Whether you are a for-profit or non-profit social enterprise, you need to be able to prove your impact. It can help you attract funding, partners, and customers.
Many social enterprises have a strong sense of their mission and purpose, and delivering on it is central to their operations and success. Measuring your impact can help you understand if you are on track and how to improve to ensure you deliver the most significant benefit to your stakeholders.
To understand your impact
Creating positive social impact is at the core of what social enterprises do, and it’s essential to understand, measure and communicate that impact. It means using data in a way that can be easily understood by stakeholders, donors, investors, and customers to ensure that your social enterprise is fulfilling its purpose.
To understand your impact, you must first define your objectives and what success looks like. It will help you create a theory of change and plan your activities.
A theory of change aims to describe what you want your social enterprise to achieve over a set period and how to get there. You can then use this to identify measurable outcomes indicating meeting your objective.
You can also use the theory of change to guide your decision-making and operational planning. For example, suppose your social enterprise is a youth organization. In that case, you could target young people vulnerable to crime and provide support services, such as a mentoring program.
However, this approach could only be practical if your long-term goals are well-defined. For instance, if you aim to improve access to employment, claiming credit for a successful job placement would be unwise just because you provided six training opportunities per year.
While impact measurement can be undertaken internally by your social enterprise, it is advisable to bring in an external consultant or specialist to conduct a more thorough evaluation of your social impact. It is a more resource-intensive option but will give you a better sense of your long-term outcomes and attribution to short-term efforts.
To understand your stakeholders
Impact measurement and management resources are essential for social enterprises seeking to drive real societal change. They increase accountability, improve decision-making, help funders understand your social enterprise’s impact, and enhance reputation.
Various independent consultants, consulting agencies, academics and universities, charities, and social enterprises specialize in impact measurement. The costs and quality can vary hugely, so it’s essential to do your research and choose the right impact measurement provider for you.
Stakeholders are people or organizations that directly or indirectly influence your business. They can be internal (such as employees and shareholders) or external (such as communities, customers, and suppliers).
Historically, shareholders have been the most invested stakeholders in a company. Still, other organizations have begun to take a more active role in holding businesses accountable for social and environmental concerns. Depending on the scope of your project, you may need to involve different groups of stakeholders.
Identifying your stakeholders can help you prioritize engagement and streamline decision-making to hit project objectives sooner. It can also help you determine who will be most affected by your work to serve them better.
To understand your business model
Impact measurement and management resources are an essential part of any social enterprise. They help you to understand your business model, identify opportunities to improve it, and measure your impact.
Having the right tools in place can make all the difference to your internal communication and work pace, public outreach and visibility, customer experience, and more. They can also help you communicate your impact effectively and harmonize your business strategy with your stakeholders.
The first step in impact measurement is to define your aim and objectives. It will allow you to communicate your social or environmental purpose and give others a reason to support your work.
Another important part of impact measurement is to set clear output and outcome metrics. These should be regularly measured to ensure that your goals are met. The length of time that you need to measure your impact will depend on whether you are measuring short-term outputs or long-term outcomes.
Aims are the driving force of your organization, and it is essential to have one to guide your work. They should include financial, social/environmental goals and be aligned with your stakeholders’ expectations.
Once you have your aim and objectives, it is a good idea to establish a business model that aligns with them. It will help you to generate income to support your impact and achieve your aim. You can do this by selling physical products or using your website to sell digital ones.
To improve your fundraising
Impact measurement and management resources are essential for social enterprises to deliver on their mission and drive real societal change effectively. They can help increase accountability, decision-making, funding opportunities, and reputation.
Impact measures include:
- Outcomes (what the social enterprise does).
- Inputs (the money, people, or resources it uses).
- Impacts (what it does for people).
Impact investors typically seek investable opportunities with a positive financial return and a clear and direct customer impact.
Often, this is difficult for social enterprises to measure in a way that informs and inspires impact investors. They need to balance easily quantifiable outputs that explain what they do with outcomes and impacts that tell a story about why they are doing it.
The sooner a social enterprise can embed IMM in its core business practice, the more successful it will be at creating real social impact. It means getting involved in the day-to-day work, engaging with stakeholders at the fundamental level, and capturing data for impact experiments and product-market growth.
Embedding strong impact practices into your social enterprise helps you to stand out, increasing the chances of securing funding in competitive processes. It also ensures that impact is at the heart of your strategy, allowing you to understand your audience and communicate your mission to them in an effective way.
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