It was another exciting day at SOCAP16! While yesterday focused on the meaning behind impact investing, today was important in recognizing how we can achieve progress and results. Naturally the conversation fell on the topic of measurement and outcomes.
The Tangled Jungle of Outcomes Measurement
When MicroEdge + Blackbaud started the journey of building a product that would help foundations and nonprofits measure outcomes, we knew there was a wide dispersion of organizational know-how to effectively track outcomes. Our Purposeful Philanthropy tour, during which we convened over 150 corporate, foundation and nonprofit thought leaders to discuss our outcomes approach, we uncovered the gap between the perceived importance of outcomes and organizational lack of readiness to track, manage and report on those outcomes.
So it was no surprise when our team noticed the same phenomena at play in the impact investing conversations at SOCAP16. In the session “Evolving Impact Measurement in the Next Decade” panelists were confounded by the same problems we’ve seen funders and nonprofits struggle with: “Where do we start? How can we connect and standardize all the data to make the sector more effective? What does success look like?” What’s more is that impact investors have the extra duty of tracking the financial return.
My colleagues who attended the “Impactful Matchmaking” and the “Strengthening Impact Measurement for Social Enterprises” sessions noticed a similar trend. Investors need to use a variety of tools to collect the impact goals from their clients such as tool kits, webinars, presentations that improve communication, but collaboration with NPOs is still proving to be difficult. Narrowing the focus on collecting the right data, i.e. who is it for and how will they use it, will help address these issues, but nonprofits, social entrepreneurs and businesses, and impact investors still are reaching for that alignment.
In short: there’s lots of data but “boiling the ocean” by harmonizing, aggregating and standardizing all of the data in the sector seems too daunting. And, many are still left asking themselves, where to start?
The Need for a Universal Measurement Tool
Contrastingly, the session “Designing Impact Measurement Frameworks that Improve Performance and More,” was centered around solution-based ideas. Here we saw powerhouse social capital investors like the Omidyar Network (@OmidyarNetwork) take the audience through sophisticated ways of tracking financial performance and social outcomes. Although I admired the intellectual firepower demonstrated, the intricacy and high cost of these methods led me to question the feasibility for the rest of the sector to replicate.
For us, that’s the challenge. There is already a high cost to tracking outcomes and today, most organizations use home-grown software and processes for their impact measurement. We need to find the right social impact metrics and universalize them between impact investors, social entrepreneurs, foundations and nonprofits. Impact investors are still stuck on outputs, while the social sector is moving to outcomes. Getting everyone to outcomes, using a common language, is the key to truly global impact.
It is our duty to philanthropists- and now impact investors- to create simple and effective solutions that can be used by everyone across the sector.
ABOUT THE AUTHOR
Charlie Vanek joined MicroEdge in October 2012. Charlie has had broad responsibilities in the software and information sector for the last eleven years including roles in Operations, New Product Development, Product Marketing and Business Development. He is responsible for MicroEdge’s partnership and acquisition strategy.
Charlie joined MicroEdge from Thomson Reuters, where he was Head of Insurance Solutions, Financial and Risk, directing Sales, Marketing and Product Development for Thomson Reuters’ insurance information and software business. Prior to that, Charlie had progressive experience in Thomson Reuters’ Business of Law division. At FindLaw, Charlie was a patent assignee to the Thomson Corporation for products that convert textual information to visual graphs.
Before Thomson Reuters, Charlie worked in Yield Management and Corporate Finance at Northwest Airlines. He has a B.S. in Mechanical Engineering from Iowa State University and an M.B.A. from the University of Chicago. He is on the Board of Directors at Open Eye Figure Theatre, a 501(c)3 in Minneapolis.