Let’s start by drawing a distinction between Output (what you produce) and Outcome (the societal benefit that you create). You need to define and measure both accurately.
Consider an education venture whose goal is to help high school children from low-income neighbourhoods improve their maths grades. The venture’s strategy might be to run extra classes outside school staffed by volunteer maths teachers. In this case, the venture’s output is the number of classes that they run, the number of youth from low-income backgrounds enrolled in those classes, and their attendance rates. These are metrics that the venture can easily measure.
However, the venture also needs to measure the outcome of those classes. Did they achieve their goal of helping students improve their grades? The venture therefore needs to measure the improvement in maths levels between when the students started studying with them and when they finished. This is the actual benefit to society created by the venture.
We can also talk about the long-term impact of the venture. Impact is harder to measure than output or outcome. It is the diffuse, long-term set of positive consequences that result from the intervention.
There are three concepts that you need to be aware of when stating the impact of your venture’s work:
- Deadweight: any changes that would have happened whether or not your venture had done anything.
- Alternative attribution: figuring out how much of the change was caused by the work of others (other organisations, the government, individuals etc.) and subtracting this from the total that your venture can “claim”.
- Drop-off: calculating how much the effect of your venture’s work will decrease over time.
To be able to convince social investors of the effectiveness of your venture, you need to be able to:
- Measure the precise outputs that you will deliver.
- Measure the outcomes that will be achieved by your output.
- Describe the long term impact that your outcomes will facilitate.
- If possible, partner with a research institution to measure the impact.