[MUSIC] In this slide-show I'm going to talk about measuring performance in social sector. It's a complicated and challenging task, and there are a lot of ways that you can do it. I'd like to start up by focusing on three approaches that are out there. And then we'll drill down into the third in the second lecture. But first let's start with a basic question, why measure performance? Why try to assess impact? I think there are three good reasons. One is, if you measure impact well, it can make your organization function more effectively. How could you possibly improve performance if you didn't know how well you were doing? You need to know if the organization's going up, down or sideways to make the adjustments necessary to make the organization perform more effectively. Secondly, you measure performance because the people outside the organization want to know, are you getting results? Are you effective? So there are demand externally to your project that are going to drive you towards performance measurement. Third and I think the best of the best reason is that performance measurement is a moment where you can get much clear about what it is you're trying to accomplish. When you ask the question, what should we measure? You're really ask any question, what matters, what are we all about? What are we trying to accomplish? So for all three reasons there's a movement in the social sector towards greater performance measurement. Let's look at three different ways people started thinking about measuring and tracking performance. The first is what I would describe as an approach that says let's measure in very quantitative terms social return on Investment. This is an approach that says, we can quantify impact and we can render it into a simple formula. Second approach says, no, why don't we try a rating systems as a way of ranking and assessing organizations that gives people inside and outside the organization's sense of how these organizations stack up comparatively. And the third approach is what I call scorecards and dashboards. These are multi-dimensional performance measurement tools that I think have the most promise. So let's look at these three and then we'll drill down into the third area. Social return of investment is simply a moment when an organization says can we account for the net benefit of the work we do? Can we monetize and be clear to the external world about the costs and benefits of what we're undertaking? But at its core there is this deep question, can all social value really be monetized? Can you really turn everything, from educational achievement, to cultural enrichment, to environmental safety. Can you turn all that into a dollar number and compute a net benefit as a result of the work that's undertaken by social enterprise? I have my doubts about how it can be used across a lot of different areas. There's not doubt that it has some application in some areas, but it ultimately is a rather narrow tool. Let's look at one way in which people have tried to do this. Here's a formula used by one of the biggest funders, the Hula Foundation. And this is in your readings. It's Paul Brest's article on calculated impact. And what you'll see is the social return of investment model says that we can use an equation with expected return, outcome probability, the philanthropic contribution and the total cost. And we can compute a number a returned number that give us a sense of, for ever dollar we put in, how much social value do we get out? Now there are some cases like the one in the article that Paul Brest uses, of job training, where the number is monetized. Earnings are achieved by people going through the program, and that can be projected that over time and the costs of achieving those increase in earnings can be calculated and a number can generated. But there are many areas in the social sector where the ultimate benefit, the ultimate end result doesn't lend itself so easily to monetization. How would you translate the value of a child going to a museum? How would you understand the value of religious revelation? How would you understand the benefit of clean air in monetary terms? So, this sort of approach, which is a narrow approach and it has some applications but I have my doubts about it's capacity to be extended across the broad range of purposes that we see in the social sector. The second approach is a ratings approach. It says, across organizations, can't we come up with ways that track accountability, that count in terms of how open an organization is? Can we track how well an organization treats its employees? How open it is to listening to its consumers. How engaged it is with the community, and how solid is its environmental record. And there are tools out there that say across different categories, we're going to give grades to organizations and then we'll sum up and we'll get a sense of how these organization within different sub-domains match up against one another. And B-Corporations are at the front edge of this movement. These are benefit corporations, and as part of this movement to create this new class of organizations, they undergo a screening which asks these very basic questions about accountability, employee treatment, consumer relations, community engagement and environmental record. And across each of those areas, after asking a whole series of questions doing field work, they develop a scorecard or a simple statement about how the organization sums up in terms of its measurement of its record across these different domains. Nothing wrong with these rating systems but they tend to be rather rigid, because they have to be applied each time the same way to different organizations. And they have one limitation, which is there constantly trying to pose a grade or a number on their organization. [MUSIC]
