Why and how social enterprises should measure their social impact?

On February 11, 2014 Pour la solidarité (member of SOLIDAR), in partnership with Saw-b, organised an interesting conference at the European Economic and Social Committee on why and how social enterprises should measure their social impact.

Many discussions are going on at EU level on measuring the social impact of social enterprises. In the frame of the Commission's Expert Group on social entrepreneurship, a report has been drafted to propose approaches to social impact measuring in the frame of two EU instruments: the EU Programme for Employment and Social Innovation and the Regulation on European social entrepreneurship funds.

But why is this happening? More and more financial institutions and private investors are interested in investing in social enterprises: it is a more secure form of investment than financial markets and it has a social objective. But to be able to decide if to invest or not, investors need to measure their risk, therefore they are interested in measuring the social impact of the social enterprise they might decide to support.

The logic of "payment by result" is becoming more and more common among public authorities as well: public authorities want to pay service providers only when their intervention proves to be successful. Public authorities want to spend their money in an effective and efficient way.

What could be the interest for social enterprises to mesure their social impact? This was the core of the debate at this event.

Sybille Merten (HEC-ULg, Management School, University of Liège) pointed out three reasons why social enterprises should measure their social impact: for an internal reason, to improve management control; for two external reasons: due to dependance from external funding socurces and to increase their legitimacy. Studies on dependance from funding socurces show that beneficiaries start using the tools of funders or investors. Therefore, it is important to choose relevant indicators, quantify what it is possible to quantify, do not forget to qualify, and educate the evaluators (donors, funders, investors) on how social enterprises function and work. We need to develop together evaluation methods that are suitable to social enterprises to accompany and steer the changes happening in our society.

Benoît Fontaine (King Badouin Foundation) informed that the Foundation set up the "Fonds Venture Philantropy" to respond to the need of the Foundation to show its impact. This Fund was created in order to strenghten the organisational capacity of social enterprises and non for profit organisations. 70% of the organisations benefitting from this Fund say that this support brings added value to their organisation. The King Badouin Foundation ia also experimenting the use of Social Impact Bonds which raise a lot of questions linked with the evaluation of the social impact of the activities carried out. He stressed that Social Impact Bonds are not a tool to be used for reporting, rather a management tool. He added that it is impossible to use only one tool. They used the Social Return on Investment and decided to abandon it because it is impossible to measure and to measure everything. A sufficient horizon of time is needed as well: minimum three years. Monitoring and measuring are important to be aware of failure, accept it, talk about it openly to be able to imrpove.

Nicolas Van Nuffel (CNCD) added that the added value of using evaluation and measurement tools such as the logical framework and problem tree analysis is that one is obliged to structure his or her thinking. There are however some risks, such as focusing on the implementation of his / her logical framework in isolation from the context, determinism (if I do A, B and C, I will get D), depoliticization of processes, devaluation of alliances (because you tend to focus on the activities andstrategies of your own organisation).

So, we should follow the advice from Florent Duclos (AVISE): yes, let's measure, but we shouldn't use one methodology, organisations need to develop their own methods and tools. This is what you learn from Avise's methodological guide, on measuring the social impact.