2. Provide guidance

Publicly backed guidance can determine to what extent the impact of the social and solidarity economy (SSE) is understood, measured and communicated, for both individual entities and the ecosystem as a whole. While full standardisation of social impact measurement is neither possible, nor desirable, the availability and accessibility of methodological guidance can foster convergence towards good practices and the emergence of robust impact evidence. This in turn, can make it easier for all actors in the SSE ecosystem to reach a common understanding and work together for systemic learning.

Too often, existing guidance does not consider the intrinsic values, resources, and capacities of SSE entities. Most international guidance is geared towards large corporate structures or has been developed to suit the interest of funders, rather than to fit the needs of SSE entities which typically experience lower levels of competency and lack resources to conduct it internally or externally (IMP, 2022[1]). Few SSE entities can afford to strictly follow these requirements or have access to relevant expertise. In a recent survey, more than 40% of French SSE entities identified the complexity of existing methods as a central hurdle (ESSEC/Impact Tank, 2021[2]). In particular, intangible outcomes (e.g. subjective social or cultural aspects, effects on satisfaction and well-being of stakeholders, etc.) are more difficult to capture, quantify and link to the activity that generated them.

More tailored guidance is needed to embed social impact measurement in the day-to-day steering of activities and the evidence produced should be used for continuous improvement. In many cases, impact measurement efforts remain rather costly, stand-alone, one-off exercises at the end of project implementation. Clear guidance can be an important external driver influencing which frameworks, tools and indicators SSE entities decide to adopt and how fit they are to their needs. It can help streamline the data collection process and ensure the application of quality standards, which may further increase comparability and reduce costs.

Policy makers can offer guidance on social impact measurement methodologies to facilitate implementation and dissemination in the SSE ecosystem. Governments can deliver guidance on social impact measurement methodologies to facilitate their voluntary adoption and adherence to certain protocols. They can offer open-access manuals, which are often developed in partnership with capacity building intermediaries or representatives of the social and solidarity economy. In doing so, the following principles can be applied to support SSE entities with guidance on social impact measurement (OECD, 2021[3]).

Guidance needs to remain sufficiently flexible to cater to the needs of different types of SSE entities. SSE entities reach from associations, cooperatives, foundations, mutual societies to social enterprises and have a wide variety of operating models, from mainly grant-funded to hybrid, including some degree of market activity. Their age, size, governance structure, services or products, and consequently their members, clients and/or beneficiaries, vary greatly. The degree of maturity and aspiration for undertaking social impact measurement may also be influenced by their sectors of activity. Together with varying local contexts, all these factors influence the needs, capacity and expectations when it comes to social impact measurement.

Policy makers can support SSE entities by providing guidance in three ways: (i) by offering open-access resources, such as freely available “how to” guides; (ii) by promoting harmonisation towards specific frameworks and indicators that allow for adherence to certain standards and aggregation of data; (iii) by supporting the design of dedicated tools for SSE entities, ideally in close partnership with their representatives, that further reduce hurdles and costs of social impact measurement.

Public authorities may produce, commission or disseminate guidance that is easily accessible and sufficiently flexible to speak to diverse audiences in varied contexts. This can be achieved by tailoring guidance to specific types of SSE entities, focusing on specific sectors or impact areas. For example, the government of Finland supports the Hyvän Mitta (Good Measure) project that provides advice and examples to SSE entities on measuring their impact (Hyvän Mitta, 2019[4]). More and more guides specifically target social enterprises that face a unique set of challenges in mobilising hybrid sources of income (i.e. from grants, donations and market activity) and scaling their impacts. These include the Maximise Your Impact guide developed by Social Value UK (Aps et al., 2017[5]) funded under Erasmus+ or the Australian Compass to Impact Measurement (Muir and Benett, 2014[6]). Others address the SSE ecosystem more broadly, such as the Social Impact Navigator by Phineo, Germany.

User-centred design and formulation are conducive to the understanding and adoption of social impact measurement practices. Guides can be structured in a way that lets the reader enter at different stages in their social impact measurement journey, whether they are just starting out or already have some basic experience. Real-life examples, exercises or toolkits can immediately equip the reader with practical know-how. Availability in national, and sometimes local languages is another important factor to improve accessibility to various audiences. The Impact Path conceived in the Netherlands, for example, is available in Dutch and English (see Making it happen 2.1) and Phineo’s Social Impact Navigator in German and English (see Making it happen 2.2).

Guidance that primarily focuses on principles or processes, rather than methods or tools, can softly encourage the harmonisation of social impact measurement practices by SSE entities. It is more flexible and less constraining on possible innovations than a standardised set of indicators. Since its promotion in the recommendations of the European Commission Expert Group on Social Economy and Social Enterprises (GECES) (European Commission, 2015[10]; OECD/EU, 2015[11]), this approach has been used across numerous guides over the last decade, e.g. the European Venture Philanthropy Association’s Practical Guide for Measuring and Managing Impact (Hehenberger, Harling and Scholten, 2015[12]), the EU-funded VISES project (ConcertES/CRESS, 2022[13]) on valuing the Social Impact of Social Entrepreneurship. The Canadian Common Approach follows a similar idea (OECD, 2021[3]). In general, broader frameworks and principle-based approaches contribute to raising the quality of impact measurement practices, while allowing for some degree of customisation in the implementation, to reflect the needs of each organisation. As such, they may be perceived as easier to incorporate, without appearing too constrictive or burdensome.

In some cases, public authorities can decide to embrace an existing social impact measurement framework and push for its uptake within the SSE ecosystem. Amongst others, the 17 Sustainable Development Goals (SDGs) – reaching from no poverty via climate action to peace, justice and strong institutions – have emerged as a unifying framework that can allow the development of a common understanding, within and beyond the SSE ecosystem. To attract a wider audience and encompass broader social challenges, many social impact measurement approaches have started directly integrating or loosely referencing the SDGs and their set of 232 unique indicators (French Impact/OECD, 2022[14]). While this framework has been initially designed to apply at the macro, country level, ongoing international efforts strive to translate it to the activity level of local organisations working towards the SDGs, many of which are SSE entities. A number of frameworks related to impact measurement and management and the SDGs apply to development organisations (OECD, 2021[15]). Most notably, the UN SDG Impact Standards for Enterprises target public-interest companies, small and medium enterprises, not-for-profits and non-governmental organisations. To support their adoption, a host of initiatives are proposed worldwide including the freely available self-assessment tool, labelling (i.e. the SDG Impact Seal, (UNDP, 2022[16])) and capacity building, such as the training offered by Duke University (Making it happen 2.3).

Policy makers may also choose to back more bottom-up approaches that stem from the SSE itself or that are extensively co-constructed with SSE representatives, as it happened in Canada (Common Approach, 2021[17]). In many countries, cooperatives have come together to identify the indicators most adapted to characterise their impacts. The European Confederation of Industrial and Service Cooperatives (CECOP) has produced a shared positioning on how to measure social impact focusing first on worker and social cooperatives, then extending this to encompass all its members, with financial support from the European Union Programme for Employment and Social Innovation (CECOP, 2021[18]; CECOP, 2020[19]).

The push for harmonisation can be more or less mandatory in its nature. Policy makers can, for instance, decide to make a set of output or outcome indicators mandatory for SSE entities wishing to obtain a certain legal status. Many examples include the reporting requirements introduced for social enterprises and work integration enterprises by the Czech Republic’s Ministry of Labour and Social Affairs (České Sociální Podnikání, 2022[20]), for work integration social enterprises by the French Ministry of Labour, Employment and Inclusion (Avise, 2007[21]) or for social enterprises and social cooperatives in Italy (Official Gazette of the Italian Republic, 2017[22]; Official Gazette of the Italian Republic, 1991[23]). Alternatively, policy makers can encourage harmonisation on a voluntary basis, as it is the case for the Social Reporting Standard, developed in Germany with support from the Federal Ministry for Family, Seniors, Women and Youth in 2010 (Social Reporting Standard, 2018[24]).

A balance needs to be found between more flexible versus more precise guidance. On the one hand, more tailored advice may better match the expectations of individual SSE entities. On the other, a more comprehensive and looser framework may foster convergence of views and practices across the SSE ecosystem. To enable the aggregation of impact evidence and ease the dialogue between SSE entities, their funders and other stakeholders, further alignment can sometimes be considered beneficial. In this case, policy makers may give more precise indications on specific tools, metrics or reporting standards, which determine how financial information, as well as economic, social, environmental and governance outcomes can be tracked and presented.

Policy makers can support the design and dissemination of tailored social impact measurement tools to reduce hurdles and facilitate their uptake. Many regional and local authorities are already taking this step, for example the local governments in Flanders (Belgium) (Impact Wizard, 2016[26]), Athens (Greece) (Social Develop Athens, 2014[27]; Temple et al., 2017[28]), and Seoul (Korea) have developed bespoke measurement approaches for different types of SSE entities. The Belgian Impact Wizard tool, for example, helps organisations along the impact evaluation process through five modules (Impact Wizard, 2016[26]). In Slovenia, as reporting of social impact by social enterprises is expected to become mandatory in 2024, the Ministry of the Economy, Tourism and Sport and the Slovenian Research Agency funded the development of a social impact measurement model for social enterprises. The model is a 5-step tool which aims to help social enterprises define indicators and other units of measurement to identify their generated impact. The model is currently in testing phase where social enterprises are invited to test and share their feedback (Ministry of the Economy, Tourism and Sport, 2022[29]; OECD/EU, 2022[30]). To further entice adherence to these tools, they can be conditional to the issuing of certifications or registrations for SSE entities, such as the Market Mate programme in Hungary1.

The more binding these tools become in their application, the more it is advisable to keep them to a minimum set of core obligations. This can be realised as a number of mandatory indicators or to foresee some room for adaptation on a case-by-case basis, as part of their design. As the European Commission Expert Group on Social Economy and Social Enterprises (GECES) concluded, “the measurement of social impact should be done using easy and simple indicators and it should not represent an additional burden for the social enterprise” (GECES Working Group, 2017[31]). Besides the risk of creating measurement fatigue, this may constrict possible innovation towards pre-determined pathways.

These tools need to find a way to be accessible and adaptable to the plurality of the SSE entities. Policy makers can help make them easily available even for smaller, non-profit organisations with limited budget availability. Despite being publicly co-financed, these tools may not always be free of charge, as is the case for the Impact Wizard in Belgium (Impact Wizard, 2016[26]) or the Outcomes Star in the United Kingdom (see Making it happen 2.4). In order to better fit the reality of social service providers, the latter tool has been adapted to a wide range of sectors (e.g. adult care, housing and homelessness, mental health, young people, refugees and asylum seeking). There is also an increasing focus on user-centred design, including to reduce the training burdens for administrators. This is for example the case of the Impact Measurement Tool developed by the City of Athens, Greece (see Making it happen 2.5).

Because such participatory approaches can be expensive and time-consuming, they need to be matched to the impact that SSE entities are intending to create. Such considerations include the likelihood of negative or unexpected impact.

Whenever possible, these tools need to serve both the accountability and learning dimension of social impact measurement. In order to shift from “proving” to “improving” impact, social impact measurement must become a holistic, organisation-wide process rather than a siloed, technical exercise (Hehenberger and Buckland, forthcoming[33]). In practice, it is recommended for the data collection and analysis process to be formative rather than summative, i.e. to help further learn, change and develop a better, more adapted service or product offering, instead of only reporting only on the impact already achieved. The term “impact management” has gained traction over the last few years, acknowledging the need to produce actionable evidence and embed it in the organisational decision-making process.

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