‘Impact’ has become a widely used term across the for-purpose sector. But what do we actually mean when we use it?
As a board director, CEO or executive, it’s a question worth sitting with, because the answer can easily be buried in the technical language that surrounds impact today.
Many organisations can clearly explain the services they deliver and the people they support. Far fewer can clearly show the difference those services make.
There is both significant opportunity and increasing pressure to demonstrate that difference.
Funders want evidence. Boards want confidence that resources are being used effectively. Leaders want to know their organisation is making a real mark. The response is often to invest in dashboards, indicators and reporting approaches designed to measure it.
Yet measurement cannot answer the question of what impact means. Well before any conversation about reporting, an organisation needs to be clear on the change it is trying to create.
Impact is ultimately about change
Fundamentally, impact is about the change an organisation enables in people’s lives. That might sound obvious, but the point can be easily lost amid competing priorities and technical language.
Here’s a simple test worth applying. If your organisation delivered every one of its services flawlessly this year, but nothing in anyone’s life actually changed, would you have succeeded?
If the honest answer is no, then delivering services isn’t enough. At the heart of impact is the change created.
The activity trap
In trying to describe their impact, it’s not uncommon for organisations to fall back on describing what they do: the services delivered, the number of people reached, the programs run.
This is understandable. Activity is visible and easy to point to.
The change an organisation creates in people’s lives is harder to see, typically takes longer to show and often requires evidence, systems and capability that many organisations are still building.
Moving from describing activity, to understanding the change it creates is a significant shift. It asks leaders and teams to think very differently about what success looks like.
Recognising that gap is the first step towards closing it.
Activity is the means, not the end. The difference it makes in people’s lives is the impact.
Why this matters for strategy
This distinction matters because what an organisation treats as its impact is what it will optimise for. Mistake activity for impact, and effort typically starts pulling towards more of it: more clients, more programs, more initiatives.
An organisation can be busier every year while making less difference, and not notice, because it is measuring the wrong thing.
When organisations clearly define impact as the change they exist to create, they hold themselves accountable to what matters, not just what’s easiest to count.
With that clarity in place, impact becomes the reference point for strategy.
Investment priorities, partnerships and growth can each be tested against a single question: does this strengthen the change we exist to create?
Impact defined at this level shapes strategic direction rather than being measured after the fact. That is a broader topic, and one we have talked about here.
Change defined with stakeholders
Understanding the change that matters shouldn’t happen without direct input from the people it affects. An organisation cannot define this change on its own.
The people an organisation exists for hold a critical view of what change would matter most in their lives.
When we facilitated Vision Australia’s Impact-led Strategy process, the organisation set out to strengthen its shift towards impact, anchored in a clear articulation of the change it exists to create.
They consulted broadly with their stakeholders, including clients, families, community and industry partners. The insights and the change those stakeholders wanted in their own lives directly shaped Vision Australia’s – Impact Principles, which became the cornerstone of their strategy.
Only direct input from stakeholders can surface that clear difference, which is why the change an organisation commits to should be defined with the people who will live it, not for them.
Getting the starting point right
Before investing in dashboards, indicators or reporting approaches, it’s worth pausing on the most fundamental question: what change are we actually trying to enable, and for whom?
The answer to this is the foundation everything else is built on.
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Foundstone works with for-purpose leaders to develop Impact-led, Open Strategy – deliberately opening up the strategy process so that the organisation’s impact, strategic choices and funding opportunities are aligned from the outset, not retrofitted later.
Get in touch if you’d like to discuss the benefits of an impact-led strategy for your for-purpose organisation.
Read more about our Foundstone Strategy Methodology.