Making Sense of Social Impact Investment

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An overview of the latest tools, methodologies, and taxonomies around social impact measurement. Includes standards and tools like IRIS, Pulse, Social E-Valuater, GIIRS, ETO, B Corp, GRI, etc.

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  • The big questions facing many nonprofits, foundations, impact-oriented investors and companies are:
    What standards, approaches, and tools are out there? What expectations are out there? And what is coming?
    And then,
    How should we, the folks on the ground, be thinking about and potentially using these tools?
  • Impact measurement feels hard.
    One thing we‘ve learned is that when things feel hard, it’s usually because something you need is missing… whether it’s clarity about where to begin or what is worth measuring, insight into what your key audience will find acceptable or appropriate, or assurance that if you do it you will be rewarded for the effort.
    To make it easier, we
  • Impact measurement feels hard.
    One thing we‘ve learned is that when things feel hard, it’s usually because something you need is missing… whether it’s clarity about where to begin or what is worth measuring, insight into what your key audience will find acceptable or appropriate, or assurance that if you do it you will be rewarded for the effort.
    To make it easier, we are both naming why it legitimately feels hard, and we’re breaking this big concept down into more bite-sized pieces so you can decide which is best for you.
    What’s the “right way” to measure?
    Emerging standard practices: terminology, processes, indicators, reports
    Trends
    How much should we be spending?
    Current benchmarks on cost
    Ways of reducing cost (tools)
    Trends
    What do we get out of it? (Is it worth it?)
    Good practices
    Trends
  • Emerging standard practices:
    Terminology resources
    Definitions (good websites)
    IRIS
    Process resources
    Principles for impact measurement
    Associations working on process standards & principles for impact assessment and management
    International Integrated Reporting Committee = GRI + Accounting for Sustainability
    SROI Network = 500+ members worldwide with XX new chapters
    SPM = performance management, XX members, Y chapters
    Environmental….
    Other industry-specific
    Resources: TRASI, SVT, GSVC, GSBI?
    Indicator resources
    IRIS, Social Evaluator, SROI Canada database of financial proxies,
    Reporting resources
    B Corp
    GIIRS

    Trends
  • Emerging standard practices:
    Terminology resources
    Definitions (good websites)
    IRIS
    Process resources
    Principles for impact measurement
    Associations working on process standards & principles for impact assessment and management
    International Integrated Reporting Committee = GRI + Accounting for Sustainability
    SROI Network = 500+ members worldwide with XX new chapters
    SPM = performance management, XX members, Y chapters
    Environmental….
    Other industry-specific
    Resources: TRASI, SVT, GSVC, GSBI?
    Indicator resources
    IRIS, Social Evaluator, SROI Canada database of financial proxies,
    Reporting resources
    B Corp
    GIIRS

    Trends
  • Terminology. This is the basic paradigm and these are the critical terms. Inputs, Activities, Outputs, Outcomes, What would have happened anyway which you subtract from outcomes, which gets you to Impact. If you are oriented around managing the creation of impact, you then check whether the Impact and all the other links in the chain are aligned with your goals.
  • Another resource related to standard terminology is IRIS: Impact Reporting and Investment Standards. It focuses on standard terminology related to inputs and outputs, with a few outcomes.
  • This is a resource that is designed to be a public good. Since the government doesn’t provide a dictionary that helps translate metrics as they’re used by different organizations into a common language, the private sector has stepped up. Acumen Fund, Rockefeller, and numerous practitioner organizations and service providers have contributed their efforts to creating this resource. It allows you and me to suggest metrics we find useful.
    Is this just for larger and international organizations? It seems good for a large microfinance organization, but what about a small community based arts or homeless serving organization?
    Who is already using it?
    If I use it and enter the information on line won’t others have access to it? What if I wan’t to keep my information private?
  • It is absolutely critical that we never lose sight of the idea of a quality leading indicator. An output might be a quality leading indicator, but it might be a misleading indicator. How many kids sat in the classroom is different than how many kids learned. All of us must check whether the definition we’re using really amounts to a good sign that something of real value is happening. It’s up to us to help bring that essential quality aspect into the metrics we and the field use.
  • Okay- but HOW do you get at what to measure?
    Here are some of the leading METHODs standards of practice.
    Emerging standard practices:
    Terminology resources
    Definitions (good websites)
    IRIS
    Process resources
    Principles for impact measurement
    Associations working on process standards & principles for impact assessment and management
    International Integrated Reporting Committee = GRI + Accounting for Sustainability
    SROI Network = 500+ members worldwide with XX new chapters
    SPM = performance management, XX members, Y chapters
    Environmental….
    Other industry-specific
    Resources: TRASI, SVT, GSVC, GSBI?
    Indicator resources
    IRIS, Social Evaluator, SROI Canada database of financial proxies,
    Reporting resources
    B Corp
    GIIRS

    Trends
  • One methodological solution is Social Accounting, which gained steam in the 1970s among corporations and is more widespread in the CSR world.
  • This was the first real effort to expand accounting from the traditional scope of financial accounting, which only considers the shareholder’s perspective and only economic impact.
    So that’s fine, but doesn’t have so much to do yet with the nonprofit world, or even the small and medium sized business world… does it?
  • A lot of us think, okay, I know what my outputs are, but so what? Is the problem really changing? Are things really getting better? Two aspects are really important to answering this question.
    The first is, what is the actual impact.
  • SROI is a ten-step process that gets at impact. It integrates the steps of traditional measurement and evaluation but emphasizes stakeholder involvement and includes consideration of impacts relative to investment. It also allows for the translation of social value into monetary terms.
    SROI has its origins in cost-benefit analysis, which dates back well into the 1900s and gained steam in the 1970s when the US government adopted it for procurement. But as a solution for social enterprises, nonprofits and venture philanthropists, it was really first articulated by REDF in 2000 in their SROI Methodology paper. Subsequently practitioners from around the world have expanded its application. It attempts to assess the impact created in a manner that is practical for businesses and nonprofits to do themselves. It also systematically looks at the value of a given impact in the eyes of the key stakeholders- which is a way of informing management about both how effective and useful their solutions are, and how to hone strategy to be more effective.
    The SROI network is 2 years old and has some 600 members worldwide. A number of tools have been developed that align with SROI principles.
  • Like social accounting but more expansive, SROI drills into the measurement of impact.
  • The other critical part of knowing whether impact is happening is understanding how to manage the organization to get the desired results to occur. That has been the focus of the groups behind the Social Performance Task Force.
    Roots in the 1990s, major backing from Ford and Argidius Foundations. Multiple players have contributed and some 650 leaders from all stakeholder groups in the MFI space are a part of this effort.
  • The Social Performance Management (SPM) Principles for microfinance have emerged from an industry-wide initiative aimed at making microfinance more effective in achieving its social mission. The Principles reflect a consensus among a wide range of stakeholders (including microfinance institutions, networks, donors, investors and support organizations) who commit to taking practical action to achieve their social mission by managing their social performance.
  • There are so many tools here. How do I find ones that are relevant for me?
    Does it tell you which ones you have to pay for and which ones are free? What about customization and consulting costs?
  • There are so many tools here. How do I find ones that are relevant for me?
    Does it tell you which ones you have to pay for and which ones are free? What about customization and consulting costs?
  • One of the things that dictates what it’s worth tracking is what you are going to be asked by funders to report. What’s the latest there?
    Emerging standard practices:
    Terminology resources
    Definitions (good websites)
    IRIS
    Process resources
    Principles for impact measurement
    Associations working on process standards & principles for impact assessment and management
    International Integrated Reporting Committee = GRI + Accounting for Sustainability
    SROI Network = 500+ members worldwide with XX new chapters
    SPM = performance management, XX members, Y chapters
    Environmental….
    Other industry-specific
    Resources: TRASI, SVT, GSVC, GSBI?
    Indicator resources
    IRIS, Social Evaluator, SROI Canada database of financial proxies,
    Reporting resources
    B Corp
    GIIRS

    Trends
  • Many of you have undoubtedly heard about B corporation. But what if you’re a nonprofit? Yes, this still can apply- if you have revenue generating activities.
    What’s the difference between a B Corp and B Corp certification? It’s only for for profits, right?
    How much does it cost to get certified?
    How long does it take to get certified?
  • Is this a certification or a legal entity…I have heard both and it’s not really clear?
    Is this only for for profits, and how big or small?
    Is this applicable anywhere in the US? What about overseas?
  • So this is just an index for investors, and not an actual tool for use by orgs, right?
    What would be some examples of the types of folks using this?
    Is it only applicable to for profits?
    How does it relate to IRIS, Pulse, or the other tools
  • Designed for corporations.
    They’re working to scale it down so it’s easier to use for smaller companies.
  • Varies greatly- stage and whether you’re Nonprofits SME Corporations Government
  • Ten step SROI process plus coaching. The coaching is on-site and customized. The tool with coaching costs 7500 for the year but can be spread over 100 users. Alternatively you can get a user login to the tool itself for $350- this is mainly for practitioners and academics and others who are quite familiar with the prinicples of SROI.
  • So I need Salesforce to use this, right?
    How much will it cost?
    Can I install and use Pulse myself or do I need to pay someone to do it?
    Is anyone really using this tool or is it just another attempt at creating measurement standards by outside folks?
  • The top four can all be downloaded from online or bought in a book.
  • (examples of good practices where groups got some tangible benefit)
    Water for people? Paul I don’t know this one, do you? If you can bring that as an illustration, great.
    Quotes
    Cone research stats?
  • So, show that you are!
    Anecdotal evidence about gaining control of funding.B Corp’s whole agenda is to garner more flow of money by marketing the companies’ goodness.
    Sources of the slide’s content, in order by bullet:
    2010 Cone Cause Evolution Study-
    2010 Online Influence Trend Tracker:
    2010 Shared Responsibility Study:
    2010 Shared Responsibility Study
    2007 Holiday Environmental Survey:
    The 2006 Cone Millennial Cause Study
    The 2006 Cone Millennial Cause Study
  • Scenario 1 Questions:
    Which tools should I use?
    How would my org benefit from using said tool(s)
    How much $ and time would be involved in customizing and managing?
    Would many funders really be interested in this information…would it help with my fundraising and reporting work?
    What would be my next steps in choosing a tool and getting help to move things along?
    Scenario 2 Questions:
    Which tools should I use?
    How would my org and my portfolio grantees benefit from using said tool(s)
    How much $ and time would be involved in customizing and managing, both for my foundation and for my grantees?
    Can I build any of this on top of my existing platforms rather than starting from scratch?
    What would be my next steps in choosing a tool and getting help to move things along?
  • Making Sense of Social Impact Investment

    1. 1. ©2009 SOCIAL VENTURE TECHNOLOGY GROUP. All rights reserved. Alphabet Soup: making sense of the evolving social impact measurement landscape A Zero Divide Webinar November 1, 2010
    2. 2. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Big Questions • What’s out there? • What’s coming? • What does this mean for us?
    3. 3. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Measuring impact: it feels hard. • Is the way we measure it going to be acceptable? • Has somebody else already figured out the best way to measure this? • What if I do it, and then expectations or standards change? • Where do I start? • When should I start? • Am I doing enough? • Am I doing too much? • What should I be spending on this? • Is it worth it? • What happens if we do measure…will it actually help or hurt?
    4. 4. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Making it Easier: Major Questions • What’s the “right way” to measure? • How much should we be spending? • What do we get out of it? (Is it worth it?)
    5. 5. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? • Emerging standards around: – Terminology – Indicators – Method – Reporting • Trends
    6. 6. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? • Emerging standard practices: – Terminology – Indicators – Method – Reporting • Trends
    7. 7. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Logic Model = Impact Value Chain
    8. 8. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Logic Model = Impact Value Chain
    9. 9. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? IRIS
    10. 10. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? IRIS The IRIS framework consists of six parts: • ORGANIZATION DESCRIPTION - indicators that focus on the organization’s mission, operational model, and location • PRODUCT DESCRIPTION - indicators that describe the organization’s products and services and target markets • FINANCIAL PERFORMANCE - commonly reported financial indicators • OPERATIONAL IMPACT - indicators that describe the organization’s policies, employees, and environmental performance • PRODUCT IMPACT - indicators that describe the performance and reach of the organization's products and services • GLOSSARY - definitions for common terms that are referenced in the indicators
    11. 11. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? IRIS
    12. 12. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Logic Model = Impact Value Chain
    13. 13. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? • Emerging standard practices: – Terminology – Indicators – Method – Reporting • Trends
    14. 14. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Social Accounting
    15. 15. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. • The process of communicating the social and environmental effects of organizations’ actions to particular interest groups within society and to society at large • Most commonly used in the context of business, or corporate social responsibility (CSR), although any organization may do it • Is also known as social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting, or sustainability accounting • Seeks to broaden the scope of accounting in the sense that it should: – concern itself with more than only economic events; – not be exclusively expressed in financial terms; – be accountable to a broader group of stakeholders; – broaden its purpose beyond reporting financial success. What’s the right way to measure? Social Accounting
    16. 16. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Logic Model = Impact Value Chain
    17. 17. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Social Return on Investment (SROI) Analysis
    18. 18. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Social Return on Investment (SROI) Analysis 1. Involve stakeholders: Inform what gets measured and how this is measured and valued by involving stakeholders. 2. Understand what changes: Articulate how change is created and evaluate this through evidence gathered, recognizing positive and negative changes as well as those that are intended and unintended. 3. Value the things that matter: Use financial proxies in order that the value of the outcomes can be recognized. Many outcomes are not traded in markets and as a result their value is not recognized. 4. Only include what is material: Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact. 5. Do not over-claim: Only claim the value that organisations are responsible for creating. 6. Be transparent: Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders. 7. Verify the result: Ensure appropriate independent assurance.
    19. 19. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? Social Performance Management (SPM) Task Force
    20. 20. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. An MFI that manages its social performance will deliberately: • Translate its mission and values into clear, measurable objectives to capture intentional social benefits. MFIs that are clear about their objectives are more likely to have a deliberate strategy to achieve them. • Design and implement systems for social responsibility, including client protection. At a minimum, MFIs should ensure they do no harm. Microfinance has great potential to help clients, but it also has the potential to hurt them, especially through over-indebtedness. • Track, understand and report on whether it is achieving its social objectives. MFIs that manage their social performance are more effective at reaching their target market, delivering appropriate services, and creating positive changes for clients. • Align its business processes to achieve both social and financial objectives. All aspects of an MFI’s operations affect whether it achieves its social goals, including marketing, recruitment, staff training, incentives, organizational culture and Board composition. • Ensure that decision-making considers both social and financial outcomes. Awareness of the social and financial consequences of decisions leads to better overall performance management. What’s the right way to measure? Social Performance Management (SPM) Principles
    21. 21. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. TRASI
    22. 22. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. TRASI
    23. 23. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What’s the right way to measure? • Emerging standard practices: – Terminology – Indicators – Method – Reporting • Trends
    24. 24. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. B Corp
    25. 25. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. B Lab
    26. 26. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. GIIRS
    27. 27. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. GRI: Global Reporting Initiative
    28. 28. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. How much should we be spending? • Current benchmarks on cost • Ways of reducing cost (tools) – Excel – Surveymonkey/Survey gizmo/zoomerang – Social Evaluator – Pulse – Efforts to Outcomes • Trends
    29. 29. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What should we be spending? Social Evaluator
    30. 30. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What should we be spending? Pulse
    31. 31. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What should we be spending? Efforts to Outcomes (ETO )TM
    32. 32. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Other methods and resources include • Balanced Scorecard (BSc) • HIPTM Framework • SROI Lite – GSBI version • Social Impact Analysis – GSVC.org • … and custom solutions – SVT Group
    33. 33. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. What do we get out of it? • The ROI of SROI • Trends
    34. 34. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. It pays to do good • 83 percent of Americans want MORE of the products, services and retailers they use to support causes. • American consumers are no longer taking the recommendations of family or friends at face value. Before deciding whether to purchase recommended products or services, more than four-out-of-five consumers (81%) will go online to verify those recommendations, specifically through researching product/service information (61%), reading user reviews (55%) or searching ratings websites (43%). • 84% of Americans believe their ideas can help companies create products and services that are a win for consumers, business and society • Only 53% feel companies are effectively encouraging them to speak up on corporate social and environmental practices and products • 48% of Americans will try to buy fewer gifts or holiday products this season because they are concerned about the effect their consumption may have on the environment • 61% of Millennials (born 1979 – 2001, 78 million strong) feel personally responsible for making a difference in the world • 78% of Millennials believe that companies have a responsibility to join them in this effort.
    35. 35. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Scenarios • Scenario 1: Medium sized nonprofit social enterprise which trains youth to refurbish computers for sale • Scenario 2: Foundation with a portfolio of 2 dozen social enterprise grantees – both grant funded and PRI funded.
    36. 36. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Resources • McKinsey “Learning for Social Impact” report • FSG Finance “Breakthroughs in Shared Measurement & Impact” • Zero Divide SROI Case Study • B Corp (bcorporation.net) • Efforts To Outcomes (socialsolutions.com) • GIIRS (giirs.org) • GRI (globalreporting.org) • Impact Reporting & Investment Standards (IRIS) (iris.thegiin.org) • Pulse (app-x.com/pulse) • Social eValuator (socialevaluator.eu) • Tools & Resources for Social Impact (TRASI) • SVT Group (svtgroup.net) • ZeroDivide (zerodivide.org)
    37. 37. ©2009-2010 SOCIAL VENTURE TECHNOLOGY GROUP, Sara Olsen and Brett Galimidi.. All rights reserved. Contact information • Sara Olsen sara@svtgroup.net • Paul Lamb pauljlamb@gmail.com

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