What’s the number one metric that is sure to: get funders excited about you, inspire individuals to volunteer for your mission, and send partners running your way? That’s right, your impact. While quite difficult to measure, especially in the early days, impact measurement can make or break your success as an organization.
Few understand the fine art of impact measurement better than Brad Presner, former Director of Analytics at Living Goods. With over a decade of experience in data analytics and impact assessment at companies like Google and Acumen, he deeply understands what goes into impact reporting.
Brad made a career of helping organizations and investors alike track and maximize financial performance, operational efficiency, and social impact of nonprofits. Year after year he shares his key learnings with our Accelerator cohorts. Here’s Brad’s expertise, distilled.
The First Lesson? It’s Hard
Defining success in the nonprofit sector is difficult. Unlike its for-profit counterpart, one cannot simply look to financial returns as a measure of success. Instead, nonprofits must focus more heavily on qualitative measures. Rather than simply maximizing profits, the aims of nonprofits are varied and unique. As such, it is not always possible to create industry-wide standards for performance. This makes it very difficult to compare the degree of social impact across different organizations and projects.
However, there has been a strong push in the last decade to better evaluate and monitor nonprofits’ social impacts. Potential donors want to make sure they are not just giving, but giving smarter. Accordingly, a nonprofit’s ability to effectively quantify their impact can have a huge influence on their ability to attract funding. As a result, conducting tenable impact assessments should be considered a crucial part of every nonprofit’s operations.
Your Goals Will Impact Your….Impact
Impact assessment helps you understand what your organization’s goals are and if you’re on track to meet those goals. When done correctly, it should allow you to:
- Create metrics that align goals with company values
- Capture data that reveals impact and financial performance
- Measure, monitor, and maximize progress
- Compare performance to a benchmark
- Report that performance to stakeholders in a compelling manner
Proper impact assessment allows you to recognize if an organization is operating efficiently and if it is consistently achieving its stated social impact goals. But impact assessment is more than just a performance evaluation. Impact means different things to different people, and how you measure and define your impact has an enormous role in shaping your organization’s work.
There is no right or wrong answer, but rather, it comes down to an organization’s values and the intended impact it seeks to have. Do you want to provide the largest number of products to needy consumers, or do you want to maximize access to desirable opportunities?
Measuring Outputs vs. Measuring Outcomes (hint – big difference)
Nonprofits looking to have the greatest impact on a target population must be very careful when defining success. Nonprofits must be wary of conflating outputs with outcomes. It is one thing to provide x number of products, but another thing entirely to ensure that providing these products is actually creating the change that an organization wants to spark.
For instance, Brad told a story of 1298, an organization providing free, alternative 911 ambulance service in India. Initially, 1298 defined its success metric as “number of rides given”. However, they soon realized that many of the ambulance rides were delivering patients to private hospitals. This meant that many riders did not belong to the underserved communities that 1298 was trying to reach. Brad worked with 1298 to figure out how to redefine success in a way that reflected the true goals of the organization, allowing them to cater their services more directly to the target population.
Stories like this show how tricky it can be to accurately evaluate impact. They speak to the importance of diving deeper into the data and of interacting with members of the target population to gain a better understanding of the impact your work is actually having.
This example also highlights the fact that impact assessment is not a one-time, isolated event. It is a process that allows organizations to constantly reflect upon their performance and update performance goals to improve their ability to provide the greatest social impact.
Thus the importance of impact assessment is two-fold. First, it allows you to better understand what type of effect your work is having in the world, but also whether you are on track with where you want to be. Secondly, it reveals opportunities for adjustment in your business model that could allow for greater overall impact.
Roll Up Your Sleeves, Maximizing Impact Requires Prep Work
Even if your organization is not ready to conduct a full impact assessment, there are steps you can take to facilitate the process as your organization grows:
Develop strategy and framework
- Establish your organization’s theory of change and framework for the impact you want to have
- Identify social and environmental objectives, potential key indicators, and existing industry & sector benchmarks
Implement Impact Strategy
- Have a process/culture for collecting, analyzing, and using data
- Integrate impact with business processes
- Develop assessment methodologies, including user feedback
- Operationalize systems and processes
Monitor and Report
- Be comfortable knowing your impact today will look different in a few years
- Develop dashboards to visualize impact performance
Manage the Process
- Understand what you need to make decisions
- Revise metrics: what will drive you to take action?
- Set and update targets
How an organization defines and quantifies its success metrics also defines the goals and values of the organization as a whole. However, in a world and industry dominated by big data and metrics, Brad left us with one important last message.
Nobody is going to know your work like you are. No one knows the work your organization does like you do. When you talk to potential funders or board members who want you to track x, y, or z metric, remember you can always say no because you know what matters and what impact you’re trying to create.
Impact assessment is about leveraging data to maximize the impact you want to have.
It is your way to define that impact and make others understand it as clearly as you do.