Published February 9, 2014 on The Holmes Report
Today’s funders and many other social-sector stakeholders represent a new generation of “value-seekers.” Rather than investing in social programs that meet some arbitrary effectiveness threshold or proffer anecdotal success stories, they want to see real changes in the outcomes they care most about, and at a reasonable cost.
One of the biggest problems in determining which programs are truly investment-worthy is that the public and social sectors lack uniform, quantitative measures against which to benchmark the value of social programs. In other words, there are no standardized performance data. Absent this, funders are unable to compare the “return on investment” (ROI) of one program versus another.
But it doesn’t have to be this way. The new generation of data that is just becoming available can meet value-seekers’ needs because it has these three key features:
1. On-demand: Value-seekers want immediate access to data, even if it’s imperfect. They are using data upfront to inform important decisions and can’t afford to wait five years for the results of a longitudinal study.
2. Predictive: Value-seekers aren’t interested in retrospective data, which are typically favored by academic research. They are interested in prospective data, which allows them to project the expected “return” on one investment versus another.
3. Comparable: Value-seekers are looking for data in context. They’re no longer making binary decisions about what works and what doesn’t work; they seek to make relative choices about what works better. Truly standardized benchmarks enable value-seekers to make apples-to-apples comparisons, rather than sifting through a cornucopia of non-standardized measures.
But while it is more and more clear what it desired, challenges remain in producing these data. There have been attempts to standardize programs (such as the Urban Institute’s National Program Classification system) and attempts to standardize metrics (for example, the US State Department’s F-indicator database or the Global Impact Reporting System). But there has never been a sustained effort to standardize outcomes.
Outcomes (think: improved academic performance, reduced violence, increased health care access), offer a unifying conceptual architecture through which to view social change. Standardizing outcomes would provide the platform for universal benchmarking in the public and nonprofit sectors. While metrics are necessarily program-specific, outcomes are universal. While there are infinite ways to measure performance, there are only a finite number of outcomes. Using outcomes instead of metrics as the unit of analysis enables better comparability, explanatory power, and practicality. Across programs aimed at improving underserved children’s diets, for example, we can’t compare protein increases to reduced fat — but we can measure each program’s contribution to nutrition. Thus using outcomes resolves the apples-to-oranges problem by identifying the shared outcome of “nutrition” and assessing the relative contribution of apples and oranges to that end.
With standard outcomes as the foundation for more logical and efficient measurement, the social sector could stop fixating on activities and outputs, and focus on measuring and maximizing actual impact. Value-seekers would be able to quickly determine the return on their social investments and finally have the information necessary to realize the opportunities of the broader social capital market.
ABOUT PERRY YEATMAN:
Throughout her career, Perry has been a leader in working at the intersection between business and society. From the early days of CSR to the rise of B-corps to the mandate for all brands to embody a social as well as functional mission, her work has helped companies, NGOs, multilateral organizations and governments simultaneously achieve economic, social and environmental benefits. Perry's experience includes revamping and running corporate foundations; developing public-private partnerships; defining and driving brand social innovation; marketing one of the world’s leading social impact measurement firms; and advising leaders from all sectors on how to create and lead purpose-driven organizations. To learn more about her thinking on these issues, visit her blog here.