Social impact? It's not a question of regulations, but of credibility (for both profit and nonprofit organizations).

"In a time when the sustainability paradigm is being questioned , it is necessary to return to fundamentals and grasp the essence of the issues ." These are the words of Filippo Giordano ( top photo ), director of the Department of Law, Economics, Politics, and Modern Languages ​​at Lumsa University in Rome, who co-authored the book Social Impact. Inclusion Interventions and Measurement Tools (Egea Editore) with Francesco Perrini .

Giordano, why is this book necessary? Why is addressing the issue of measuring social impact still so crucial for all economic actors?

It is the fruit of years of study and research on the topic of social impact measurement, conducted with my colleague Francesco Perrini of Bocconi University. At a time when the sustainability paradigm is being questioned (see the issue of the ESG crisis) because it is considered (paradoxically) unsustainable, that is, a paradigm whose costs for organizations outweigh the benefits, it is necessary to return to fundamentals and grasp the essence of the issues .

We've been through years of debates on impact measurement, which have focused too much on tools and the need for reporting requirements. These have fueled a culture of compliance rather than fostering a culture of impact and measurement. The risk is that, with the waning regulatory pressure, there will be a disengagement from these issues, especially in the profit-making world. This is why it's a topic that organizations today must address with greater awareness and maturity .

What about non-profits?

For nonprofits, the situation is somewhat different, as impact measurement is closely tied to verifying the organization's institutional results. However, it is an activity that risks being unsustainable. Measuring social impact is expensive, requires time and expertise, and is effectively a research activity . Despite its relevance even in nonprofits, if compliance is not achieved, the costs inevitably far outweigh the benefits. Yet the added value that social impact measurement can bring to organizations is significant. If approached correctly, it can transform from a cost into an investment, thus generating value over time .

How should organizations approach impact measurement today? What are the real benefits of this activity?

The issue takes on different connotations and relevance in different sectors (profit, nonprofit, and public), but with one underlying element in common: the extraordinary value that impact measurement brings in terms of knowledge and understanding of one's organizational identity . I'm referring to who one is, how the organization works, what its intervention model is, what are the distinctive characteristics of projects and activities that enable them to be transformative, and indeed, to generate impact. This makes measurement a powerful tool for strategic reorientation and management.

For profit-making companies, social impact measurement projects should foster a reflection on the corporate purpose . Talking about social impact means questioning the organization's contribution to society, what socioeconomic system it helps build, and what ethical values ​​it intends to uphold. Quoting the preface to Francesco Billari 's book, if the term "ecological footprint" has been coined for environmental impact, for social impact we could speak of a "social footprint," understood as the contribution to individual well-being, the quality of relationships, and the social cohesion left on the community by corporate projects, activities, and policies .

For non-profit companies where the purpose is in fact the institutional aim, things are a little different.

For nonprofits, social impact measurement is a powerful tool for strategic analysis and planning because it connects their vision (what they aspire to be, what social problem they want to help solve, and therefore what long-term impact they intend to generate) with their mission: who we are, how we approach the problem, and what activities are needed to be transformative. This allows them to align corporate behaviors and contribute to the establishment and growth of a shared organizational culture.

Measuring social impact is essential for a nonprofit to fully understand the processes of change it seeks to trigger and, therefore, to implement coherent projects and effective interventions where nothing is left to chance. This strengthens internal relationships, reinforces stakeholders' sense of belonging, and enhances its external reputation—an organization's true asset.

In general, for those who work in social issues or declare they have social objectives, whether an organization is a non-profit, a business, or a public administration, starting processes to measure social impact is a question of credibility .

Measuring social impact for a non-profit is essential to have full awareness of the change processes that you want to trigger.

You first mentioned the issue of costs and the fact that measurement is a research activity. What are the main factors that make measuring social impact challenging for an organization?

The measurement process requires two phases. The first involves building a theoretical measurement model, which leads to the identification of impact drivers and the indicators we choose to measure the outcomes of our activities. This phase involves listening to the organization's stakeholder network, gathering the perspectives of direct and indirect beneficiaries of our interventions and of stakeholders. This phase must be supported by the study of relevant scientific literature, which allows us to both validate emerging issues and broaden our perspective. This is a true strategic analysis activity for a nonprofit.

The goal of this phase is to highlight our organization's distinctive features, our thinking about how to contribute to solving the social problem, and the relevant aspects we will measure and monitor with the chosen indicators. The theory of change we develop and the measurement model we build must be an expression of our identity; it represents our point of view, albeit grounded in science. Much of the value we can generate for the organization through impact measurement lies in this phase.

The second phase?

The second phase , however, concerns the actual measurement activity, which involves identifying information sources, designing survey tools, data collection, and processing techniques . This phase requires very specific technical choices that concern not only the methodology to be adopted but, above all, the measurement scope. Two dimensions define the scope of impact measurement. The first is scope : what is the object of measurement? Are we measuring the impact of an activity, a project, or the organization? Do we focus on a specific category of direct beneficiaries or consider multiple stakeholders? We measure the impact on a specific dimension of analysis, such as improvements in beneficiaries' social behaviors and personal skills. The second dimension is the measurement time horizon . This requires defining the length of the observation period. For example, one can choose to measure what happens during the execution of a project, or I can measure its benefits six months later or one or more years later. This phase is characterized by the greatest costs of measurement, not only in economic terms but also in terms of time consuming and organizational effort.

Two final points to note in this regard. The first is that deciding to measure something ex-post raises issues regarding the availability of primary data and the robustness of indicators: you measure what you can, not what is useful to measure. Therefore, it is important to plan the measurement ex-ante . The second is that a serious measurement activity requires time and a significant observation horizon . Simplifying choices can certainly reduce the costs of this activity, but also significantly reduce the benefits.

Much of your research on these topics has focused on evaluating the impact of interventions promoting the social inclusion of serving time and, therefore, measuring recidivism , a topic addressed in the second part of the book. Why is it important to discuss social impact in this context as well?

There is a large and ever-growing body of research examining treatment activities carried out in penitentiaries and communities, with the aim of understanding whether and to what extent the re-educational, rather than punitive, component can produce positive effects and which programs should be prioritized as most effective. The justice system is characterized by organizational and structural characteristics such that the introduction and maintenance of systems for measuring both short- and long-term outcomes, specifically recidivism, certainly presents specific risks and complexities in data collection .

For those who work in social issues or declare that they have social objectives, whether an organisation is a non-profit, a business or a public administration, starting social impact measurement processes is a question of credibility.

What are some specific risks and complexities of data collection?

For example, the need to connect information systems across multiple administrations, or privacy and the processing of sensitive data. But in this historical phase of reflection on the purposes and methods by which the penal system fulfills its mission, the use of impact measurement can accompany and support a process of learning and organizational change. It is through timely monitoring the impact of their programs and policies implemented in this area that public decision-makers and criminal justice agencies can not only gain insights into the outcomes of their interventions, but also give meaning and recognition to the work of prison staff and all stakeholders in the justice system .