Improving your social impact reporting

For-purpose organisations exist to create impact or social value. Mainly they are creating social value for people. Yet the uptake of reporting on impact or social value can be described as patchy at best. It lags behind best practice in the business sector. What can be done by for-purpose organisations to improve their social impact reporting? This article outlines different layers to social impact reports that should be explored by the for-purpose sector. 

‘An unassured social impact report is no more than a marketing document.’ This was the provocative start to a presentation several years ago by Jeremy Nichols who had been the CEO of Social Value International (SVI). It echoed around the conference room. Many of us there – mostly experienced social impact practitioners – were squirming in our seats as we tried to work out if our organisations produced an impact report, let alone had it assured! Nichols was making the case for assurance of all impact reporting to improve standards for organisations to manage for better impact.

Impact reporting barriers and drivers

We are a long, long way from the concept of ‘assured’ impact reports being the norm in the for-purpose sector. This is not just the not-for-profit (NFP) sector but includes B Corps where impact reporting is historically low. Whilst the focus of this article is for NFPs, the good practice identified is equally relevant for B Corps.

My last check with SVI indicated there were ‘hardly any’ social impact reports being sent in for assurance. The reality is that here in Australia there are only a small number of for-purpose organisations even producing annual impact reports. When it comes to reporting most NFPs sit in one of three camps:

1. Only report on outcomes when doing acquittals to funders.
2. Have a page or two in the annual report.
3. Carry out the occasional ad hoc impact evaluation when they get some funding.

There are obvious reasons for this. Organisations often lack the resources to carry out impact reporting. This can be compounded by a lack of skills or expertise to collect, analyse and utilise impact data. But maybe the main reason is that historically there has been no demand for impact reporting from the key stakeholders in the for-purpose ecosystem.

There are now subtle signs this is changing. Driving this change are the growing number of philanthropic foundations asking more serious questions about the impact being achieved through their funding. Government is also wrestling with how to shift the focus from output measures to outcome measures. The small impact investing community in Australia is maturing into looking at the impact of their investments. And as more collaborations develop around achieving impact, service partners want to know what impact prospective partners have achieved.

Several years ago at Think Impact, we identified five characteristics that should drive good impact reporting. These have stood the test of time. We’ve even run an activity in training sessions getting people new to impact measurement to assess publicly available impact reports – this throws up some interesting observations!

Communicating your full social value

So how should organisations go deeper – how can they improve their social impact reporting?

Through work we have been doing in the corporate sector around ESG and Sustainability Reporting, including producing our own sustainability report, we’ve deepened our thinking around what a good impact report should include. When we are talking about social value, the focus is on people – this is the ‘S for Social’ in ESG and should be the anchor of any impact report.

There are four layers to this focus on people that should be reported on:

• The impact on beneficiaries, the people that use the services (this one is obvious). This means understanding the effectiveness of the programs you are running in terms of achieving your intended impact.
• How the well an organisation is driving a diversity and inclusion agenda. It is important to understand if an organisation is implementing good practice in these areas.
• How an organisation takes care of its people. Here the focus is on staff wellbeing. Obviously if your staff are burning out trying to achieve impact, this would need to be addressed.
• How the organisation buys from people, including social and sustainable procurement practices, and tackling modern slavery. This is where an organisation can enhance its impact through good purchasing practices or be reinforcing disadvantage through buying blindly.

Note that when we are working in the ESG space with business clients we also include how the organisation gives back to people. This may be less relevant in the NFP sector but worth keeping an open mind on.

Moving beyond the ‘S’

Moving beyond the social/people aspect, if we want to tackle the big global issues such as climate change as a society, then for-purpose organisations should be actively considering their carbon footprint and disclosing the actions taken to reduce this. This means taking steps to understand what your carbon footprint is and then actively working to reduce it. There are lots of resources to assist with this. I wonder how many NFPs look seriously at this? When I asked a few people I knew on NFP boards, I was met with mostly blank stares. Perhaps the initial step is NFP boards holding leadership teams to account for this.

Reviewing existing impact reports, I see there is some work being done on reporting progress towards the Sustainable Development Goals (SDGs), but this is very patchy. Is this because it is seen as a developing world issue and not relevant to Australia? I would have thought this was an area where NFPs would want to blow their trumpets strongly about the progress they are making.

Increasing transparency and taking a holistic approach to impact reporting would raise the standard of reporting even more in the for-purpose sector. We need more disclosure and integrated reporting of positive and negative social and environmental impacts across all sectors to help drive improved practices. A great example of how one organisation has approached this is the first SGCH Impact Report which outlines their ESG approach – see www.sgch.com.au/wp-content/uploads/2022/06/Impact-Report-2022.pdf

At Think Impact our team are trained and experienced in using a range of reporting frameworks and standards, and we are committed to facilitating change and advancing the quality of impact reporting.