You are an investor. Every time money moves, this is an investment. You make dozens of investment decisions everyday.
Every item you buy in your local store is a decision and an opportunity to invest in ethical providers or a healthy lifestyle. Every time you buy clothes you have a choice to invest your money in brands who are committed to sustainable fashion. Every choice you make to better balance our increasingly meat-based diet, you invest in a healing of our environment. If you have a pension plan, somebody is making decisions on your behalf on where to invest your retirement funds.
And every investment has an impact. Good or bad. If you knew that some of your purchasing decisions or investments cause harm for the world, I bet you would reconsider your investment choices. I know you would, because who wants to cause harm knowingly?
Seek the answer to this question: ‘what impact do my everyday decisions have on people and the planet’? If you are an investor in the traditional sense, and have thousands of dollars in investment funds, ask yourself ‘what impact do my investments make?’ Do they cause, or avoid harm for people and the planet? Do they contribute to solutions of social and environmental issues or benefit underserved communities?
The world needs you. Your investments are your superpower. Any power comes with responsibility, let alone a superpower. You can’t just not do anything with it. So what are you going to do?
Think about it. It is your chance and choice to change the world – better or worse. What is it going to be?
We buy a cold drink because we’re thirsty or need a refreshment on a hot day while we are trying to deal with a million things. We may have preferences, but we don’t really care how many units you’ve sold today or in the past 6 months. We buy snow boots for our toddlers because we want their feet to be warm and cosy in below zero temperatures. If they make this happen, we don’t care how many distributors you have all over the world.
You may be great. Your product or service may be wonderful. It is relevant and valuable to the extent that it solves a problem for us or addresses one of our needs. We buy the difference you make in our lives. We buy your help in making us the hero of our own lives.
This works in a similar way in the not-for-profit sector. More so now than it has ever been. Your beneficiaries take part in your initiatives not because you’re great but because you offer something that addresses a problem in their lives and helps them become a better version of themselves. Other organizations team up with you because you respond to a need in their community. The days when donors used to give a generous cheque to a not-for-profit because they seem to be nice people and doing good stuff, are long gone. These days, especially the new ‘millennial’ generation of donors give to causes they are passionate about. They give with an intention to contribute to solving the world’s problems. They give to make the world a better place.
So, what problem do you solve for people and their communities? What needs do you address? What difference do you make? And who is the hero of your story?
If your elevator pitch, website, adverts, promotional materials, social media channels are not answering these questions clearly at first sight, then you don’t give people the opportunity to relate to you. You don’t give them a reason to buy your product, participate in your project or donate to your organization. They don’t choose you as an ally that helps them to be the hero of their lives.
The difference you make, the problem you solve and the need you address is your impact:
Understand it and you will relate to the heroes of your story better;
Measure it and you will know whether you are really solving problems or unintentionally contributing to them;
Communicate it and people can make a connection and become more willing to engage with you.
As mighty as you think you are, don’t forget the hero of your story nor underestimate the power of your impact in your survival and growth.
“If your presence doesn’t make an impact, your absence won’t make a difference.”
When having a conversation about the impact of an initiative, often there is a lack of common understanding across the basic definitions of the elements of an impact journey. It is not uncommon to see ‘output’, ‘outcome’ and ‘impact’ being used interchangeably and interpreted differently. This may create confusion especially when you would like to map out how change occurs due to your business or initiative. Moreover, understanding these elements will make your job easier when it comes to identifying suitable methods to measure your impact. In this article, I aim to bring clarity to how these 3 elements of impact differ from one another with the help of examples in three different contexts.
In an impact journey there are three levels of impact that interact with each other. They tell the story of the difference you make in the lives of the beneficiaries and key stakeholders of an initiative and society in general. These levels are output, outcome and impact. My intention is not to invent new definitions for these as there are already many of them at your fingertips when you do a quick online search. Instead, for the purposes of this article, I will use OECD’s definitions, which are available in fifteen languages, to illustrate what an impact journey looks like all the way from inputs to impacts. These definitions are in the context of ‘development interventions’ but they should still make sense if you think about your own context when reviewing them:
Here are three contexts where we can see how outputs, outcomes and impacts are defined and interact with one another. The lists below are mainly based on the changes experienced by the beneficiaries and therefore are not fully comprehensive. They are compiled with the intention to reveal differences by examples and get you thinking about the outputs, outcomes and impacts of your own initiatives.
Example #1 – A training course on diversity in the workplace:
Outputs: Number of hours of training undertaken, number of people trained, diversity of people trained
Outcomes: Increase in knowledge about diversity, increase in positive attitudes about diversity, increase in level of openness, increase in level of intercultural competence
Impacts: Increase in positive attitudes leading to behavioural change and resulting in a more inclusive work environment; increased openness to other cultures and intercultural competence leading to social cohesion
Example #2 – An exhibition about the achievements of visually impaired people
Outputs: Number of visitors, number of days the exhibition was run
<p value="<amp-fit-text layout="fixed-height" min-font-size="6" max-font-size="72" height="80"><em>Outcomes:</em> Increase in awareness about the capabilities of visually impaired people, positive change in attitudes towards visually impaired, increase in the ability to empathize with visually impaired, increase in knowledge about how to communicate with visually impaired, increase in awareness of the importance of other sensesOutcomes: Increase in awareness about the capabilities of visually impaired people, positive change in attitudes towards visually impaired, increase in the ability to empathize with visually impaired, increase in knowledge about how to communicate with visually impaired, increase in awareness of the importance of other senses
Impacts: Increase in positive attitudes towards and ability to empathise with visually impaired people, leading to behavioural change and resulting in reduction in inequality
Example #3 – An outdoor education program for young people
Outputs: Number of young people taking part, number of staff and volunteers trained to support the program, number of hours of training undertaken, number of hours spent outdoors, number of hours spent doing physical activity
Outcomes: Increase experience in planning and problem solving, increased experience in teamworking, sense of achievement and satisfaction, increased interest in physical activity, increased awareness of environmental issues, increased appreciation of nature
Impacts: Enhanced life skills leading to improved employability; increased appreciation of nature and awareness of environmental issues leading to reduced environmental impact
It is when we move on from outputs towards outcomes and impacts that we start to talk about the change that the beneficiaries experience in their lives. The zone of the outcomes and impacts is where we ask the ‘so what?’ question. So what happens when 100,000 people visit the exhibition? And so what happens if they became more aware of the capabilities of visually impaired? So what happens if your employees know more about diversity at workplace? So what happens if young people have an increased interest in physical activity and nature?
To reach the ultimate ‘impact’, keep asking ‘so what’ until it takes you to broader changes that occur within the community, organization, society, or environment which you can no further challenge with a ‘so what’ question. Are you struggling with conceptualizing what those broader changes could be? This is where your impact may intersect with the Sustainable Development Goals (SDGs) of the United Nations. Check them out to see whether any of your outcomes may be leading to any of these global goals.
Has this article helped you to distinguish your outputs, outcomes and impacts? The more examples we hear the better we can relate to these concepts and juggle with them comfortably. Please share your initial thoughts about the elements of your impact journey that this article has prompted. What is your context? What outputs, outcomes or impacts come to your mind?
I have a certain level of academic research and market research experience. I am trained as a Social Return on Investment (SROI) practitioner by Social Value UK (2015). I am actively practicing social value evaluation methodologies in the context of a global non-formal education and learning (NFEL) programme. I wouldn’t say I’m an expert, but I would like to share my learning and observations in impact measurement and evaluation with the hope that they provide useful insights to those who are gearing up to measure the impact of their product, service or projects and considering to adopt social value analysis as a way of measuring their social impact.
In this inaugural article of my ‘Musings of an impact practitioner’ series, I would like to talk about one of the questions that I get asked frequently: what is the difference between the economic value versus the social value of an ‘output’ or ‘outcome’? And to illustrate this difference, I will elaborate on the economic value versus social value of volunteering in the context of our work with The Duke of Edinburgh’s International Award – Australia as a case study.
What is social value?
Before we go any further, let’s clarify what we mean by ‘social value’. Social value is the value of the changes that beneficiaries and stakeholders experience as a result of using a product or service; or taking part in a project or programme. So, in my context, we deliver a programme for young people through adult mentors and we define our social value as ‘the value of the changes that young people, adult mentors and the wider society experience as a result of coming into contact with our programme’. Using SROI principles and welfare economics, these changes are represented in monetary terms. The monetary value of the impact created is a way of understanding the contribution that your product, service, project or programme makes to society and economy. Simply put, it is the economic value of your social impact.
Economic value of volunteering hours
Volunteering is one of the elements of our programme through which a remarkable volume of economic and social value is generated. Young people who take part in a regular volunteering activity within the programme and their adult mentors who support them at voluntary capacity donate millions of hours of service globally every year. Consider the ‘number of volunteering hours’ as an ‘output’. In 2017, the minimum number of volunteering hours completed by young people who completed the programme in Australia was 242,684. According to 2018 Australian Bureau of Statistics (ABS) figures, the value of volunteer hours in Australia in 2017 was 41.72 AUD/hour. When we adjust this value for age and multiply it with the total number of hours, it sums up to an economic value of 5.1 million Australian Dollars. In other words, young people who completed our programme in Australia in 2017, donated an equivalent of AUD 5.1 million in volunteering hours to their community. Impressive, isn’t it?
But… is it the true value of the impact of our programme? How much of these volunteering hours can we claim as a direct output of our programme? How do we know whether their volunteering activity was due to their participation in our programme? Would they have done it anyway? Did they do more volunteering than before while taking part in our programme? If they did, how much of the increase in their volunteering is due to our programme? Did the time they put in volunteering prevent them from experiencing positive impacts elsewhere? Or did they prevent others from experiencing positive impacts? So many ways we can challenge how much of that economic value we can claim.
Social value of volunteering hours
All the questions above sum up one of the key principles of SROI approach: do not overclaim. We do this by establishing impact and subsequently evaluating this impact by accounting for attribution, deadweight and displacement. Here is a helpful visual from Collective Value Creation that explains these concepts:
When these discount factors are considered, we find the social value of young people’s volunteering due to their involvement in the Award in 2017 is AUD 2.1 million. Where do we get these discount factors from? We ask young people themselves through a survey– 2 other key principles of SROI: involve stakeholders andunderstand what changes.
Social value also considers the intention to continue volunteering and the value of volunteering hours of young people over their lifetime. When calculating this future value, ‘drop-off’ factor is taken into consideration to account for the decrease in volunteering activity. The future value of volunteering hours for young people who completed their Award in Australia in 2017 is estimated as AUD 9.5 million. So, our combined social value of the present and the future value of volunteering hours in Australia in 2017 is AUD 11.9 million.
Understanding the value of output versus outcomes
When it comes to finding out about the difference that our programme makes in young people’s volunteering and its social value, there is more to it. ‘Output’ answers the question of ‘what’. As a measure of social impact, social value does not stop at ‘what’; it goes on to explore the value of ‘so what’. So what happens when young people do a minimum of 242,684 hours of volunteering? Now we are talking about ‘outcomes’. For instance, we know from anecdotal evidence and secondary research that increased volunteering leads to improved mental health and well-being. So in our social value evaluation we also look into the social value of well-being due to increased volunteering. I will say more about how social value helps to quantify the value of outcomes in another article.
I am a big advocate of understanding, measuring and communicating impact. Outputs are the low hanging fruit in the entire impact journey. They are the ones that we are most familiar with; we see them in annual reports and key promotional materials. They provide a good starting point for understanding your impact. If you don’t know your outputs start from there; how many beneficiaries, how many hours, how many events, how many touch points, how many ‘likes’? Then find a way to evaluate them to make it meaningful, tangible and relevant in your context. As discussed in this article, economic value is a great way of showing the value of volunteering hours in a community in a tangible way. As you progress further in your impact journey, social value approach may help you identify multiple ways to look at and evaluate your outputs and their outcomes and bring you closer to understanding the value of the difference you make.