Measuring the social impact of NFPs: When doing good isn’t good enough

Individual actions have ripple effects. The trick is in measuring them.

It isn't enough for businesses to simply do good. Now they have to prove their worth in measurable ways.

Not surprisingly, Australians are spending more than $250 billion each year on social issues. This means that broad claims about making a difference won’t cut it anymore, and Australian businesses must now provide evidence of their impact.

For not-for-profit organisations (NFPs) this is good news, because it means that the audience is listening.

The bad news is that measuring social impact can be complicated, expensive and often impractical. 

Measuring outcomes by a dollar-replacement value is one thing. But when NFPs try to quantify impacts that are multi-layered over longer timeframes it becomes a whole other story, and there is no definitive right or wrong way to approach it.

Simon Faivel, director of Social Ventures Australia (SVA) Consulting and chair of SIMNA, the Social Impact Measurement Network Australia, is confident an evolution is taking place that will see social impact measurement traverse all sectors.

The key, he says, is the large amount of information sharing that is bringing more knowledge and greater access to data.

“When you see what others have done it makes it easier to make that first leap,” says Faivel.

“If you can get your community to share, you can learn more and foster better application of social impact development techniques.”

Professor David Gilchrist, the director of Curtin University’s Not-For-Profit Initiatives, agrees.

He says when like organisations work together to gather outcome data, it can provide a bigger picture for analyses and the costs can be shared. Having a more complete body of information enables a stronger case to be presented to governments when negotiations about policy and funding arise.

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Gilchrist warns against restricting data to annual reporting because true impact can often take years, even decades, to be realised.

Measuring impacts on a three- or even five-year cycle can be simpler, more telling and shares the financial load across several reporting periods.

How to measure social impact

There are two main reasons for NFP’s to measure social impact – for proving and for improving.

While everyone’s data and methodology will be different, according to size and purpose, there are several common factors that go into forming a framework for accurate and useful social impact measurement.

Step 1. Pinpoint your vision

You need to clearly define what you are setting out to achieve before you can decide what information needs to be collected to judge its level of success.

Step 2. Measure What Matters

Don’t feel obligated to try to measure everything at once. Look at what is most important to your vision and determine the indicators most likely to help you understand your successes as well as areas for improvement. 

You can get a stronger result by using several perspectives, such as feedback from the beneficiaries, the front-line workers and the managers who will look at it from an operational point of view. Sharing data collection with others in your sector can give you more scope for analysis and reduce costs. Make sure your indicators are consistent, specific and time-bound but importantly, keep it simple.

Step 3. Communicate internally

Embed your vision and measurement framework throughout the organisation, across all levels.

Engaged staff means that they will come to understand the framework’s purpose as well as feel more comfortable supporting it and using the results. 

Step 4. Analyse and validate

When assembling results, be sure to explain how the information was gathered.

To prove your impact you need to show it was done objectively and robustly. For improvement, your findings need to declare both good and bad results. If you have the resources then consider getting external verification. Comparisons from other parties can help to establish benchmarks.

Step 5. Communicate results

Relaying the information can be done in a myriad of ways whether via newsletters, online posts and webinars, or as part of an annual report. Information should be easy to understand and readily accessible.

Large not-for-profits lead the way

As the first children’s charity in Australia to conduct a Social Research Impact Study, Starlight Children’s Foundation is consistently among the top 10 most credible and trusted charity brands in Australia and is currently the number one ranked children’s brand for integrity. 

Its latest report, by PwC, shows that every $1 outlay by Starlight results in more than $4 returned to the community in value.

CEO Louise Baxter says it is important to make the vision an embedded part of the culture. Starlight does this by regularly sharing findings through all levels of the staff and encouraging them to continually evaluate and provide feedback data for analysis. 

Takeaways for smaller charities

For smaller charities, the time and cost of collating and analysing data often means they have to think outside the square.

The Top Blokes Foundation works with at-risk and disadvantaged young males but has found the cost of an externally-produced Social Impact report prohibitive.

The cheapest quote received was $65,000 and Operations Manager Lauren Gale says convincing the board to allocate so much money to a report rather than directly into programs is virtually impossible to justify when your annual turnover is only $250,000. 

So for now, using internationally-endorsed scales, the Foundation developed its own framework, one that is affordable but has the capacity to grow with the organisation.

The social enterprise Thankyou Group exists solely for the purpose of making a difference. It puts 100 per cent of profits from sales of its bottled water, food and body care products into water, food and hygiene, and sanitation projects around the world.

Co-founder Jarryd Burns says the company wanted a transparent system that would provide equivalent information to the person who invested in their cause by purchasing a $2 bottle of water as they did to the company or person who donated $2 million. 

The result is a tracking system where every product is allocated to a specific project and carries an individual reference code the buyer can input to be shown exactly where and what has been funded by that purchase.

To formulate a system, constantly evolve

The current method of using a dollar-replacement value does not measure other meaningful impacts organisations have as they create, build and maintain flourishing societies. 

Researchers at University of Technology, Sydney, in partnership with Surf Life Saving Australia (SLSA), have developed a new measurement tool they say more accurately takes into account the wider economic and social value of community-based organisations as well as their volunteers. 

UTS Researcher Dr. Melissa Edwards says that they do more than just save lives on the beach; SLSA is also developing skilled human capital that flows into other aspects of the volunteers’ lives.

The research led to national recognition for the University’s Ripple Model, which uses statistical indicators to make visible the contributions that filter out from the individual and the club to wider networks. Implementation of the new model has changed the way SLSA engages its members at a corporate level, and their mission is now social impact driven by up to two-thirds.

Dr Edwards believes that just as we once did not assign value to a tree but now use a carbon metric and offset system, there will come a time where a specific value will be able to be assigned to social impact.

“Is it possible? Anything is possible,” she says.


Tip 1

Have an ownership mindset. If you owned the company, what would you do to improve it?

Tip 2

No matter how high up you are, pick up the phone and occasionally talk to your customers.

Tip 3

Put yourself and “leader” in the same sentence – even before you think you’re ready.

December/January 2022
December/January 2022

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