Focus On Impact, Not Activity

We increasingly hear calls for charities, business and government entities to evaluate the impact they have.  However, to properly evaluate impact requires identifying what organisational success is, and then implementing a plan to achieve that vision.  Many organisations confuse activity with impact. They count success in numbers – how many people’s lives they touch, how much money they fund-raise, how many members they have.  Yet, these numbers are not indicators of success, simply levels of activity (or in management speak “outputs”).

There is increasing community pressure to differentiate between an organisation’s activities (outputs) and outcomes when reporting back to funders, shareholders, members, donors, researchers, peak bodies and other stakeholders who may have an interest in the organisation’s work. A focus on outcome reporting requires the organisation to show the impact such activity outputs is having.  This is not an easy thing for some organisations.

When your organisation wants to move from measuring outputs to measuring impact/outcomes, there are some immediate steps you can take:

  1. Define organisational outcomes. Outcomes are often poorly articulated, or not defined at all so that clients and the community cannot easily understand what impact the organisation aims to achieve.
  2. Agree what measurements will be used to assess success. For commercial enterprises, this can be as simple as a percentage return on the investment made. For charities and government entities it is more complex, but deciding on objective measures help focuses the development of outcomes.
  3. Define the timeframe. Establish a baseline and then measure outcomes as change is observed for accurate reporting.
  4. Do not measure outcomes simply for the sake of reporting. Measurement, as an activity, MUST aid continuous improvement of services. Measuring outcomes can support activity changes and other future operational decisions.

Why Measuring Impact is Important

While it may be easy to count the number of hours of service an organisation provides, can it answer the question “So what?”  So what if the organisation provides on average four hours of service per client? So what if it provides 1000 hours of service a week?

The real question is “What difference have those services made to clients’ lives?”  Can another business provide the same level of service more cost-effectively than this organisation? Do the clients being served really need those services, or would other services better help them?  Are there other individuals who are more in need of the services, and if so, why are they not being served by the organisation?  If the organisation cannot answer those questions, then it does not know its impact.

Organisations that have the benefit of taxpayer subsidisation (either through government grants, tax deductibility for donations to them, or through their tax-free status) in particular need to transparently demonstrate their impact on society. If they cannot, the question needs to be asked, “Why do they deserve such taxpayer subsidisation?”

Impact measurements tend to be ad-hoc – in response to a specific enquiry – rather than systematically collected across the organisation, and more importantly understood by all in that organisation.  However, without regular and systematic impact evaluation, organisations cannot know if they are adding any real value, or whether they should change and improve.

Measuring Impact

Social Return on Investment (SROI) is one measure that is increasingly being used in evaluating impacts.  This methodology assigns values to non-financial outcomes and then calculates a holistic ‘cost-benefit’.  Another impact evaluation methodology is Results Based Accountability (RBA) which defines the desired outcome or result, and then works backwards to “cost” or assess the inputs required to achieve that outcome, within a certain timeframe (given that time itself has a value).

Whatever methodology is used, it is imperative that organisations start to seriously evaluate their impact, rather than merely measuring the activity they engage in.  Ultimately, the primary goal of organisations should not be to secure employment for those within them but to “produce” something that is needed by those it serves.

If your organisation needs help in performance evaluation, impact measurement or quality auditing contact Faileen James for a confidential conversation.

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