By Lindsey Alexander
In late March, the World Business Council on Sustainable Development (WBCSD) and the Aspen Network of Development Entrepreneurs (ANDE) hosted an event in Washington DC to explore the challenges and opportunities surrounding measurement of social performance indicators. This event was in response to the recent release of WBCSD’s publication Measuring Socio-economic Impact, which provides practical information on social indicator measurement tools, including their application. The event attracted professionals from a wide variety of backgrounds, including public health, consumer products, and financial services. All attendees shared the same question: How do I know if my organization is improving the human condition?
One theme that I found interesting and useful for PPI users is the differences among output, outcome, and impact.
Outputs are what your organization is actually providing to the world’s poor; microloans, mosquito nets, water purification tablets, solar lights, vocational training, contraception, and eyeglasses are all outputs.
Outcomes are the immediate result of your outputs. For example, a family planning clinic that serves poor communities might tell its donors that it has “helped over 2000 women avoid unwanted pregnancy with affordable contraception.”
Impact is the degree to which your organization has alleviated a prevailing social problem. While donors and practitioners alike tend to fixate on impact, it is extremely difficult to measure. An organization working with smallholder farmers might see significant outcomes such as higher crop yields and wider product distribution. If that same organization uses the PPI to measure the farmers’ poverty, the organization may even see that farmers who participate in the program tend to become less poor over time. However, based on this information alone, the organization cannot claim impact with certainty because they cannot prove causality; they cannot prove that their actions caused the farmers progress out of poverty. Fair weather conditions and changing government regulations could be equally responsible for the farmers’ success. Thus, impact may be presumed but not declared.
WBCSD’s Measuring Socio-economic Impact certainly makes impact measurement more feasible for many organizations. But for organizations that continue to struggle to prove that they are improving the human condition, Steve Wright had this advice at last month’s event: “Don’t get drunk on impact.” When I followed up with Steve, he explained that proving impact may not always be possible or worth the investment, but that each organization should be operating based on a theory of change. With good data and an iterative approach, organizations can test and refine that theory of change over time in pursuit of their social goals.
What does all of this mean for PPI users? First, client-level poverty data cannot by itself reveal your impact because it does not address causality. However, client-level poverty data is essential because if you intend to address poverty you must know if your clients are poor, and you must know if your poorest clients are finding value in your products. The PPI is not a magic bullet for impact measurement, but rather a highly useful tool that helps poverty-focused professionals manage their performance.
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Lindsey Alexander is the PPI Communications Officer at Grameen Foundation. She is based in Washington, D.C.
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