Measuring social impact in the not-for-profit sector

The backbone of society

Not-for-profit (NFP) organisations play an important economic, political and social role in countries around the world. Here in Australia, NFPs deliver programs and interventions that are designed to deliver meaningful social impact to communities across the country. These programs span a wide range of areas – cultural, civic, health, sports and safety, to name a few – and are often rolled out with minimal budgets.

Associate Professor Bronwen Dalton is the Director of the Masters of Not-for-Profit and Social Enterprise at UTS, and the convener of a new online course through UTS Open called Measuring Social Impact. A former co-director of the UTS Centre for Cosmopolitan and Civil Societies and a recipient of the Larkinson Award for Social Studies from Oxford University, Dalton is a teaching and research leader in the NFP space.

According to Dalton, Australians rely on the NFP sector to support their social welfare more than residents of any other country in the world – the Australian Charities and Not-for-Profits Commission (ACNC) reports approximately 600,000 NFPs in Australia, although Dalton estimates the real number is actually closer to 700,000. Of these, more than 54,000 are registered with the ACNC.

“The NFP sector is the biggest employer and one the largest NFP sectors in the world,” Dalton says.

No evidence, no funding

Despite its scale, however, much of the NFP sector still struggles to demonstrate the extent of its social impact. Many programs are designed and delivered without any formal evaluation – but in an increasingly competitive funding environment, funders now expect to see evidence-based outcomes that clearly show whether programs are reaching their stated goals.

Dalton believes that all organisations delivering interventions for social change should be measuring their social impact at every stage of a program’s development and rollout.

“A lot of programs are sometimes just borrowed from overseas, or developed because someone thought it was a good idea, or continued unchanged because that’s the way it’s always been done,” she says.

“Measuring social impact is about implementing best practice techniques and ensuring you have an evidence-based intervention that gets the biggest bang for your buck.”

Why measure social impact?

There are four key reasons that organisations should measure their social impact, Dalton says: to track progress, identifying whether or not a program is achieving its intended goals; to inform strategies that improve an organisation’s programs and practices; to make the most effective contribution to society; and to gain the confidence and support of funders.

To do this, Dalton believes that NFPs should allocate 5-10 per cent of a project’s total funds towards evaluation as a separate budgetary line item. This evaluation funding should then be used for evidence-based program design; capturing client demographic data; developing a whole-of-organisation understanding of what success looks like; measuring and reporting on immediate outcomes and longer-term impact; and using validated measures, indicators and tools for evaluation.

However, formal project evaluation can be a complicated proposition for organisations with little or no evaluation expertise. And, while some larger NFPs employ consultants to help them, the associated cost is often prohibitive for smaller organisations.

Online learning for in-house expertise

In response, Dalton’s UTS Open course has been designed to help NFPs evaluate their own programs using best practice processes. The course, which teaches participants to develop their own Logic Model (a tool that describes the activities within a program that will deliver the intended change) and Theory of Change (an overarching statement that describes what a program is and why it will work) provides the fundamentals of evidence-based program evaluation.

Concurrently, Dalton and her colleagues are developing a social impact toolbox that will provide NFPs with access to the type of validated evaluation tools that are normally inaccessible to the public.

“What UTS is about is democratising access. As a university, we understand that without an vibrant and effective NFP sector, all of the beneficiaries that NFPs serve would suffer,” she says.

“We’re trying to level the playing field and ensure that all NFPs, regardless of their size, are funded not on their capacity to engage expensive consultants but on their capacity to make a difference.”