What Is Impact Assessment? A Complete Introduction

Walk into any board room in the U.S. and you’ll likely hear the term “impact assessment” tossed around. From such contexts, it can be difficult to intuit what impact assessment actually means and what it looks like in practice.

But behind the corporate jargon, impact assessment is an essential tool for the success of both for-profit and non-profit organizations. From an ice cream parlor looking to franchise its business to a homeless shelter reporting to funders about its impact on the community, impact assessment can be used in an extremely wide range of contexts.

At SureImpact, we create impact assessment and case management software for non-profit organizations, foundations, and cross-sector collaboratives in social good industries. We’ve seen what works—as well as what doesn’t—and we hope to share what we’ve found with you here.

In this guide, we’ll explore the important basics of impact assessment and our recommendations for how your nonprofit can best put it to use. We’ve broken this guide into four sections:

As you read, keep in mind that there’s more than one way to go about impact assessment, and you’ll want to tailor the framework and tools you choose to your specific organization. While a one-size-fits-all solution may seem appealing at first, it will generally end up being a frustrating experience that can result in sizable, unanticipated expenditures.

Want to learn more about what impact assessment can do for you? Schedule a live demo.

Impact Assessment Fundamentals: FAQ

Even though organizations will differ widely in their impact assessment implementation, there are several elements that remain consistent across every impact assessment. Before you plan your next impact assessment, it’s important to understand these common elements. Let’s begin by addressing the elephant in the room: What exactly is impact assessment?

What is impact assessment?

Impact assessment is a formal process used to measure the effectiveness, relevance, and sustainability of an organization’s current and proposed actions and interventions. From major policy decisions to specific programmatic projects, impact assessment considers the implications an action or intervention has had or will have on specific groups of people, businesses, and/or the environment. Ultimately, impact assessment seeks to establish a relationship between an organization’s inputs, outputs, and outcomes.

What is the purpose of impact assessment?

Put simply, the purpose of impact assessment is to help organizations make informed programmatic and institutional decisions. According to the International Association for Impact Assessment (IAIA), we can break this down into four distinct goals:

  • Understand the possible consequences of a proposed action, change, or intervention and plan ahead to respond to any positive and negative results.

  • Encourage accountability to stakeholders, including shareholders, employees, donors, partners, customers, volunteers, and beneficiaries.

  • Identify necessary procedures and methods for future policy, planning, and project cycles.

  • Make environmentally, socially, and economically sustainable decisions for organizational growth and development.

While impact assessment is commonly associated with for-profit businesses, it’s relevant to all types of organizations—especially nonprofits who need to communicate the impact of funding with donors.

When should impact assessment occur?

Depending on your organization’s mission, you may conduct impact assessment before, during, and/or after a planned activity. With a for-profit organization, for example, impact assessment will generally occur well before implementation. On the other hand, a nonprofit will often use impact assessment to improve programs, strengthen an annual report to stakeholders or to assess community needs before implementing a new initiative.

But impact assessment can also be an ongoing process. For instance, SureImpact’s solution integrates tools for impact assessment and case management to provide nonprofits with “a continuous feedback loop with real-time outcome and impact data.”

For social good organizations, real-time, ongoing impact assessment and reporting can help bridge gaps between grantees and funders as well as between stakeholders and beneficiaries. Instead of waiting until it’s too late, this allows all involved parties to be proactive in making improvements or recommendations to a given program.

What’s the difference between impact assessment and evaluation?

At some point in time, you may have heard “impact assessment” and “impact evaluation” being used interchangeably. Although closely related, there’s a clear difference between the two. While impact assessment focuses only on the specific effects of an intervention, impact evaluation also studies:

  • An intervention’s design and process

  • Cost and efficiency of an intervention

  • Unanticipated effects of an intervention

  • Lessons for future interventions

In this sense, impact assessment is a crucial element—studying a narrowly-defined set of impacts—of the larger impact evaluation process.

What are the different forms of impact assessment?

As you can probably tell, there isn’t just one type of impact assessment. With for-profit organizations, impact assessment tends to focus exclusively on the economic effect a change (such as an ice cream parlor adding a habanero chocolate flavor) will have on a business.

However, nonprofits don’t exist to generate income for investors. As a result, organizations in the social good and human services sector are in a unique position to measure and assess the various impacts on the beneficiaries of their interventions. The impacts you measure might include:

  • Social Impacts

  • Economic Impacts

  • Health Impacts

  • Ecological Impacts

In the next section, we’ll dig into the four corresponding types of impact assessment and consider the circumstances in which you might use each type.

Types of Impact Assessments

Though it may seem commonplace today, impact assessment has not always existed in its current form. In fact, while we now largely associate impact assessment with the corporate sector, it’s historically been linked to environmental justice concerns.

As the concept of the “environment” expanded beyond the purely ecological to include the physical, biological, visual, cultural, social, and economic, practitioners have developed specific types of impact assessment to individually address each component of the broader environment.

Social Impact Assessment

Social Impact Assessment evaluates a proposed action’s impacts on individuals, families, and communities. Depending on your target population, social impact assessment may include a wide range of social components. These might include:

  • Institutional structures. What are the positive and negative impacts of the proposed intervention on the local community?

  • Local demographics. How will an intervention impact population characteristics (e.g. gender, racial, or political disparities) in the area of interest?

  • Community structures. How will an intervention change availability of community resources such as housing and social services?

  • Political authority. How will an intervention influence power dynamics? Will it adhere to existing and future laws?

  • Families. How will an intervention impact the family unit and family relationships?

As you consider who is impacted—and how—plan to collect and organize your data with software that is built to measure these impacts.

Economic Impact Assessment

Both non-profit and for-profit organizations will often use economic impact assessment to guide business decisions toward growth and sustainability. This type of assessment considers the direct and indirect impacts on:

  • Job creation

  • Profit

  • Revenue

  • Wages

In addition to performing economic impact assessment before implementing changes, a nonprofit might also use this type of impact assessment to evaluate and report on the impacts of previous business decisions.

Health Impact Assessment (HIA)

Finally, Health Impact Assessment focuses on studying the impacts of an intervention on stakeholders’ health and welfare. Generally, Health Impact Assessment follows four steps:

  1. Screening. Before jumping into your assessment, determine if a health impact assessment is warranted.

  2. Scoping. Define the impacts that you will consider and make a detailed plan for the health impact assessment.

  3. Assessment. Determine all potential health impacts alongside their likelihood, magnitude, and distribution.

  4. Recommendation. Using concrete evidence, consider all trade-offs and make action-oriented recommendations.

As with all impact assessments, once you’ve completed your health impact assessment, continue to evaluate and monitor the health impacts, and make changes when necessary.

Ecological Impact Assessment

Ecological (or Environmental) Impact Assessment focuses on investigating the possible environmental repercussions that a project or change will have on the physical world. Not only does Ecological Impact Assessment help you adhere to laws and regulations, it also helps you adapt to and protect the local and global environments alike.

As you might imagine, it’s quite difficult to use only one type of impact assessment without considering its relation to all the others. As a result, in addition to each individual type of impact assessment, there’s the comprehensive Strategic Environmental Assessment (SEA) model. SEA takes a holistic lens to examine an intervention’s cumulative ecological, social, economic, and health impacts.

Impact Assessment Frameworks

Depending on an organization’s mission and goals, impact assessment can follow a number of different frameworks. An organization can develop its own impact assessment framework or choose between a number of existing frameworks. Popular frameworks include:

  • B Impact Assessment. The B Impact Assessment measures an organization’s impact on workers, community, and environment.

  • Sustainable Development Goals. Developed by the United Nations, the 17 Sustainable Development Goals (SDGs) can be used as a guide to sustainable development practices for businesses and nonprofits.

  • Principles for Responsible Investing. Also from the United Nations, the Principles for Responsible Investing (PRIs) is a model developed to assess Environmental, Social, and Governance (ESG) factors in investment decisions.

  • Global Reporting Initiative Standards. The Global Reporting Initiative (GRI) Standards define best practices for economic, environmental, and social impact reporting.

  • Social Return on Investment. REDF’s Social Return on Investment (SROI) framework offers seven principles for measuring social impact, including involving stakeholders, valuing transparency, and verifying results.

In addition to these pre-made frameworks, there are also several models, such as the Theory of Change, Logic Model, and Five Dimensions of Impact, that can be used as templates for developing your own framework.

In any case, choose your framework before diving into your impact assessment and make sure it will work with your impact management and reporting solution. In order to avoid frustration down the line—especially if your framework ever changes—use tools that you can easily adapt to multiple frameworks.

Essential Elements of Impact Assessment

Despite their differences, there are a few core elements metrics that are likely to appear in any impact assessment framework. These include:

  1. Inputs: which are the available resources, such as funding, staff, and materials you have to invest in a given intervention or program. Before jumping into a new project, it’s important to take stock of the resources you’ll have at your disposal.

  2. Activities: which are the actions (e.g. develop or select a curriculum, train staff, make a marketing plan) that you’ll take in your intervention/program to bring about a desired outcome and impact.

  3. Outputs: which are the direct, quantifiable products of your activities, such as the number of patients treated or student ratings. Outputs often focus on the key performance indicators (KPIs) of your intervention, the quantifiable measures of the scale and quality of an activity.

  4. Outcomes: which are the short-, and medium-term effects of an intervention, such as change in program participants’ behavior, knowledge, skills, beliefs, or status.

  5. Impacts: which are the fundamental intended or unintended changes in organizations, communities, or systems as a result of the program/intervention. According to the WKKF, these generally occur after the conclusion of project funding.

We can further divide these elements into two separate categories: Planned Work and Results. Planned Work includes the inputs and activities that your organization is putting toward an intervention. Results, on the other hand, are the outputs, outcomes, and impacts that come out of your intervention. As you consider your results, it’s important to think about both the intended impacts and outcomes as well as any unintended consequences.

Across impact assessments, there are five common elements: inputs, activities, outputs, outcomes, and impacts.

Take, for example, a proposed after-school literacy development program. Instead of jumping in, we’d want to make sure that our planned activities were having the impact we wanted.

This example of a logic model for an after-school literacy development program shows the common elements of impact assessment in action.

If you’re in the planning stages of your program, by considering all five of these elements, you’ll be able to take the necessary steps to get from inputs to outputs to impacts. If you’re in the reporting stages, you can use these to investigate the connections (intentional or otherwise) between the work you did and the impact you ultimately had.

Impact Assessment Tools and Resources

Are you ready to implement impact assessment in your organization? If so, you’ll want the tools and resources at your disposal to be built with your industry and mission in mind. For example, a nonprofit trying to use impact assessment software made for for-profit businesses would likely struggle to measure the impacts of their activities and share assessments with funders and stakeholders. Take it from us: It can be a frustrating experience!

We made SureImpact with direct service providers, nonprofit executies, and funders at top of mind. With an intuitive design, our impact management and reporting software brings nonprofits and funders together in one location to provide a holistic view of client, program, and organization outcomes and impacts. SureImpact is a time-saving, game-changing resource specifically for nonprofits, government programs, collective impact groups, and foundations.

For more impact assessment-related resources and tools, check out these in-depth articles and guides:

4 Steps for Illustrating a Compelling Impact Story. Interested in how you can turn your impact into a compelling narrative? This article takes you through a step-by-step process for telling a captivating impact story.

A Playbook for Designing Social Impact Measurement. This guide from the Stanford Social Innovation Review at Stanford University offers detailed steps for determining the best metrics for measuring your social impact.

Back to the Basics of Measurement. This comprehensive eBook details a clear process for collecting and sharing your impact data.

Not all impact assessment tools are made alike. SureImpact is the only impact management and reporting solution made specifically for nonprofits and their funders. Contact us to get started.