At Nesta Arts & Culture Finance, a key element of our Theory of Change as a social investor is to support arts and cultural organisations to better make the case for the positive social change that they are uniquely placed to have on people and communities. Nesta’s submission to a government inquiry into the social impact of participation in culture and sport includes several examples from within our existing investment portfolio. As Impact Manager for the Cultural Impact Development Fund, part of my role is to help organisations develop their approach to social impact and in particular the mechanisms they use to better manage their impact. This process is part of how we hope to contribute to the goals outlined in our Theory of Change. In practice, this work breaks down into four steps:

Before we dive into the organisation’s own approach to social impact, it is useful to check what evidence is already out there about the effectiveness of similar service offerings. Seeing what types of outcomes are being attained in other programmes can help better understand and articulate what type of social impact the organisation aims to support through its own services. Similarly, knowing how other programmes are measuring these outcomes can provide ideas on how the organisation can approach measurement and evaluation itself. Another valuable source of evidence is an organisation’s own track record. If it has a history of evaluating its services, we review its past reports to see what social impact its services have supported, which also helps provide benchmarks for setting future social impact goals.

Armed with this evidence, we then chart out what social impact the organisation aims to create and how it contributes to this impact through its services. Using a Theory of Change approach, we identify the organisation’s long-term social impact goals and work backward to understand the necessary preconditions and requirements to achieve those goals. This framework therefore helps us work through the key assumptions underlying the organisation’s service model and the key factors for its success. Creating a Theory of Change also allows us to trace the throughline between what services the organisation delivers (outputs) and what changes it expects to see as a result (outcomes). This helps open up a discussion about what outputs and outcomes the organisation may wish to monitor, evaluate, and set goals around.

Once we have identified the organisation’s expected outputs and outcomes through its Theory of Change, this provides a basis for deciding what types of data it will collect about these outputs and outcomes, and how it will monitor, evaluate, and learn from this data. For outputs, this might include data about the number of sessions the organisation delivers, the characteristics of its service users, their level of engagement with the services, and their feedback about the quality of the services. For outcomes, this comprises specific, observable things that can be assessed periodically to check whether change is happening in the desired direction of travel, such as through user self-assessments or facilitator observation notes.

As part of this framework, we also ask organisations to outline how they will manage the practicalities of data collection and analysis, how they will integrate learning from these findings into their service planning and delivery, and how they will share this learning more widely with other stakeholders and decision-makers. This provides a clear plan of action around the organisation’s approach to monitoring, evaluation, and learning, which we then break down into annual social impact goals through its development plan.

Building on this framework, we encourage the organisation to define its annual social impact goals and lay them out in what we call its development plan. The development plan encompasses three types of social impact goals:

• Goals relating to its outputs, such as the number of users engaging with its services or the average user satisfaction rating of its services;
• Goals relating to its outcomes, such as the average change in service users’ subjective wellbeing or the percentage of users who achieve a qualification through engagement with the services;
• Goals relating to the organisation’s approach to impact management, such as training additional staff to collect and analyse impact data, or sharing its findings through conference presentations or in sector publications.

We ask the organisation to identify annual targets in each output, outcome, and impact management area. If possible, these targets should be based on benchmarks from the evidence review. After having gone through this process, by the time we set the organisation’s social impact goals and annual targets, we can have confidence that they are built on a strong understanding of its social impact model and a robustly considered approach to managing its impact through monitoring, evaluation, and learning.

This may seem like a lot of work, and the truth is that it does require an investment of time and reflection from both the organisation’s leadership and its delivery team. However, if we’re to take impact seriously, then this is necessary and much-needed work. Ultimately, it will help our investees identify their areas of impact, better monitor and evaluate their services, ensure accountability toward their social impact goals, and develop a culture of evidence and learning.

As we continue to roll out the Cultural Impact Development Fund and organisations begin to implement and embed these tools, we hope to report back on the difference that this process has made to the impact culture of our supported organisations. In addition, the tools described here play an important role in the Fund’s innovative social impact financial incentives. Stay tuned for more information about this in our next blog post.

Check out the Nesta Arts & Culture Finance website for more news on Cultural Impact Development Fund as well as examples of investments from our Arts Impact Fund.