Forecasting – What You Need to Know
As a research consultant, I support a diverse range of organisations with a variety of challenges. I have worked with clients ranging from local micro social enterprises to global corporations, on everything from branding to product development to customer understanding and outcomes measurement. When a non-profit client came to me and expressed an interest in undertaking an SROI analysis, I went to work learning as much as I could about this fascinating methodology. In 2021 I attended the SROI training programme run by Quality Matters. At the start of 2022, I became a Level 1 Associate Practitioner, and by the end of the year I was a Level 3 Advanced Practitioner.
Within that period, I began working on the SROI analysis. My client was keen to include ten of their services in the analysis. In retrospect, I would not recommend a first timer doing this! I lost count of how many more experienced practitioners told me I was mad to have taken on the project. Due to the massive scope of the project, our relative inexperience in the methodology, and my client’s commitment to making social value measurement an ongoing part of their strategy, we decided to approach it with a forecast first and an evaluation to follow.
A forecast predicts the value an organisation expects to create for stakeholders within a set time period in the future, as opposed to an evaluation, which looks at change already created within a set time period in the past. A forecast lends a little more leniency than an evaluation. Forecasting is a great process by which to build an SROI framework in a relatively short time, and gain indicative insight into the value being created by interventions.
It was an incredible nine months, with many highs and many lows, which I have been told is a fairly typical experience for any SROI study. We are now into our evaluative analysis for 2023-2024 which is very exciting, and much less daunting than before. With the completion and assurance of our forecast in 2022, there were a few key learnings that stood out.
Paradoxically, it is worth running your intervention at least once before you do a forecast
Stakeholder engagement is a key element of the SROI methodology. To have informed stakeholders, who can really speak to the change experienced, it is a good idea to run your intervention at least once before conducting the analysis. Stakeholders will help you to identify the theory of change, outcomes, suitable valuations, deductions and more. If they have not yet experienced the intervention, this will not be an easy or reliable process.
It is acceptable to use post-only research to inform your forecast
Of course, pre+post research is the most effective way to measure the change created by an intervention, but this is not always necessary for a forecast. As it is not being used as an accurate measurement tool for something that has already happened, post-only research is enough for you to do your calculations (remember the motto of Social Value International: “enough precision for the decision”). The decision in this case was how to begin a process of social value measurement with a framework that can be replicated for future evaluative SROI analyses.
You are laying the groundwork for future measurement so make sure you do it well now
It is not worth cutting corners in a forecast. Ultimately, the effort you put in at this stage will make your life significantly simpler when the time comes to do the SROI evaluation proper. Make sure your outcomes are well-honed, test and re-test your valuations, validate your findings with the people who matter most, and be open to making changes if your stakeholders indicate that this is necessary, even if it interferes with your timeline or means redoing some data collection.
Do not overestimate
Your forecast should be a precursor to an evaluation, so you do not want to shoot yourself in the foot by being too ambitious with the numbers because you will need to evidence the actual change later. At the same time, do not underplay it; your forecast should be as accurate a representation as possible of what you think will occur. Funders, donors and the like need to have a clear sense of what you expect to happen in the forecasted period.
Plan for the future
Your experience of conducting the forecast analysis will show you where there might be gaps and limitations in your method or your data. You will need to explain every limitation and show how you plan to overcome it in your future evaluative SROI analysis. It is worth taking the time to scrutinise your method as you work through it and make detailed notes on what went wrong and how it could have been better. It is not about aiming for perfection, but about being aware and committed to minimising the limitations in your evaluation. Try to see your whole forecast process as an opportunity to learn and plan for better social value measurement and management in the future.