How can you measure the social impact of your business?

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Whether you’re interested in raisingfunds from impact investors or securing partnerships with other organizations or government players , measuring your impact will demonstrate that your social enterprise is delivering on its mission.

But how do you get started?

Logic models: a strategic way to think about impact

You can measure the social impact that your enterprise creates through the entire life-cycle of your business (from ideation to execution and results), by using a simple tool called Logic Model.

While there are many different tools and frameworks for measuring impact, the logic model is one the easiest and adaptable tool that we recommend to help you plan, evaluate and clearly measure your social impact at different stages of your enterprise.

So how does the logic model actually work?

The logic model is basically a breakdown of the 5 ways in which your business works and creates impact. As seen in the graph above, the 5 parts are:

Inputs: the resources you put into your business to make your business work

Activities: the main actions your business does

Outputs: the products or services created from your business activities

Outcomes: the benefits created from your product or service

Impact: the long-lasting effect your business has on your target community

By selecting measurable (trackable with data) goals at each of the final 3 stages of the logic model (Outputs, Outcomes, Impact), you can begin to measure your impact.

It’s important that as you pick the goals measuring your impact, you should be lean! There are many goals to choose from, so to makit easy on yourself , only choose a few.  We recommend picking 3 – 6 output goals, 2 – 3 outcome goals, and 1 – 2 impact goals.

Of course, you can adjust this depending on the stage of your business and the impact your Social Enterprise prioritizes.

Tip on Output versus outcomes

Steps 3 and 4 of the logic model, outputs and outcomes, are often used interchangeably, yet they actually represent two different ideas.  Output is “the literal amount of the thing you’ve produced” and demonstrates that an activity has taken place, whereas an outcome measures the change that has occurred as a result of the output.

Here is an example of a social enterprise that builds and distributes water sanitation devices to give you more clarity.

The output of the business would be the actual sanitation devices they create (for e.g. they produce 500 sanitation devices per year), whereas the outcome of the business is that the community using the sanitation devices has clean and safe drinking water (for e.g. 5,000 people now have safe water).

Aligning with the SDGs

The UN’s Sustainable Development Goals are the most commonly used goals amongst businesses, investors, government, NGOs and social entrepreneurs for measuring social impact. While there are 17 goals in total, they collectively represent 5 P’s: Peace, Prosperity, Planet, Partnership and People.

Aligning your social impact with the SDGs will help you showcase your impact better in global context.  It is also useful because the SDGs are goals, and each goal has several targets — the targets are basically checkpoints you need to reach to meet the goal. So, by aligning with the SDGs, you have goals and targets to help guide your impact measurement.

We will be decoding SDG’s and diving deep on aligning  Social Enterprises’s impact with SDG’s in our future articles so keep coming back to this space.