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Social Entrepreneurship: Social Impact Metrics

March 7, 20117 March 2011

Social impacts of the arts

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This report explores possibilities for measuring the social impacts of organizations’ activities, despite challenges such as “the lack of a common measure of how much good has been done” and the lack of an “agreed unit of social impact” that might be equivalent to financial metrics used in market transactions.

According to the “impact value chain” in the report, inputs into a venture result in activities, which produce outputs, or results that can be measured. However, activities and outputs are only “leading indicators” of impact, not impact measurements per se.

Outcomes, or changes to social systems, are what impact measurements should focus on. To measure impact, one should look at changes to social systems minus thosechanges that would have happened anyway.

Good impact measurements are management tools that should result in the adjustment of organizational goals and activities. Impact measurements can also be used to track commitment to an organization’s mission and to provide assurance to funders. Indeed, “a good performance measurement should be first and foremost aligned with the mission of the venture and focused on its impact. It should also be simple to manage, understandable, clear and concise, and meaningful.” This is a difficult task, as the report indicates that “there is no industry standard for social impact measurement in use by social enterprises, social purpose businesses, charities or the funders and investors that support these organizations”. Additional challenges include potentially high costs, the risk that organizational leaders will exaggerate their impacts in order to receive more funding, and the potential “bias against programs with complex effects that are difficult to measure”.

Among emerging standards for measurement, the report highlights the Social Return on Investment Project (, which specifies the basic stages of calculating social returns:

  • establishing scope and identifying key stakeholders;
  • mapping outcomes;
  • evidencing outcomes and giving them a value;
  • establishing impact;
  • calculating the social return on investment; and
  • reporting on, using and embedding the calculations.

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