Jeremy Nicholls — There are two possible ways for impact measurement to evolve

nicholls_250The launch of Social Value UK and Social Value International (formerly SIAA and The SROI Network) is a crucial step forward in unifying the message about the importance of accounting for value. At the launch event in May CEO Jeremy Nicholls advocated for incorporating different types of value into decision making, what he says will “ultimately help increase the accountability of organizations to all of their stakeholders”.

Following a survey WINGS conducted earlier this year in partnership with the organization, we hosted a meeting in Berlin to exchange knowledge and experience on social return on investment. We asked Nicholls, the main presenter and moderator, to recap the session and for his thoughts on how impact measurement might evolve over the next 15 years.

Jeremy Nicholls: The growing interest in impact measurement within foundations, which itself reflects a growing interest across all sectors, is still mainly based on the proving impact, either by charities and non-profits reporting to foundations or by foundations reporting on their impact to a wider audience.

SROI is the application of the principles of social value where monetary equivalents are used to value outcomes. One of these principles is that stakeholders should be involved in determining those outcomes. One of the learnings was that there is an accountability gap between organisations and the people whose lives are effected, whether by intent or otherwise and the consequence is that the organisation is able to decide what to measure and how to measure its effects on the lives of others. As a result few social purpose organisations (and their funders) are set up in order to maximise the impact they have with the resources available to them. The necessary level of accountability, which is a key driver of innovation and performance, is missing.

So there are two possible ways for impact measurement to evolve. One is that accountability is not addressed and the sector continues to have a focus on objectives and on an organisational theory of change, and the level of change required in society is not achieved and continues to play catch up with increasing social and environmental challenges. The other is that the sector embraces and learns from accountability frameworks elsewhere, particularly in corporate sustainability reporting, which recognises the need for accountability to society for positive and negative, intended and unintended outcomes. In this scenario the organisation has to recognise a number of different theories of change relevant to different groups of stakeholders. Governance objectives shift to seek to maximise social value created, and performance is managed against social budgets set to try to maximise that value.

Under either scenario organisations are likely to continue to shift focus from outputs to outcomes and adopt mixed methods, using qualitative information as a basis for quantification of outcomes. Only in the latter, where the need to choose between alternative services or ways of delivering the same service, are ways to weight the relative importance of different outcomes fundamentally required.

This has implications for foundations and their networks, working with organisations that are at many different stages of their development and maturity in thinking about and managing impact. While some quantified information on performance will remain important, this should be balanced with support for organisations to improve policies and processes as they increase accountability. They might start with simple checklists, for example, to see if an organisation has someone on the board who has a passion for and experience in social value accounting.

More WINGS interviews here.

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