Module 3: Mapping the Social Impact Ecosystem
The following has been adapted from the Standards Australia, ‘Measuring and Valuing Social Impact - Guidance on approach and methodologies” Handbook SA HB 204:2-22. Sectoin 2
Since the middle of the twentieth century the use of financial metrics as a measure of social value and progress has become ubiquitous. Economic activity has been used as a proxy for societal wellbeing and social progress. The concept of GDP developed in the 1930s was intended only as a measure of economic progress, it became the de facto measure of human progress. The notion of what is deemed to be “a good life” has become equated with fast economic growth, which has then become an end in itself.
By the start of the new millennium there was growing recognition of the limitations of GDP as a measure of human progress and sporadic advances towards the introduction of alternative measures. For example, the Australian Treasury introduced a wellbeing framework in 2004 and in 2006, the UK’s then Prime Minister David Cameron made a speech to Google Zeitgeist Europe declaring it was time to recognize there is more to life than money and that it was time to look beyond GDP and focus on general wellbeing.
The Global Financial Crisis was a trigger for greater formal action. In 2008 France set up The Commission on the Measurement of Economic Performance and Social Progress with leading economists Joseph Stiglitz, Jean Paul Fitoussi and Amartya Sen to establish a better measure than GDP for measuring social progress. This helped provide recognition at a global level of the limitations of GDP as a measure of progress and that our over reliance on financial measures of social progress is having many unintended consequences [1]. In 2011 the UN General Assembly passed resolution 65/309 [2] which called on member states to recognize the limitations of GDP, focus development and policy more on wellbeing and happiness and emphasised the need to develop better indicators to measure these phenomena.
This call to action has been taken up by a growing list of countries around the world that have adopted wellbeing budgets, including Scotland, New Zealand, Wales, Finland and Iceland with Australia the most recent. Across the private and social sectors there has also been rapid growth in the production of new frameworks, approaches and emerging standards for measuring social impact. Some seek to go beyond GDP as a measure of social progress, others seek to go beyond ESG management and reporting and balancing social and financial returns. There are now many approaches to measuring social impact at global, national, local and sector-specific levels.
However, the sheer number and diversity of measurement approaches is causing confusion about which approach to use and is reducing the effectiveness of social impact measurement to enable resources to be directed to where they can have the greatest social impact. Critically, social impact measurement assists in understanding how to address social issues and in strategically and systemically achieving social impact. OECD Global Action [3] articulate that social impact measurement is needed to effectively allocate resources to social value creation; enable organisations to improvise, experiment and allocate; increase stakeholder collaboration and participation; and to persuade (for example, to inform policy design).
It is now clear that many of the issues the world is currently facing have arisen due to a preoccupation with financial growth, with social and environmental impacts being ignored. Without measuring what matters we will therefore continue to make decisions at the cost of our social, environmental and personal wellbeing.
[1] STIGLITZ J., SEN A., FITOUSSI J. Report by the Commission on the Measurement of Economic Performance and Social Progress. 2010 [viewed 2021-0https://ec.europa.eu/eurostat/documents/8131721/8131772/Stiglitz-Sen-Fitoussi-Commission-report.pdf6-30]
[2] UNITED NATIONS GENERAL ASSEMBLY. Transforming our world: the 2030 Agenda for Sustainable Development. 2015
[3] OECD GLOBAL A.C.T.I.O.N. “PROMOTING SOCIAL AND SOLIDARITY ECONOMY ECOSYSTEMS. Social Impact measurement for the Social and Solidarity Economy. OECD Local Economic and Employment Development (LEED) Papers. 2021. [viewed 2021-08-30]
There is a myriad of measurement authorities, standards and frameworks operating within and across sectors. We offer a map to the ecosystem to help you identify appropriate tools and authorities to refer to for your measurement project.
Lessons
Lesson 1: Systems - Management, Measurement and Valuation
Within different sectors (government, community development, investment and enterprise) across the ecosystem, there are many different approaches to ‘measuring’ social impact. The first thing to note about the ecosystem, is that many approaches are not actually measurement systems. Instead, they either focus on how an organisation or initiative should be managed to have a positive social impact (such as what to think about and what to report on), or how the impact should be valued once it is known. Measurement systems instead focus on assessing what, how and why something is happening and can involve both quantitative and qualitative elements
For example, the Impact Management Platform (IMP) provides guidance for managing impact. The IMP provides actions for impact management that starts with Strategy (embedding impact within strategy) and goes on to include measuring and valuing. When it comes to measuring impact, the focus of this course, the process follows a scientific approach, stating with developing your hypothesis (impact thesis) and designing an experiment (measurement plan) to test and learn against the impact thesis. Once measured, if we want to understand how much the impact is worth, we need to apply a valuation approach. Valuation is often done in terms of calculating the economic value, such as the various Social Value Banks around the world, including the Australian Social Value Bank, that puts an economic value to the improvement in wellbeing. However, noting the inherent limitations in converting social value to financial value, there are other wellbeing valuation approaches emerging including the WELLBY approach, or Wellbeing Adjusted Life Year approach, that calculates value in terms of the improvement of wellbeing and length of time. The WELLBY is similar to the Quality Adjusted Life Year (QALY) in the health system. The WELLBY approach recognises that social value is distinct from financial value and therefore is an approach that moves us closer to determining longitude.
Lesson 2: Levels of Prescription
For each type of these systems, there are levels of prescription across the ecosystem. These are summarised in the following diagram, in order of increasing prescription, again to help organise where everything in the ecosystem fits in.
Lesson 3: Accounting vs Social Science
Another framing that may assist to make sense of the myriad of methodologies, is to categorise them as either ‘accounting or social science’ based. This categorisation matters because accounting-based methods tend treat changes in people’s lives as occurring in isolation, or linear, without recognising that all aspects of our lives are interconnected. Where outcomes may be achieved in one area of people’s lives it may be at the expense of other aspects of their lives. Accounting based methods treat impact like a balance sheet, calculating the sum of positive and negative impact. Accounting based methods also often ignore context, giving outcomes the same weighting across different contexts. Whereas social science-based methodologies recognise the complexity of social change, understanding social value as the net effect of change in people’s lives based on how the lived experience of the people impacted.
Below is a table summarising the differences to help make it clear how the discipline effects the integrity of the approach.
QUESTION & ANSWER
Your Log Book Exercises
Head to your log book to see the activities in relation to module 3.
Additional study
Here are some additional resources we find thought provoking, clarifying and at times even inspirational:
ESG is Dead, Long Live Social Value - (2022), Guy Battle, CEO of Social Value Portal
Using Measurement to Manage Impact, (2019), Martina Castro and Matt Ripley, Standford Social Innovation Review
The Next Frontier in Social Impact Measurement Isn’t Measurement at All. (2016), Kate Ruff and Sara Olsen, Standford Social Innovation Review
If you have any questions or thoughts that will be relevant to all those on their accreditation journey please ask away and we will post a Huber Social Academy response below.