If you work in, volunteer for, or support a not-for-profit organisation, you will almost certainly have been asked ‘what difference do you actually make?’
Sometimes that question may come from a funder. Sometimes from a trustee. Increasingly, it is being asked by beneficiaries, partners, and the public. Measuring impact is no longer a ‘nice to have’ but a core part of running a credible, sustainable organisation.
And yet, for many not-for-profits, impact measurement feels daunting. It can sound technical, resource-heavy, or worryingly close to turning human stories into spreadsheets. The good news is that there is no single ‘right’ way to measure impact. Different organisations need different approaches at different stages of their development.
In this blog, I’ll explore three commonly used impact measurement methodologies, explain what they are really for, and highlight when each might be most useful. These approaches can (and often should) sit alongside each other and each deserves a deeper dive of its own in future blogs.
What Do We Mean by Impact?
Before diving into methodologies, it’s worth being clear on what impact actually is.
- Outputs are what you do
We delivered 120 advice sessions over the last 12 months. - Outcomes are the changes that happen as a result
Participants felt more confident managing their finances. - Impact is the broader, longer-term difference you make
People were less likely to fall into crisis debt as a result of our programme.
Impact is about change, not activity. Measuring it helps you understand whether your organisation is genuinely achieving its purpose or not.
Methodology 1: Theory of Change
What it is
A Theory of Change is a structured way of explaining how and why your activities lead to the change you want to see. It maps the logical steps between your work and your intended impact.
At its simplest, it answers three questions:
- What problem are we trying to address?
- What do we do about it?
- How does that lead to meaningful change?
This is often visualised as a diagram linking inputs, activities, outputs, outcomes, and impact.
Why organisations use it
Theory of Change is particularly valuable because it:
- Forces clarity about purpose
- Surfaces assumptions (often hidden ones)
- Provides a shared understanding for staff, trustees, and funders
- Creates a foundation for other forms of measurement
Rather than being a measurement tool on its own, it is best thought of as an impact framework.
When it works best
- When an organisation is clarifying or refining its strategy
- When multiple programmes contribute to the same mission
- When funders ask ‘how does this activity lead to impact?’
A Theory of Change should not become an academic exercise. If it is too complex to explain to a volunteer or beneficiary, it is probably too complex to use. The goal is shared understanding, not perfection.
Methodology 2: Outcomes-Based Measurement
What it is
Outcomes-based measurement focuses on tracking the changes experienced by beneficiaries as a result of your work. These changes can be:
- Skills gained
- Knowledge improved
- Behaviours changed
- Situations stabilised or improved
Outcomes are usually measured using tools such as surveys, questionnaires, interviews or observation, both before and after an intervention.
Why organisations use it
This approach is popular because it feels practical and proportionate. It allows organisations to:
- Demonstrate progress towards their mission
- Show funders evidence of effectiveness
- Improve services based on real feedback
It also respects the fact that not all impact is immediate or easily quantified in financial terms.
When it works best
- For service delivery organisations
- When working directly with individuals or groups
- When improvement over time is a key objective
Outcomes based measurement is often the most accessible place for smaller not-for-profits to start.
Outcomes need to be:
- Clearly defined
- Realistic to measure
- Relevant to beneficiaries
Collecting too much data, or measuring things simply because they are easy to count, can lead to reporting fatigue without real insight.
Methodology 3: Social Return on Investment (SROI)
What it is
Social Return on Investment (SROI) attempts to put a monetary value on the social, environmental, and economic outcomes created by an organisation.
It typically results in a ratio, such as:
For every £1 invested, £4 of social value is created.
SROI involves identifying outcomes, assigning financial proxies to them, and adjusting for factors such as what would have happened anyway.
Why organisations use it
SROI is particularly attractive to:
- Funders focused on value for money
- Commissioners comparing different interventions
- Organisations working at scale or in policy-influencing spaces
It can be a powerful advocacy tool when used carefully.
When it works best
- For mature organisations with good data systems
- When comparing different models of intervention
- When financial decision-makers are the primary audience
SROI is resource intensive and requires time, expertise and robust data.
There is also a risk of oversimplifying complex human change into neat financial figures. SROI should support understanding, not replace narrative, lived experience, or professional judgement.
Choosing the Right Approach (or Combination)
Most effective organisations do not rely on a single methodology. Instead, they:
- Use a Theory of Change to articulate intent
- Track outcomes to understand progress
- Occasionally use SROI to answer specific funding or policy questions
The key is proportionality. Impact measurement should support your mission not drain your capacity.
A small volunteer-led organisation does not need the same systems as a national charity. What matters is that your approach is honest, useful and embedded in how you work
Conclusion
Used well, impact measurement will help you:
- Improve services
- Allocate resources
- Strengthen governance
- Tell your story with confidence
In future blogs, I’ll explore each of these methodologies in more depth, including practical examples, common pitfalls, and how to get started without overwhelming your organisation.
