From auditing to management

Impact measurement practices have been initially created by development agencies, such as USAID ( United States Agency for International Development) and Dfid (Department for International Development), and have developed quickly in the last decade leveraged by the impact investing sector, which requires from investors measuring their actual impact generated.

Despite the benefits that this trend brought to the concreteness of impact measurement methodologies, the approach generally taken by investors seldom satisfies the needs of entrepreneurs, as metrics are not aligned with their daily challenges.

The new generation of impact measurement aims to integrate impact and business management. For example, by integrating the Customer Relationship Management to the impact evaluation process, a company can simultaneously measure the change experienced by beneficiaries and the client's satisfaction level with their product.

In order to facilitate the process of alignment of business and impact metrics one can apply methods of mission alignment, that evaluate the assessment of an organization's strategy against its mission and end goals. As Ivy So and Alina Staskevicius describe at "Measuring the impact in impact investing" this method can include Theory of Change or Impact Map that drives the identification of KPIs into an effective scorecard.

... the perspectives of a traditional balanced scorecard are actually analogous to a logic model. By juxtaposing the two frameworks, we can see that the four perspectives of the balanced scorecard can be considered and captured in application of the logic model framework.

Below you can see the Theory of change framework, which leads to select indicators of impact. Notice that while impact is a long term aim, the management process must involve all the steps that lead to the right direction, from Inputs to Impact.

Source: Elaborated by Impact Track from EVPA Guide to measuring and managing impact and from Kellogg Foundation Logic model development guide.

To learn more about this topic see: Measuring the “impact” in impact investing - Harvard Business School; Metrics 3.0 a new vision for shared metrics - Stanford Social Innovation Review

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