Outside in approach

A financial audit looks at a company from the inside. It checks the company's own books and its own transactions. Social Impact Assessment looks the other way instead. The workbook calls this the "outside in" approach.

The workbook's own words: Social Impact Assessment "takes an 'outside in' approach of looking at organisation." It cares more about how outside, non-financial stakeholders view the business. It cares less about how the organisation's own managers or owners see themselves.

In plain terms, an organisation's own account of its success is not enough. What matters more is how the people affected by it feel. That means beneficiaries, communities and local staff. Their experience counts for more than the organisation's own report.

This is one of the features that separates Social Impact Assessment from a financial audit, alongside gathering data mostly from outside the organisation, and adopting a triple bottom line view rather than a purely financial one.

Table 5.1 and the surrounding text (Chapter 5, section 5.1.2) set out how a financial audit and a Social Impact Assessment differ on this point:

The outside-in approach shapes practical assessment work. Because much of the evidence has to come from outside the organisation being assessed, the assessor relies heavily on direct beneficiaries, local government representatives and other NGOs as data sources, using Key Informant Interviews, Focus Group Discussions and quantitative surveys, rather than management's own internal reports.

Drawing on the workbook's own IWMP case study figures.

AB Responsible Services runs a watershed programme across 18 villages in Ratnagiri and Raigad, reaching a population of 25,000. Management's internal reports describe the project as a clear success, citing Rs 45.3 lakh invested and infrastructure completed on schedule.

An outside-in Social Impact Assessment does not stop there. It draws a 5% sample of direct beneficiaries — farmers, local business owners, villagers — and separately consults Panchayat members, district officials and local NGOs. If villagers report the check dams have not actually improved water availability for their own fields, that outside view counts more, in a Social Impact Assessment, than management's own internal completion report.

Chapter 5 (Social Impact Assessment and Social Impact Assessors), section 5.1.2 and Table 5.1, name the "outside in" approach as a defining feature of Social Impact Assessment, contrasted with a financial audit's inside-out, financial-only perspective. Expect a question asking which feature distinguishes SIA from a financial audit on perspective.

• "Outside in" is about whose view counts, not only about where data physically comes from — though the two are linked in practice.
• Do not confuse the outside-in approach with the triple bottom line — two separate, related features the workbook lists for Social Impact Assessment.
• A financial audit's stakeholders are "mainly shareholders"; a Social Impact Assessment's outside-in view considers all stakeholders.
• The outside-in approach explains why Social Impact Assessment relies so heavily on direct beneficiaries and Focus Group Discussions, rather than management's own internal reporting.