Measuring impact: theory of change, five dimensions and IRIS+

Measuring impact means answering a simple question honestly: what changed in people's lives or in the environment because of this activity?

That is harder than it sounds. It is easy to count money spent or people trained. It is harder to know how many of those people got better jobs, and harder still to know how many would have got those jobs anyway.

The tools in this guide help structure the answer. A theory of change sets out the expected chain from activity to outcome. The five dimensions describe the impact fully. Common metric sets such as IRIS+ make results comparable. And an adjustment for what would have happened anyway turns raw counts into real impact.

Theory of change

A theory of change maps the steps from what an organisation does to the change it wants:

Each arrow in the chain rests on assumptions, such as "employers in the district are hiring electricians". A good theory of change states those assumptions so they can be tested.

The five dimensions of impact

Developed through the Impact Management Project and used with the GIIN's IRIS+ system:

1. What: which outcome occurs, and how important is it to the people affected?
2. Who: who experiences it, and how underserved were they before?
3. How much: how many people, how big a change and for how long?
4. Contribution: how much of the change would not have happened anyway?
5. Risk: how likely is it that the impact turns out different from what was expected?

IRIS+

IRIS+ is a free system run by the GIIN. It includes a catalogue of standard metrics and core metric sets for common impact themes, such as financial inclusion, clean energy and education. Using standard metrics makes it easier to compare results across investments.

Operating Principles for Impact Management

These principles, launched by the IFC (part of the World Bank Group) in 2019, set out nine steps for managing impact across the investment cycle, from defining strategic impact objectives to independent verification of how a manager applies them.

Worked example (hypothetical numbers)

The skilling programme above trains 1,000 people. After six months, 600 are in jobs and 420 of them are still in jobs. A comparison group from the same district suggests that 30% of similar people find and keep such jobs without the programme.

• Kept jobs among those trained = 420, or 42% of 1,000
• Expected without the programme = 30% of 1,000 = 300
• Additional people in lasting jobs = 420 minus 300 = 120

The raw number (600 placed) overstates the programme's impact by five times compared with the adjusted figure (120). Both numbers are worth reporting, but only the second shows contribution.

Impact reporting in India

Non-profits that raise money on a Social Stock Exchange must file an Annual Impact Report by 31 October each year, assessed by a Social Impact Assessor. Assessors are registered with self-regulatory organisations set up by ICAI, ICMAI and ICSI.