New Impact-Assessment Method Allows INGOs to Measure Long-Term Performance

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The FINANCIAL — Few large international nongovernmental organizations (INGOs) have an effective means of measuring long-term impact in the social sector. Working in partnership with The Boston Consulting Group (BCG), as part of BCG’s social impact efforts, SOS Children’s Villages recently developed an innovative approach that comprehensively measures the long-term effects of its work. This new analysis provides a framework that other social-sector organizations may use.

SOS Children’s Villages, a leading INGO that provides care, education, and health services to more than 1 million children and adults, compared its benefits to society with its programs’ costs and found that an investment of €1 yielded a social return on investment (SROI) of €4 to €6. The learnings from this effort are featured in a new article, Gauging Long-Term Impact in the Social Sector: A Cutting-Edge Approach, released on February 17.

BCG’s collaboration with SOS Children’s Villages produced a highly effective means of measuring the long-term financial impact on society and the long-term nonfinancial impact on program participants and the community. The financial impact on society is gauged by the programs’ SROI. The nonfinancial impact for individual participants is based largely on interviews of former program participants to assess long-term outcomes along eight dimensions: livelihood, care, food security, shelter, education and skills, protection, physical health, and social and emotional well-being.

Most INGOs lack a rigorous, systematic approach to measuring the lasting effects of their work; many measure short-term indicators, such as the number of program participants, or short-term effects, such as improved grades in school. The development of this new approach enables SOS Children’s Villages to precisely quantify its programs’ long-term results. 

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“The evolving social-impact landscape places increasing importance on understanding the long-term results of investments,” said Alexander Baic, a Munich-based BCG principal who manages BCG’s social sector efforts in Germany and Austria. “BCG and SOS Children’s Villages have a long history of collaboration. SOS Children’s Villages creates huge value for its program participants, so it was a natural evolution of our relationship to support the organization’s determination to calculate this value and enable it and other INGOs to measure the impact of their work.”

To calculate the SROI and SOS Children’s Villages’ financial impact, the team measured factors such as former program participants’ projected lifetime incomes and found the SROI ranging from 4:1 to 6:1 in the first pilots. From a nonfinancial perspective, the first pilots found almost 90% of former participants performing well across at least six out of eight dimensions, which is notable given that SOS Children’s Villages works with the most vulnerable members of society and that one of the assessed dimensions (livelihood) depends heavily on often challenging local job markets.

“Our comprehensive approach to assessing our impact exactly reflects our understanding of our work on the ground,” said Stewart Wilms, international director of programme and strategy of SOS Children’s Villages. “It’s a holistic approach, considering all building blocks of well-being, and we are excited by the potential opportunities this unlocks across the social sector.”

Although this unique impact-assessment methodology has elements tailored specifically to SOS Children’s Villages, its core elements are broadly applicable. Both SOS Children’s Villages and BCG stand ready to share and advance this powerful lens for understanding long-term effects. 

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