Elements of Exceptional Impact Reporting: Demonstrating Accountability and Credibility Among Stakeholders
As funders, government agencies, and partners increasingly expect in-depth, transparent, and reliable reporting around social impact projects, understanding how to measure and share data, progress, and outcomes is an essential component of the world of impact work. “Impact reporting demonstrates a commitment to a firm’s mission and goals through transparency, and it allows stakeholders to hold the group accountable,” says Nina Tschinkel, a Vice President at Catalyst Opportunity Funds, an impact real estate investment firm and one of the funds in Sorenson Impact’s asset management portfolio. A seasoned leader in the impact space, Tschinkel says impact reporting is essential to her work and her company’s business decisions.
Without the critical step of collecting and analyzing data against a set of objectives, an organization cannot accurately assess its impact nor identify areas for improvement and future progress. “The purpose of impact reporting is to communicate an organization’s progress toward achieving its intended social and/or environmental goals,” says Dr. Nzinga Broussard, Senior Director of Impact Measurement at the Sorenson Impact Institute. “A report offers a tangible way to communicate the results of your efforts and can help inform business decisions to achieve the desired results.”
In this interview with Erin Ram, Communications Associate at Sorenson Impact Institute, Broussard, Tshinkel, and their colleagues share their collective expertise, discussing the pivotal role impact reporting plays in shaping decision-making, cultivating trust, and driving meaningful change. Together, they explore the key elements of impact reporting — clear objectives, a strong framework, and powerful storytelling — and the emerging trends reshaping the landscape.
What are the key elements of exceptional impact reporting?
Broussard: Impact reporting should start with an impact thesis, an overview of the social and/or environmental challenge being addressed, and how an organization’s activities intend to contribute to improving that challenge. In order to best measure the impact, a measurement and management framework is critical. This allows a clear and effective way for an organization to provide information on the tools used to measure and track the performance of its outcomes. At Sorenson Impact Institute, we design tailored impact measurement solutions for our clients to elevate their impact reporting standards.
Within the report, quantitative and qualitative data are essential. Quantitative metrics demonstrate the achieved impact as it relates to the impact thesis. These metrics should include outputs (i.e. number of people reached) and outcomes (i.e. crop yield, prevalence of chronic disease among participants), and how the outcomes compare to the status quo. The qualitative data, such as case studies and storytelling, highlights the non-quantifiable impacts of the organization’s work.
Tschinkel: I agree with everything Nzinga shared. For additional context, I would highlight the importance of contextualizing metrics against your own targets over a set period of time and, if possible, against industry benchmarks. It’s also important to create a feedback mechanism that includes voices of relevant stakeholders and adjusts objectives accordingly. Lastly, it adds accountability to a report if you are able to obtain an external, independent review of the data to report lessons learned. As Nzinga shared, storytelling is of course key, as it supplements and augments data, bringing the impact to life.
What criteria should be used to measure impact?
Tschinkel: We consider these six criteria when measuring impact:
- Set the scope for impact. What do we have the power to change?
- Determine corresponding metrics. What can be quantified both qualitatively and quantitatively?
- Set the frequency of data collection. How often do we expect this data point to change?
- Determine the data source and data quality. How will we collect this data and from whom? Will it be direct data or proxy data?
- Analyze for additionality. Did this change happen because of our intervention or was it bound to happen regardless?
- Set a growth path and goals. What can we change in the future (i.e. in the next month, 100 days, year, etc.)?
What challenges have you come across when collecting data for impact reporting? How do you address those challenges?
Tschinkel: Catalyst invests in impactful real estate projects across the U.S. Specifically, we provide equity capital to local developers who build intentional, community-driven development projects, such as affordable and workforce housing. For the most part, Catalyst’s data comes directly from our partners, i.e. our developers and community partners, as well as those impacted by our work, including residents.
When we collect data from our partners, we always work to strike a balance between getting the data we need while not creating a reporting burden. Often, a challenge is getting data requests back in a complete and timely manner. As such and wherever we can, we build reporting requirements into our contracts, and, in the case of our developers, we tie compliance to their asset management agreements, with financial incentives for compliance.
When that isn’t possible, we look to other incentives that tie back to our mission and goals to drive responses. In addition to gathering data from our partners, we also survey those impacted by our work, such as tenants in our affordable housing buildings. On the survey front, it can be challenging, though manageable, to design questions that ladder back to organizational goals, but are framed in a manner that is relatable and accessible to respondents.
Julianna Scionti, Associate at Catalyst Opportunity Funds: Another challenge is ensuring data quality. At our current size and scale, it isn’t cost-effective to commission external data audits or to align with reporting frameworks with very high reporting requirements. There is also the issue of proxy data, which is necessary in some cases but has cropped up in the industry as groups try to measure their impact without data that is sourced directly from their stakeholders. At Catalyst, we focus on limiting our use of proxy data. In some cases, like for carbon footprinting, it is unavoidable given the stage the market is in. Because the majority of our data comes directly from our third-party stakeholders, we are confident in the data quality. As we continue to scale, we will assess the need for an external audit of our data as well as align with reporting frameworks with heavy reporting requirements.
Broussard: Impact is defined as the change in an outcome due to an intervention compared to what the outcome would have been had the intervention not occurred (referred to as the counterfactual). When measuring impact, there needs to be a way of assessing the counterfactual in order to make claims about an organization’s impact. This can be done by measuring outcomes of a comparison group which can often be very costly, or by comparing outcomes against the status quo, otherwise known as benchmarking.
In the absence of a rigorous impact evaluation, most organizations do not have information on the counterfactual. One way to get around this challenge in order to assess an organization’s impact is to benchmark the organization’s reported outcomes against the status quo. This requires collecting secondary data from publicly available sources to assess the status quo.
Can you discuss the role of storytelling in impact reporting? How do you ensure that data is compelling and accessible?
Broussard: Storytelling is key to supplementing quantitative impact metrics. It allows organizations to highlight the benefits of their interventions that are not easily quantifiable.
Tschinkel: Qualitative storytelling is a crucial element. The quantifiable metrics are key to demonstrating scale, but it’s the stories that bring impact to life and make our work accessible, compelling and relatable on a human level. Throughout our reporting, Catalyst works to weave in stories about real people who were impacted by our investments, buildings, and programming. Some of these are captured in narrative form, others in email/text exchanges, others in succinct quotes that capture the heart of an experience or sentiment.
Kathryn Colton, Creative Director at Sorenson Impact Institute: Exactly. Impact reports provide a glimpse into the lives of those who have been positively affected. Highlighting the stories of those individuals is key to helping the reader fully understand the results being presented.
Exceptional impact reports make large amounts of information digestible, easy to understand, and tell a story. Strong design is crucial. In terms of ensuring data is compelling, infographics are a great way to make the numbers compelling. They are my favorite aspect of impact reporting because there are endless ways to present data, and they keep readers engaged.
Can you share an example of an exceptional impact report you’ve worked on? What sets this report apart from others?
Broussard: Sorenson Impact Institute recently partnered with Airbnb.org to produce its first impact report highlighting the organization’s unique, innovative role in the field of emergency response. Since December 2020, Airbnb.org has allowed hosts to provide temporary stays for displaced people and relief workers during times of crisis. By leveraging the Airbnb platform and global network of more than 4 million Hosts, Airbnb.org is able to connect hosts willing to open their homes with guests who need a place to stay in times of crisis.
The Institute helped Airbnb.org revise its theory of change and developed an impact thesis that clearly communicates Airbnb.org’s contribution to emergency housing. The impact report highlights Airbnb.org’s unique contribution, shares achieved impact outputs, and provides storytelling to highlight how Airbnb.org impacted the lives of its guests and hosts. Because Airbnb.org is at the beginning of its impact journey, the impact report does not include impact outcomes. However, the lack of outcome data did not prevent us from sharing how impactful Airbnb.org has been. The report provides several case studies showcasing the impact it has had across its four impact pillars.
Tschinkel: At Catalyst, my team and I are responsible for generating our annual impact report, and putting that together every year is one of the most exhilarating, fulfilling parts of my job. Our 2023 report, which will be published soon, has taken meaningful steps toward new, thoughtful ways to explore and communicate the impact our projects have on real people’s lives.
One element of this year’s report that I find exceptional is our tenant survey. Catalyst is committed to addressing America’s housing affordability crisis. Through a predominantly ground-up development strategy, Catalyst focuses on building new affordable units for America’s “missing middle,” who are increasingly at risk of unsustainable rent burdens and displacement. For many funds focused on affordable housing, reporting starts and ends with the number of affordable units created or preserved. While those numbers are important, they don’t tell you much about the lived experience. What does it mean for a family to have access to affordable housing? What does this unlock for them?
Through our tenant survey, we learned that 41% of residents had increased their disposable income as a result of living in our building, with 71% using that disposable income to build their wealth through savings and investments. 50% spent that money on wellness and exercise, 38% on healthier food, and 21% on health insurance that they otherwise couldn’t afford. We also learned that 73% of tenants had reduced their dependency on fossil fuels through reduced commutes. Again, I think this level of reporting helps to bring our impact to life in a way that is so much more human, so much more relatable, and sets it apart from others in the space.
Can you speak to the importance of transparency and accountability in relation to impact reporting?
Tschinkel: Transparency and accountability are core to impact reporting. We think of impact reporting as the equivalent of financial reporting for the nonfinancial returns, i.e. impacts, we deliver for investors. In this way, we see impact reporting as core to our role as a fiduciary and the primary way in which our investors and stakeholders hold us accountable to our impact goals.
Broussard: One way to avoid impact-washing or the appearance of impact-washing is to be transparent about the organization’s impact measurement and management practices as well as being honest about what we can and cannot measure.
Can you provide an example of how impact reporting has influenced decision-making within an organization or community?
Tschinkel: Koz on MLK, a Catalyst project located in the Hilltop neighborhood of Tacoma, Washington, offers an interesting example of how our internal impact processes inform our investments. Koz on MLK provides the community 161 units of affordable and workforce housing, as well as 6,000 square feet of ground-floor commercial space. Through a proprietary and internally designed community needs assessment, which analyzes 20-plus publicly available datasets, Catalyst determined that the Hilltop neighborhood was in need of financial services.
We worked with our developer and the Tacoma Economic Development Office to bring a community credit union into the ground floor, which focuses on providing banking services as well as providing financial education and loans — car loans, school loans, home loans — to underserved populations. After the credit union opened in October, Catalyst worked closely with branch leadership to design a tenant survey for upstairs residents, which helped the credit union to identify financial programming that would appeal to and be relevant to the surrounding community.
As hopefully shines through, our upfront impact processes allow us to have a level of intentionality that shines through in the quality of our subsequent community impact and, in turn, in the quality of our impact reporting.
What emerging trends or innovations do you see influencing impact reporting in the future?
Scionti: A few changes will reshape impact reporting. The first is the consolidation of reporting frameworks for comparability. Second is growing regulatory requirements that supersede voluntary reporting frameworks, which are already well underway in Europe. The SEC Climate Reporting Rule is setting a bar for climate reporting in the U.S. Lastly, higher expectations on impact reporting from investors will greatly influence the future of reporting. Investors want to see impact reported with attribution, so they can understand what amount of impact is attributable to their investment for their own impact reporting requirements.
Colton: Interactive digital reports have become more common, which is both helpful for easy dissemination as well as being better for the environment. Digital reporting also paves the way for impact organizations to utilize video, animation, and other technology to inform. Report designers will continue to need an understanding of effective user experience principles and utilize multiple design mediums. Online publishing platforms are an easy way to digitize traditional, printed reports. The Institute did this for the Sorenson Impact Foundation’s 2022 Impact Report.
Broussard: The development of impact reporting norms proposed for impact investors is a new development that has promise. At the end of 2023, Impact Frontiers released its Impact Performance Reporting Norms for Investors in Private Markets for public comment. The goal is to establish standards for impact reporting by impact investors. The draft Norms provide suggested content that should be included in a report and aims to reduce the risk of impact-washing.
This article was originally published at https://www.forbes.com. B The Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
