Impact Measurement and Management in Seoul Forest Cluster

Voluntary Cooperation across the Private Sector to Create a Common Language

Summary

With economic inequality and environmental crises on the rise, the Korean government and investors have started to look to a relatively new concept – social ventures. Such ventures can provide a basis for models addressing those social problems that are difficult to solve solely with market principles. Yet, there has been insufficient research on the system for measuring and managing social value (IMM).  Until now, research has focused primarily on the performance evaluation needed for government support, while related laws and regulations have not been institutionalized. This, in turn, has limited the activation of public and private social values. Various players in both the public and private sectors show high interest in the IMM, and resources are flowing into the field. However, the lack of real and base data from the field creates a risk for impact washing, meaning that the resources and interest may flow in the wrong direction. From this context, a need has emerged for a common language – one that enables actors from across the field to communicate with accuracy and to assess the impact created. 

Being one of the oldest players in the field, Impact Square (ISQ) – a Korean think-tank and consultancy – worked with the Seoul Forest Cluster social venture project to develop an easy and cost-efficient tool to self-evaluate the impact created by each social enterprise company when communicating with other stakeholders in the area. This work was intended to advance stakeholder engagement in impact measurement and management for the social and solidarity economy (SSE), inclusive of social ventures, social enterprises and the stakeholders who are most affected. 

Here’s hImpact Measurement and Management in Seoul Forest Clusterow it works

The major players involved in the process can be broken down into three major categories: i) funders, ii) social enterprises that interactively communicate with their end beneficiaries to ensure their voices are heard, and iii) IMM practitioners. It is no secret that IMM requires a lot of money and time and, in order to achieve optimal practical effectiveness, each stakeholder should be engaged in ways that enable it to receive the best benefit. 

In the current Korean SSE ecosystem, each stakeholder has its own interest reflected in the IMM programme. At the same time, the IMM programme facilitates active interaction among those stakeholders, which thus allows for constant development and bettering of the process.

Currently, the process mainly consists of three stages: i) holding educational workshops, ii) using the self-reporting process, and iii) sharing feedback and consultation. In many cases, the educational workshops are commissioned by social venture funders – namely, the investors, intermediaries and corporations that support social enterprises. By holding educational seminars on the subject of IMM practice, these social ventures and enterprises can initially establish a common theoretical understanding of how they define social value and the importance of measuring and managing it. This can also include a core framework that explains how the measuring and managing can be done.  

Working in teams, the seminar participants initially practice with a sample case in preparation for using Impact Square’s self-disclosure report platform. This process includes active feedback and interactions that ensure everyone involved is on the same page. The self-reporting system provides a fundamental framework in which the Impact Management Project’s (IMP) five dimensions of impact and 15 impact data categories are embedded. Specific guidance is provided to make the use of IMP for measurement and reporting more relatable to Korean field practitioners.

Additionally, the self-reporting system aligns with other IMM frameworks and metrics, including the Sustainable Development Goals (SDGs), Impact Reporting and Investment Standards (IRIS) and Social Return on Investment (SROI) standards.  SDGs are aligned not as goals, but as target levels for the practitioners to report their impact.  IRIS indicators are decided upon through in-depth discussions and mutual agreements between the IMM professionals and the social enterprises. The social enterprises gather and share information on the stakeholders related to their outcomes and, in some circumstances and at the funders’ request, they demonstrate the monetised value of their impact, based on SROIs.

During the IMM process, the social enterprises engage in active conversations with the end beneficiaries, as they need to report the live data of how the beneficiaries experience the impact. Specifically, the outcome numbers that are reported through the self-report system are designed to reflect the depth of the impact compared with the situation before the company’s intervention. The key here is to get accurate and practical information on the beneficiaries’ end so that the numbers on the report capture the essence of the enterprises’ activities and their impact from the stakeholders’ perspectives. Ranging from quantitative and qualitative questionnaires to one-on-one interviews, the enterprises use interactive methods to gather the information needed for the self-reporting assessment. 

The case of Brother’s Keeper – one of the Korean social enterprises that went through the self-reporting process on the Impact Square platform – provides one example of this communication. Brother’s Keeper’s main area of work is hiring and training “care leavers” – those who are forced to “graduate” from orphanages when reaching age 19 but may then be exposed to diverse hardships and crimes as they lack education and therefore do not have a chance to explore adequate career opportunities. In the self-reporting process, Brother’s Keeper selected the hired youths’ income levels as its main outcome indicator. Thus, in order to reflect the depth of the outcome, its staff talked to all youths individually to determine what their incomes had been before they became part of the company. 

Compared with the conventional approaches of IMM practice in the field that require contribution of professionals, this self-reporting system is free and can be conducted by the organizations themselves with an easy and straightforward interface and logic. All companies can partake in this self-reporting, by defining their key social impact and gathering data required for their annual self-assessments. Depending on the options chosen, review and consultation are included in the self-disclosure report. 

The benefit

The system is unique in that it is coordinated by the individual actors in the private sector. The benefit of such an approach is clear when compared with the traditional top-down approach. Created due to – and catering to – the needs of the actors in the community, this programme offers a valuable opportunity for each company to listen to its targeted beneficiaries, adopt the mechanism for assessing the company’s created impact, and then compare that assessment to the conditions before the company’s contribution and to the counterfactual conditions. In the 2-year period after this tool was launched, 68 organizations went through the workshops, with their cases analyzed in depth. This inspiring outcome also benefitted from the accessibility of the system.

In the long term, each participating player and the ecosystem as a whole reap benefits at a larger scale. Based on the accumulated data, Impact Square can provide benchmarks to the social enterprises and social venture funders, while also sharing the knowledge and data-based insights across the entire ecosystem. This means the social enterprises can gain a better understanding of the IMM process and increase their overall capacities. The funders can move the resources according to the insights based on such data, which then allows for better allocation targeted to better impact solutions. Overall, the resulting data is more realistic and actively engaged, which allows for mutual understanding and the expansion and growth of each organization. 

As a result, the micro data from the social enterprises and their beneficiaries plus the macro data from the government’s end can then merge, accumulate and become more accessible. From the investors’ perspective, this makes it easier to make informed investment choices in order to create the biggest real impact possible. As the SSE ecosystem advances and grows, it will help re-focus  the investment portfolio on the stakeholders’ voices, reduce the risk of impact washing, enhance the efficiency of consulting and, consequently, enable the ecosystem as a whole to become more impact driven. As this trend continues, there will also be an increased need for an independent assurance role in the private sector which will serve to enhance the credibility of the data when conducting research and consulting for the social enterprises. 

The further potential of the approach is endless. In particular, as government organizations, corporations and mainstream consulting firms enter the realm of IMM due to the ESG craze, it is not surprising that the existing impact measurement activities of the Seoul Forest Social Venture Cluster (which adopted MM in the beginning) have increased. With a common language, the key stakeholders – in this case the individual impact-driven organizations – can better understand and communicate the social value created. This serves as a gatekeeper against the possibility of impact washing and can be useful to other stakeholders in the SSE ecosystem, including local accelerating associations and impact-driven organizations outside of Seoul. We look forward to integrating and cooperating with other stakeholders in applying this approach for creating a common language and making the intangible demonstratable.

Learn More

See this case study prepared for OECD:  A Government data-driven approach to foster social impact measurement practice: Providing a public database of ‘Baseline’ and ‘Threshold’ data by impact themes.

Prepared by Namhee Yee and Hyojae Shin,  Impact Square and SV Korea

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