Burgess COMMENTARY

Peter Burgess

Mythbusting: it's too difficult to demonstrate social impact It's not as expensive and time-consuming as some people may think to demonstrate social impact We're not all lucky enough to be given those extra few minutes to complete the job – but lack of time shouldn't be an excuse not to demonstrate SROI. Photograph: Michael Regan/Getty Images More or less everyone involved in social enterprise agrees that demonstrating your impact is really important but not very many are actually doing it. This is particularly true in the case of the UK government's impact measurement framework of choice, Social Return On Investment (SROI). According to nef: 'Social Return on Investment is an analytic tool for measuring and accounting for a much broader concept of value, taking into account social, economic and environmental factors.' SROI is commonly used to come up with figures for the social value (or social impact) generated by products and services, such as the example quoted by nef that: '£1 invested in high-quality residential care for children generates a social return of between £4 and £6.10.' In 2010, the Demos report Measuring Social Value recommended that: 'Given that the principles behind SROI are sound, but for many SROI is an extremely ambitious goal, there ought to be a more achievable social value measurement target set for the third sector as a whole.' The Department of Health's Social Enterprise Investment Fund (SEIF) was a prominent recent example of organisations not using SROI in large numbers. Despite the fact that one of the conditions of SEIF was that funded organisations used SROI to measure the impact of that funding, most had other ideas. As I reported last year, by the time the fund was evaluated, only 30% of funded organisations were using SROI. According to researchers from Third Sector Research Centre (TSRC): 'Whilst some organisations were aware that SROI was part of SEIF funding requirements, their interest in it 'fizzled out'. This was often due to the practical constraints of undertaking SROI, including time, resources and money constraints.' A previous TSRC report, The Ambitions and Challenges of SROI, highlighted the cost issues noting that: 'Gordon (2009) found that smaller SROI projects would cost between £12-15,000 each with larger ones rising to £40,000. Lyon et al. (2010) found SROI studies ranging in size from £4,000 to several hundreds of thousands of pounds.' It's clearly true that measuring impact, whether using SROI or one of the many other approaches available can be expensive and time consuming but this is neither inevitable nor a good reason to avoid doing it. The SROI Network, a group of SROI practitioners, recently published SROI, Myths and Challenges – as an attempt to tackle 'a variety of misunderstandings' about their approach. While much of the document is taken up with responses to the objections of think tank experts and academics, delivered in a slightly exasperated tone, it also provides some useful hints as to what SROI is actually for: 'If you get a group of people to consider what questions they would need to ask in order to know how much of a difference they have made, they generally come up with things like: who has been affected or changed? What were the effects or changes? How did we decide which effects or changes to account for (and so manage)? How much change occurred that can be attributed to our activities? What common measure will we use in order to aggregate the difference and so start discussions about how we can make more of a difference Who answered these questions?' Whether or not your social enterprise is in a position to measure its impact using SROI and/or to publish an annual social impact report such as those carried out by FRC Group – or HCT Group – you can and do have time to work at what you're trying to do and to decide how you'll judge whether or not you're being successful. As part of the new programme of impact investment – Nesta have developed Standards of Evidence for Impact Investment – our-approach-to-impact-and-evidence/our-standards-of-evidence – showing five different levels of impact measurement. These range from Level 1, where an organisation able to explain what their product or service does, and provide a logical explanation as to why it might have a positive social impact, to Level 5 where a product or service can deliver a proven social impact at scale while remaining financially viable. Different approaches will be suitable for different social enterprises but there's no excuse for not measuring your impact in some way. The growth in social investment and the introduction of the Public Services (Social Value) Act means that some social enterprises will be under increasing pressure to demonstrate their social impact to other funders and commissioners but that's only part of the point. The key issue is that, as social enterprises, we need to know what we're trying to do and whether it's working. If we, as people running social enterprise don't have the time and resources to work out what we're doing and how it's making the world a better place, we probably don't have the time and resources to run an organisation at all. David Floyd is managing director of Social Spider CIC and blogs on Beanbags and Bullsh!t This content is brought to you by Guardian Professional. To join the Guardian Social Enterprise Network, click here. reddit this Comments (4) Posted by David Floyd 14 May 2013 16.13 BST guardian.co.uk Comment wall Jeff Mowatt 15 May 2013, 11.58 I wrote a social impact report (because I was asked to) for the SE100 index in 2011. It described our impact on childcare policy in Eastern Europe and the social business approach we used. Back in 1996 we'd made a point about measument saying:- Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion. There was an interesting congruence with what Muhammad Yunus says of Grameen Danone, that the bottom line is the number of children removed from malnutrition since our focus was placing children in loving family homes. i wrote this impact story up for the Mix initiative run by Mckinsey and Havard last year. The thing is David, if we can't find anyone to publish these reports - how can anybody know anything about what works or doesn't? Report abuse MJ Ray 15 May 2013, 12.51 'More or less everyone involved in social enterprise agrees that demonstrating your impact is really important' They do? I thought customers didn't agree, that it was a myth that people buy from social enterprise because of their impact. Someone wrote about that on this very site! http://socialenterprise.guardian.co.uk/en/articles/social-enterprise-network/2013/apr/08/mythbusting-customers-buy-social-enterprises As far as I've seen, a big problem of many social impact systems is assigning a value-free price to everything. The various Co-operative Codes are notable exceptions, accepting that social goals are worthwhile in and of themselves. Report abuse David Floyd 16 May 2013, 0.41 It's a myth that customers from social enterprises (just) because they're social enterprises. It's too soon to say whether or not a significant percentage of individual consumers would actively choose to buy from social enterprises delivering a demonstrable social impact, because there aren't enough social enterprises (yet) that both sell in consumer markets and explain their social impact to customers for any meaningful assessment to be made. I think a significant percentage might. Report abuse Jeff Mowatt 16 May 2013, 10.22 I'm trying to get my head around this. The SEIF was introduced to fund social enterprise healthcare spin outs and was specific about these being nonprofit organisations. They need to show SROI, before they've began operating. I guess this can only be hypothetical. But social enterprises are businesses which invest profit for social benefit OTOH social enterprises overall receive 8 times their profit in grant support. People don't but from social enterprises on the basis of their social impact, they buy products that meet their needs or desires. Nesta have created a standards scale for measuring impact. which will be no interest to customers of social enterprise businesses.. Social enterprise that do produce social impact reports can't get them published. They're aren't enough social enterprises trading and creating social impact reports to be noticed. Perhaps only Danny Kaye could get his head around this - Vessel with the Pestle or Flagon with the Dragon?