Provisional Translation

Promoting Social Impact Measurement– Basic Concept of Social Impact Measurement
for Solving Social Issues and Plans to be Taken –March 2016
Working Group on Social Impact Measurement

Provisional Translation

1. Introduction
 Reasons Why Social Impact Measurement is Required‐ Changes of social environment‐ Changes of economic situation

・The attitude of funders has been changing after the financial crisis in 2008
・Also there is a trend that companies place more importance on their sociality
as enterprise value and become willing to disclose non‐financial info.

 International trends‐ Changes in funders’ attitude after the financial crisis.
Utilize the private sector’s knowledge and technologies.
・Funders such as foundations and investors have come to seek outcomesmore.
・Cooperative activities with NPOs and social impact investments are rapidlyexpanding.

“Visualization”
of social value Current status in Japan‐ Social problems are becoming more diverse and complicated.
Financial limitation is increasing.
・With population declining and aging, social problems are becoming morediverse and complicated.
・There may be a limit wherein the administration plays the central role.

Necessity forresource
mobilization fromprivate sector

It is indispensable to have social impact measurement accepted as theinfrastructure for public interest activities.

Provisional Translation

2. Meaning of social impact measurement
Grasping social and environmental outcomes, resulting from the relevantbusinesses and activities including short‐term and long‐term changes,
quantitatively and qualitatively then adding a value judgment.
 Misunderstandings about measurement◎It aims to extract value to achieve growth and improve their businesses.
× Not to audit, appraise them or waste business resources• Objectives i) To ensure accountabilityii) To facilitate learning and improvement• Features ‐ Go so far as to assess outcomes not limited to only assessing output
 Measurement conducted only based on measurement of the output does not fall under
the category of social impact measurement.
【e.g. (outputs)】 Held events 4times. 100 participants.

‐ Utilize logic models(*) to clarify a logical connection from input to output and to outcomes.
 Check whether not to set the scope of outcomes to be assessedcompletely apart from the output or the activity.

 Example of a logic model (Case of a business preventing adult diseases)
Outcome
Input

OutputActivities

・Funds, Facilities
・Specialized staff

・Planningseminars
・Training
specialized staff

・Numbers of seminars
held・Numbers of specialized
staff trained

Conventional scope of measurement（Short term）
・Increased citizensʼawareness
・Detection ofdiseases at earlystage（Long term）
・Extended healthy
life expectancy
・Increased laborforce
・Decreased medicalexpenses

Provisional Translation

2. Meaning of social impact measurement（2） Utilization and significance‐ How to utilize social impact measurement?

 For acquiring resources and achieving growth・Disclose the entity’s strategies and the outcomes, thereby further attracting resources？

e.g.

 Entities will be able to further mobilize resources caused by deepen
communication with funders
 Measurement results could be used as grounds for explaining theeffectiveness of invested funds to funders
 Entities will be able to make an appeal with the social value they have created.

 For managing business and making decisions
・Fully utilize the measurement results in making decisions on the content of businesses andallocation of resources with the aim of maximizing the social impact.

？

e.g.

 Examination of businesses may trigger improvements in deployment andallocation of human resources and funds.
 Figuring out the progress and problems may encourage business entities toreview the content thereof or even change their goals.
 related parties can share goals and deepen their understanding of recipientsʼ
businesses which will lead to the enhancement of mutual trust.

Provisional Translation

3. Measurement Methods
Fundamental concept (Principles of measurement)
Materiality – Measurement should cover information that affects decisions on the stakeholders.
Proportionality – Measurement should be conducted in accordance with the objectives, size of theorganization and resources (human resources and money).
※ There are other principles such as Comparability, Stakeholder involvement, Transparency and so on.
 The Measurement methods should be selected in accordance with the objectives and needs, due to thestrictness and the required cost varies by its method.
 currency conversion is not a requirement.

 What should be covered in the measurement (Scope of measurement)
Clarify the scope of outcomes (in short term and long term), stakeholders and so on.
 A figure of outcomes scope

Output

Input

Outcomes occurredas the business result
Changesin short term

Changesin long term

Changes
occurred attarget area

Changes
occurred insocial or
environmental

Changes
occurred inthemselves

Changes
occurred inoutside ofthemselvesLonger and wider outcomes they
will grasp, the difficulty becomeincrease.

Clarify the scope to be covered in
the measurement based on themeasurement objectives, businessrecourses and so on.

Provisional Translation

3. Measurement Methods (2)What procedures should be followed (measurement process)‐ The process of the measurement roughly consists of four steps

 Measurement processpoint
The result should be
disclosed and utilized
for explanations ofbusiness achievements
and improvement ofbusiness contents.

point
Whether presumed
outcomes have been
actually created, what is
the obstructive factors
and so on are analyzed.

Report & Utilize
ReportUtilization fordecision making

Assessment ofproblems andobstructive factors

AssessAssessment of
causalrelationships

PlanDiscussions andverification of the logic
model and the theory ofchange
Determination ofassessment scope=Prior assessment of thetheory
Scopes of businesses andstakeholders

Determination ofassessment
methods

Collection ofdata andmeasurement

Do

point
It is necessity to share thelogic model et al. from thestage of planning.

Methods of obtaining
indicators and data,
designing of assessment

point
It is preferable to utilize
both quantitative andqualitative dataProvisional Translation

4. Reporting and disclosure of measurement results
it is preferable to disclose the following data necessary forstakeholders in understanding relevant businesses and judging
the reliability.
e.g. ) Outline of the organization and businesses, related stakeholders, the logic model Scopes of businesses to be assessed, targeted stakeholders and outcomes, and thegrounds for specifying such scopes.
 Measurement methods (measurement techniques, indicator for each outcome, andmethods of collecting data), and the grounds for selecting such methods
 Measurement results (including grounds for outcomes, analysis results of the outcomes,and limits of the analysis)
 Utilization of measurement results in decision making.
et al.

「Comply or Explain」 “whether to comply with the basic standards or to explain why not ”
Considering the principle of proportionality, it is impossible that all entities engaging in social businesses will acquire allmaterial information and make reports. In fact, required information and data may sometimes be unavailable or a roughestimation may be made. Nevertheless, such limitations should be referred to and stated in reports.

Provisional Translation

5. Experience of Social Impact Measurement‐ Opinions of a company conducting measurement
Q.1 What activities are you doing?
We have made investment in theFP Corporation that engages inrecycling and manufacturing offood tray containers. The company
is characterized with its unique
technologies and high rate of
employees with disabilities, withsome of them assuming major
posts.

We are offering support for selfreliance and job search to young
people suffering from variousproblems. Our users havedifficulties in finding jobs due totheir individual experience, family
backgrounds, and attributes.

Kamakura
Investment
ManagementCo., Ltd.

K2InternationalCo., Ltd.

We engage in venture philanthropybusiness using the Japan Venture
Philanthropy Fund, which we operate
jointly with the Nippon Foundation
SocialInvestment
Partners

Q.2 How to address the measurement?
We conducted social impact measurement for the FP
Corporation in order to create a visualization of its
efforts to hire people with disabilities and presented themeasurement results at the general meeting of ourcustomers (beneficiaries). We also transmit ourmessage as a shareholder of the company, requesting it
to further promote such activities.

When measuring social impact, we quantified levels of
their difficulties based on their status and sharedwithin the company the awareness that effective
support programs differ depending on such levels ofdifficulties. Thanks to numerical grounds added to ourknow-how, which has been accumulated based on
personal experience of each counselor, it has become
possible to offer more concrete and effective support
to each user.
We consider that social impact measurement facilitated
our learning and has led to business improvements.
As part of our efforts for due diligence, we set KPIs formeasuring social impact while using logic models andother frameworks in establishing business plans together
with support recipients. By making social impact visible inthis manner, the performance achieved by recipients isclarified, and at the same time, steps that recipientsshould aim at over a medium term become clear in theprocess of creating logic models and setting KPIs.

6. Issues and Counter Plans for disseminating IssuesCounter Plans（Plans should be taken）

Lack of understanding concerning thesignificance and necessity

Holding of a symposium aiming todisseminate social impact
measurement and establishment of aforum for promoting measurement

Lack of understanding concerning
methods
Lack of tools such as standard
methods and indicators necessary

Preparation of an measurement
declaration and a roadmap by relatedparties
Translation of measurement-related
terms into Japanese and clarificationof definitions

Insufficient basic information andshortage of reference materials(Definitions of terminology, translationof foreign papers et al.)Development of guidebooks on basic
tools such as logic models and thetheory of change in Japanese

Shortage of personnel for conducting
measurement

Listing up of related foreign
documents and translation of major
ones into Japanese

Bearing of costs and ideal forms ofsupport

Holding of training sessions forfostering personnel andimplementation of model projects
Sharing of knowledge by accumulating
best practices and through peer
review

Provisional Translation

Working Group on Social Impact Measurement
This WG’s objective is below;
The WG was established under the Council for Promotion of the Societyof Mutual Assistance which hosted by Minister of State for Economic andFiscal Policy to make the first step of social impact measurement
promotion in Japan. The fundamental concept, issues and experiences
around the measurement would be collected and reviewed with experts.
Moreover disseminating the achievement enhance the opportunities ofpracticing social impact measurement by stakeholders such as not for
profit organizations, for profit organizations, foundations and fundmediators with providing the tools for discussion on measurement
method development.

10