utility of the tools provided). This gives you an idea of the performance of your impact venture.
After this exercise you are able to build you theory of change (relationship between outcomes and impact goals) and your logic model.