In theory, social impact measurement should be a powerful tool to improve the European social economy. It can help individual organizations set realistic objectives; monitor, learn from, and improve their activities; prioritize decisions; and access funding. Collectively, social impact measurement can help organizations working on similar social issues or in similar geographic areas better understand the aggregate impacts of their work and collaborate to achieve greater change.

And at a European level, agreed upon standards, common indicators, and benchmarks can allow policy makers to evaluate the impact of the social economy on society, advocate for more public funding of social economy organizations, and help donors and investors direct their resources to the interventions that have the most impact.

But in practice, social impact measurement has often come up short. Nonprofit organizations and social enterprises, often pressed for money, typically underinvest in impact measurement. As a result, they lack the evidence that is needed to secure funding from government, grantmakers, and impact investors. It is a vicious cycle that breeds cynicism and distrust.

It doesn’t need to be this way. We believe that there is a new path in which social economy organizations develop a learning culture where impact measurement is truly integrated into the workings of the organizations, producing data that matters and that is inclusive of the voices of the people who are impacted, and that is actionable by the organizations doing the impact work and also useful for the policy makers and funders who support that work.

Of course, impact measurement is not without its challenges. Critics have pointed out the risk of channeling resources to interventions that are easy to measure, but potentially with low impact. The long-term effects of interventions involving multiple stakeholders and addressing complex challenges are more difficult to measure and might therefore be overlooked. And bad actors can find ways to game the indicators and cherry-pick service users to help them meet their targets.

Read the full article about social impact measurement by Leonora Buckland and Lisa Hehenberger at Stanford Social Innovation Review.