Thought Leadership

A Look into the Measurement of Social Funding

By Ashley Dion

The panarchy cycle (adapted from the field of ecology) has four stages. These stages can be used to describe where an issue or organization is in social innovation.

A representation of the panarchy cycle, taken from  https://www.resalliance.org/adaptive-cycle

A representation of the panarchy cycle, taken from https://www.resalliance.org/adaptive-cycle

  1. The cycle starts with conservation of an old system.

  2. Eventually, the system is disrupted or challenged, leading to the release stage

  3. People start to look for new ideas and ways to do things. As these ideas develop, the system will shift into reorganization

  4. The last stage is exploitation where the idea is starting to be implemented. 

Over time, the idea grows and is shifted back to conservation as the “new idea” becomes the norm for this system.  

Two articles I recently read (A Critical Reflection on Social Impact Bonds and Ten Reasons Not to Measure Impact – and What to do Instead) illustrate what it looks like to be at different stages of the panarchy cycle. The articles do not explicitly say they are structuring things within the panarchy cycle, but when looking at the following criteria it is clear they are experiencing it and writing about it.

When an issue is in conservation it is the accepted method/idea, but something can disrupt that conservation. For the accepted methods / ideas discussed in these articles (previously-accepted ways of finding investors and funding your cause), disruption comes through frustration with how things are running. Frustration pushes people to start looking for new ideas and develop them to be accepted as the new normal. When organizations are facing frustrations, they start looking for new ideas like those provided in these articles. This being said, there are still issues with the new ideas that both articles do not capture.

A Critical Reflection on Social Impact Bonds

In the article A Critical Reflection on Social Impact Bonds, the authors talk about issues around how private investors, government, and the public sector interact with social impact bonds. A social impact bond is like other bonds, but repayment happens when an agreed-upon social outcome is achieved. 

Let’s look at where in the panarchy cycle the authors of this article are, and some of the issues they are facing. In the panarchy cycle they are still working on new ideas and those ideas are competing against each other to become the predominant idea. The social impact bond used to be one predominant idea, as it was solving the issue that “public resources are not always available to adequately fund public and social services” (Roy et al., 2018, para. 1). But the authors argue that the idea of social impact bonds is not working, and has led to unintended negative consequences including turning citizens into commodities. This has pushed the authors and others in the sector to the reorganization stage in the panarachy cycle. While they describe several issues with social impact bonds and suggest a few alternatives, it is clear that no single new idea has replaced social impact bonds. They do not specifically talk about the rigidity trap which the public sector is in. However, they do say public service providers want to stick with established practices as there is high risk to changing things up. It is safer to stay with a practice that helps 15% of the population instead of changing to an unknown outcome. This outcome could end up decreasing results to helping 5% of the population or increasing to helping 40% of the population. Until this risk factor is dealt with, the public sector will continue to be rigid to changes. And because the public sector deals with issues that hugely affect people’s lives, such as homelessness, there needs to be more credible evidence that a new approach will work before the sector will consider switching, even from something that is not working well.


Ten Reasons not to Measure Impact

Now looking at the article Ten Reasons Not to Measure Impact – and What to do Instead, we will examine where the authors are at in the panarchy cycle and a few considerations they have not addressed in the article. They are in a slightly different place on the cycle than the authors of A Critical Reflection on Social Impact Bonds: this article proposes a new idea and way to help inventors and decision makers in organizations, which means they are in the exploitation phase. Guerty and Karlan do a good job of giving logical reasons for why doing impact measurement is not always the best option for an organization. They also show the frustrations experienced by individuals involved in impact measurement systems. These issues include not having big enough sample sizes and not having enough money to use the data. Factors like these are shifting the problem from conservation.

To address these issues, Guerty and Karlan suggest using the Goldilocks Challenge, which is outlined in a book they wrote to help organizations design “right-fit” data strategies. A minor flaw with their new idea of the Goldilocks Challenge is that in their article, they do not provide quantitative data to back up why it would work better than more traditional impact measurement. The authors did not consider that an organization would just have to trust them that this is the best way to use data for investors and decision making. Even though the Goldilocks Challenge has not been tested, logically it looks like something that would work. Most social innovators take risks so they would be willing to advise an organization to give this method a try without the solid data to back it up. 



References

Gugerty, M., & Karlan, D. (2018, Summer). Ten Reasons Not to Measure Impact-and What to Do Instead (SSIR). Retrieved February 8, 2019, from https://ssir.org/articles/entry/ten_reasons_not_to_measure_impact_and_what_to_do_instead

Roy, M. J., McHugh, N., & Sinclair, S. (2018, May 1). A Critical Reflection on Social Impact Bonds (SSIR). Retrieved February 8, 2019, from https://ssir.org/articles/entry/a_critical_reflection_on_social_impact_bonds


Ashley Dion just completed her second year at Mount Royal University, where she is taking a Social Innovation concentration. This blog post was adapted from a précis Ashley wrote for a social innovation course: Historical Case Studies for Social Innovation. 

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