What Is Impact Measurement? Here’s A Complete Rundown
Whether your organization is a nonprofit, a family foundation, an impact investing firm, or a corporation with several corporate social responsibility (CSR) initiatives, your work makes a real difference. But how do you know what that difference is?
The answer lies in a process called impact measurement, which allows you to make data-driven decisions that shape your organization’s future and the good it does for others. In this guide, we'll explore everything you need to know about impact measurement and how you can get started:
FAQs About Impact Measurement
What is impact?
Impact refers to the tangible changes or results an organization generates for its community as outlined by its mission, vision, and goals.
Depending on the nature of an organization's work, it may have an impact on one or more of the following:
- Individual lives
- Societal systems and structures
- The environment
- Economic development
- Pubic health and well-being
- Education
- Cultural and artistic expression
- Human rights and social justice
- Technology and innovation
To understand and communicate your own organization's impact, you need to evaluate and report on it effectively. That's where impact measurement comes in.
What is impact measurement?
Impact measurement, also referred to as impact measurement and management (IMM), is a process that involves evaluating the effectiveness of an organization's programs, initiatives, and interventions to determine if the organization is delivering its intended results or benefits to its target beneficiaries.
This means going beyond tracking what an organization does daily, like making investments, checking in with grantees, putting volunteers to work, or delivering services, and examining the short- and long-term positive outcomes of the work it's doing.
Why is impact measurement important?
Let's examine the importance of impact measurement from the perspective of mission-driven organizations and their stakeholders.
Measuring organizational impact is important for:
- Accountability and transparency: Mission-driven work depends on stakeholder support. By demonstrating how resources are used and the effectiveness of services rendered, organizations can stay accountable to stakeholders and maintain trust as they strive to be transparent about their operations.
- Learning and making improvements: Understanding the impact of programs, initiatives, and interventions allows organizations to learn what strategies work best and make data-driven decisions to improve their approach.
- Resource allocation: In the mission-driven space, sticking to a budget and prioritizing the most important needs is the name of the game. Impact measurement allows organizations to see which areas of operations need the most time, attention, and funding.
- Enhanced employee morale: Impact measurement has the power to open team members' eyes to the importance of the work they do every day, which can motivate them and increase productivity.
- Better marketing: Measuring impact can help an organization share its story in more emotionally evocative ways, which can be helpful for raising awareness of its cause and calling for support.
- Scaling up operations: Whether an organization is creating a strategic plan for the next five years or simply planning an upcoming fundraising campaign, it's always looking to grow its impact. To achieve more down the line, organizations first have to understand how well they are currently performing.
For the stakeholders who support mission-driven work, impact measurement is important for:
- Organizational governance: The leaders of mission-driven organizations, like the board of directors, need a full understanding of how effectively the organization is delivering its mission. This way, they can make informed strategic governance decisions and guide the organization toward a healthy future.
- Compliance and regulatory purposes: Policymakers, investors, or grantmaking organizations may require organizations they support to report on progress toward their mission. When an organization has an impact measurement strategy, this process is much smoother.
- Strengthened relationships: Mission-driven organizations often collaborate with community partners or businesses to move their work forward. Demonstrating impact is a good way to strengthen and maintain relationships and show partners why they should continue to lend support.
- Having evidence of an organization's effectiveness: Stakeholders like donors or investors want to know that their contributions are making a difference. When they can see an organization's impact for themselves, they feel more motivated to give again.
- Recognition of contributions: Sharing an organization's impact is also a great way to recognize those who contribute to its mission, whether through donating, volunteering, or some other form of support. Being able to point to what their contributions helped produce can be rewarding for supporters.
Who uses impact measurement?
Different types of mission-driven organizations will have different IMM needs. Let's take a look at three core types of organizations to better understand their motivations for measuring impact and how they typically approach the process.
Impact Investors
Impact investors manage portfolio companies or funds, typically investing in for-profit organizations with a certain thematic focus, such as the environment, education, or social good. It’s an increasingly popular method of investing, growing at a compound annual growth rate of 21%.
These organizations benefit from impact measurement in two ways:
- They measure and report on their own organization's impact to stay accountable to stakeholders such as their board of investors.
- They also encourage portfolio companies or funds to report impact information to them.
By reporting on their own impact, impact investors can continue contributing to organizations building a better tomorrow. Additionally, by understanding the impact of portfolio companies and funds, investors can provide effective strategic support, helping the organizations they support improve their operations and scale up.
Real-World Example of Impact Measurement for Investors
SJF Ventures is a venture capital firm dedicated to driving sustainable and equitable growth by investing in high-growth companies that deliver both social and environmental impact.
This investment firm needed a structured (yet flexible) approach to impact measurement, so it partnered with UpMetrics to refine its process. This collaboration enabled SJF to automate data collection from its portfolio companies and to use dashboards that provide real-time visibility into its metrics. By making impact data transparent and actionable, SJF Ventures helps its partners see the tangible results of their investments while fostering long-term success.
Grantmakers
Private foundations, public foundations, corporations, and government agencies may all provide grants to nonprofits.
Similar to impact investors, these organizations measure impact to stay accountable to boards, donors, and communities while also encouraging their grantees to demonstrate the impact they're generating using grant funds.
Enhanced transparency among grantmakers, their supporters, and their grantees allows for better collaboration and learning among all three parties. Not to mention, transparency is largely becoming an expectation in producing impact—a study by the Association of Corporate Citizenship Professionals found that 56% of corporate social impact professionals are experiencing increased demand to measure impact.
Real-World Example of Impact Measurement for Grantmakers
The Ewing Marion Kauffman Foundation helps people in the Kansas City metropolitan area achieve financial stability, upward mobility, and economic prosperity. One way it does this is by providing grants to local organizations aligned with its mission.
During the COVID-19 pandemic, the Kauffman Foundation saw a need to improve its data strategy. The organization began using UpMetrics' IMM platform to set grantees up with a way to define their own success metrics and monitor their impact.
Now, the foundation and its grantees can learn from their impact data to drive even more positive change for the Kansas City community.
Nonprofits
Nonprofits rely on the generosity of others to keep their missions moving forward. One way they can prove themselves worthy of continued support is to demonstrate the impact of their programs and services. Research by the Golub Capital Social Impact Lab at Stanford Graduate School of Business reveals that both narrative descriptions and numerical data about impact boost giving rates when provided in checkout experiences (i.e., donation pages).
Not to mention, studies also show nonprofits experience a 25% increase in program effectiveness when they apply their data to decision-making. By measuring their progress, nonprofits can evaluate the outcomes of their initiatives and projects and use that information to make careful decisions about improving their operations.
Real-World Example of Impact Measurement for Nonprofits
Since 2000, America SCORES Chicago has provided free after-school and summer programming to youth that combines soccer, poetry, and service learning.
The nonprofit works with UpMetrics to enhance its reporting efforts and more effectively track student engagement and program effectiveness data.
Now, they have easy access to insights on their work that allow them to stay accountable to government funders and school principals. They've also found it easier and faster for their internal team to collect and manage organizational data.
How to Measure Impact
Now that you understand what impact measurement is, the value it can bring, and what it looks like at different organizations, you're likely ready to dive into evaluating your own organization's impact.
Follow these steps to get started:
1. Create an Impact Framework.
An Impact Framework is a visual and mental map that helps your team think about impact as something you can measure and leverage. Here's a snapshot of what your Impact Framework could end up looking like:
UpMetrics’ impact reporting tool allows organizations to put together all the pieces of its Impact Framework. Let’s look at the three key pieces:
Dimensions of Impact
At UpMetrics, we recommend you begin building your Framework by considering your larger mission and vision in the context of these dimensions of impact:
- Who you serve
- What you are delivering to those you serve
- The quality of your delivery
- How those you serve are better off because of what you deliver
- Community contributions, or the larger, possibly more indirect impact your work has on your community
From there, you'll determine objectives and key impact indicators that fall under those specific impact dimensions.
Objectives
To ensure your impact measurement efforts yield positive outcomes for your organization, stakeholders, and those you serve, you need to know what you want to achieve through the process.
Of course, you want to make headway on your organization's overarching mission, but breaking this larger objective into more granular goals will make the process more manageable.
Here are a few examples of objectives to inspire you:
- Raise academic performance across each high school in the district.
- Improve our portfolio company's solar panel installation program.
- Increase enrollment in our volunteer program.
- Strengthen our relationships with community partners.
- Help grantees distribute more hygiene kits to the unhoused in our county.
Key Impact Indicators (KIIs)
Similar to key performance indicators (KPIs), KIIs are measurable values that help you see the progress you've made toward your objectives. The KIIs you choose will inform the data collection and analysis steps coming up.
Here are some examples of KIIs:
- High school attendance rates
- Number of beneficiaries served
- Percent of donors who gave again
- Number of grants awarded
- Satisfaction from program participants
- Pre- and post-test scores
- Staff retention rate
- Total number of corporate partners
As you come up with KIIs that align with your own objectives, try to go a little deeper than surface-level indicators. For instance, it may be helpful to track the number of people who enroll in a program, but it may be more informative in the end to track the number of people who complete the program or are retained in the program year after year.
2. Select the data you’ll track.
Data refers to the raw facts and figures you need to collect and analyze to evaluate your organization's impact, or, on a more manageable level, its progress toward specific objectives.
You can (and should) use both quantitative and qualitative data to measure your progress.
Quantitative data refers to data that can be given a numeric value, whereas qualitative data focuses on qualities, characteristics, experiences, and behaviors in a more descriptive, subjective, or narrative form.
Test your understanding of quantitative and qualitative data by identifying the examples below!
Commit to working with both quantitative and qualitative data from the get-go. This will give you a fuller picture of your organization's impact once you begin analyzing your data for insights.
3. Collect data.
Begin by digging into the data you already have. The data that will get most of your focus will largely depend on the KIIs you've picked.
This will require you to identify where your current data lives. If your organization is small or new, you may only have a few spreadsheets to reference. However, larger and more established organizations may have heaps of data sitting in several different solutions, from donor databases to marketing tools. You'll eventually need to consolidate your data in one place to analyze it. Jump ahead to learn about recommended tools for doing this!
You'll likely want to collect additional data to reference as well. Depending on your KIIs and data needs, you may need to conduct surveys, interviews, or focus groups. You'll also want to look for trends in your internal database and other tools.
Also, consider any publicly available data that can enrich your organization's own data collection. For instance, perhaps your organization is focused on lowering the unemployment rate in your local area. Publicly available data about unemployment on the state, county, or city level can enrich your understanding of the data your organization has.
4. Analyze the data.
When it's time to analyze your data, you'll be looking for changes, trends, and patterns that occur over time. For example, you might see that your grantee's adult English as a second language (ESL) classes have increased enrollment every year for the past three years. Or, you may see that many focus group participants mentioned something about your email newsletter when asked what your organization could do to improve its marketing efforts.
So, how do you get your data to the point where you can see trends and patterns clearly? It depends on the data type:
- Quantitative data calls for statistical analysis. The specific method you'll need to use will depend on your KIIs.
- Qualitative data requires thematic analysis. To do this, you'll codify your data and then extract themes that you can turn into understandable insights.
If you're intimidated by the prospect of data analysis or know that this skillset is out of your team's wheelhouse, you're not alone. Consider partnering with a data scientist or investing in an impact analysis platform to explore what your data has to say about your work.
5. Act on your insights.
Effective data analysis will answer the question, "How close are we to achieving our objectives?" And once you have those answers, it's time to act.
This may involve:
- Making data-driven decisions and improvements to your organization's programs, initiatives, and interventions
- Generating comprehensive and engaging impact reports to share with stakeholders
- Sharing the story of your organization's progress toward its larger goals with your community through marketing materials
Even if your data says that you haven't made much progress on your goals or that new problems have emerged that need addressing, remember not to be discouraged by your findings. Let your insights spur positive change and optimism for better results in the future.
4 Impact Measurement Tools to Consider
Having the right tools at your disposal will make your impact measurement efforts easier and more successful. As you consider the top providers below, take into account your organization's needs, budget, goals, and plans for scaling up in the future so that you pick the right fit.
1. UpMetrics
UpMetrics is the leading provider of impact measurement and management software for nonprofits, foundations, impact investors, and CSR-focused corporations.
With our user-friendly tools, your organization can tap into our DeCAL methodology for impact measurement. DeCAL stands for:
- Define: Create an Impact Framework that includes the objectives and KIIs you want to track to accomplish your larger mission and vision.
- Collect: Gather your existing data, use our data capture tools to collect more information, and then format and prepare your data for thorough analysis.
- Analyze: Visualize your data with our custom dashboards and compare your outcomes against your organization's or industry's baselines to evaluate progress toward your goals.
- Leverage: Take your insights from our platform and use them to make positive changes, stay accountable to stakeholders, and share your organization's story.
Why UpMetrics Is The Best Tool for Impact Measurement
UpMetrics stands out because of our team of social sector experts. Through our managed services offering, you can tap into expertise on:
- Impact measurement strategy, Impact Framework, and KII development
- Data science
- Data collection and maintenance
Better yet, we'll help you become an expert in impact measurement, too, empowering you to become self-sufficient on our platform over time.
Additionally, by working with UpMetrics, you can tap into the power of community by joining our Impact Learning Collectives (free for UpMetrics customers!). Or, if you're a grantmaking organization, you can sponsor the cost of the platform for a group of your grantees through our Cohort program.
2. Sopact
Sopact is a software provider committed to helping organizations make sense of their data through careful listening and artificial intelligence (AI)-powered data collection and analysis.
They offer two solutions:
- Sopact Sense: A platform that allows users to easily collect data and then thoroughly analyze it with the power of automation
- Sopact Suite: A more robust tool that allows organizations to combine organizational data and AI for rapid data analysis, integrate with other solutions, and tap into expert support.
3. ImpactMapper
ImpactMapper is a provider that puts a special emphasis on helping organizations get the most out of their qualitative data.
Their software empowers organizations to:
- Turn text into quantitative trends
- Create custom surveys
- Create and customize data visualizations
- Review all data with high-level analytics
- Manage grants, grantees, and fund disbursements
4. Civis Analytics
Civis Analytics helps its users overcome data silos and unify information to better understand what motivates their audiences to take action. It's an especially useful tool for mission-driven marketers.
Some of its capabilities include:
- Easy importing and exporting
- AI-supported workflows
- Data standardization
- Data augmentation
- Data processing in coding language of user's choice
- Simple report creation
Wrapping Up
Measuring impact allows an organization to quantify and communicate the difference it's making in the world. As you work to measure and manage your own organization's impact, draw on the process outlined above to guide your work.
And remember, the impact measurement journey often requires support. Consider partnering with a provider like UpMetrics to gain access to the tools and expertise you need to truly understand how much progress you or the organizations you support are making on your mission!
Want to keep learning about the world of impact measurement? Here are a few recommended resources from our blog:
- Social Return on Investment (SROI): Measure the Intangible
- Impact Measurement vs. Impact Reporting: Why You Need Both to Drive Real Change
- Participatory Grantmaking Principles, Potential, and More
