What Justifies The Growing Need For Social Enterprises To Evaluate Their Social Impact?
Social enterprises are at the heart of the global economic system, despite being recent additions to the trend of entrepreneurial ventures. These are driven explicitly by a particular social cause with the primary objective of serving the common good.
These organisations, however, are complex in their structures.
They involve multiple stakeholders such as public authorities, local leaders, facilitators, beneficiaries, funders, supports along with others and have several goals with multiple bottom-lines, aiming to produce social, economic and environmental value to society. This necessitates the outward generation of desired social benefits by the organization. Moreover, with an increase in the number of social enterprises aimed at bringing a positive change to society over time, an analysis of their impact on society is necessary to identify, understand and capture the effectiveness and potential of such organizations.
Impact measurements for a social enterprise involve a process of understanding the adopted mechanisms and simultaneously measuring the effectiveness of intended interventions. Due to complexity in organizational structures and tools or techniques utilized to report profitability (e.g. financial profits, balance scorecard, and benchmarking), for-profit business models cannot leveraged when in the impact measurement framework of the social enterprises.
Social enterprises must take into account expenditure, income and profits when attempting to fulfill social purposes while justifying how resources have been used to achieve these objectives. Therefore, comprehensive models such as theory of change, social audit, social return on investment (SROI) help these organizations in applying impact assessments to enhance their endeavours to change the world. These frameworks entail the incorporation of dynamic and multidirectional approaches to measure the short-term and long-term outputs and outcomes. And at the same time, they also inform processes, mechanisms and systems involved in achieving the desired aims at all organizational levels.
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Impact measurement framework acts as a critical guideline to solve the problem
Social impact measurement aims to provide evidence of the intervention, assisting leaders in identifying the enterprise’s vision, mission and values while also setting objectives, planning activities and elaborating priorities to meet a vision in the context of a social problem. It helps leaders understand the magnitude and direction of contributions and the identity of potential beneficiaries. As a tool that sets realistic objectives against the prospective deliverables of their mission, the evaluation framework model serves as a benchmark to inform decision-making during the implementation stage.
Once the proposed actions are in line with the purpose of the project, the framework allows for a better understanding of potential financial returns. And since investments in a social enterprise are driven with an aim to create social impact first and thereafter any financial return, it is a fundamental necessity to conduct impact assessment for measuring this impact and hence establish the accountability to the funding organisations and investors.
Additionally, social impact is primarily an effect on the beneficiaries targeted by an enterprise as a result of its actions and so, measurements of this impact are important; a story of change claims their mission and thus, encourages community engagement with the mission.
The framework helps the social enterprise to outline its medium-term strategy
A defined evaluation framework is a guide not only to answer questions, such as what an enterprise wants to achieve and how it will achieve it, but also to reflect on how it will confirm effective operations.
After execution of the required assessment, the framework assists the enterprise in monitoring the progress of its operations. Such evaluation essentially provides a means for critical reflection of the processes involved and helps the project leaders identify potential strengths and weaknesses. This strategic perspective is instrumental in providing narrative evidence of organizational performance which helps review the efficiency of internal systems and stakeholders with an eye to more systemic and sustainable change.
The framework defines goals for the enterprise in long-term
Impact measurement supports a high-level and forward-thinking vision in quantifiable terms. This means that it would articulate parameters of success or ideal outcomes over time and therefore, effectively communicate the social value of project to the stakeholders keen on seeing the tangible impact. Building on this clear and consistent engagement, the measurement framework is an instrument that not only attracts the investors, funders, customers and other key stakeholders, but also helps to build stronger relationships and confidence in the long run.
At the same time, these reports also advance a transparent approach into the double or triple bottom line values of the organisation. This transparency generates a learning component within the deliverables of the organisation which can be shared with others, internally or externally, to inform future activities and research.
The importance of communicating impact (Sourced from Intelligent HQ)
Therefore, impact measurement of a social enterprise is a process that effectively creates value for an enterprise, reflects on the current efforts and achievements, identifies the relevant dynamics and helps optimize future projects.
Himani Aggarwal is pursuing MPhil in Evidence-Based Social Intervention and Policy Evaluation. Currently, she is also working as a consultant for Immunisation Systematic Review with International Initiative for Impact Evaluation. She is passionate about the issues of education, health and social welfare of the rural communities. Primarily, she is interested in studying about the mechanisms that can be effective in addressing education inequalities in low- and middle-income countries. Her interest in EBSIPE can be traced back to her master’s degree in Economics with specialisation in Economic Policy from University of Bristol. In the past, she has worked with the Government of India and has been an active social worker with organisations such as Students4Students and Rotaract, where she was in charge of multiple educational and health support projects for at-risk population at leading positions.
The views expressed in this article are the author's own and do not necessarily reflect any editorial policy.