For my second Nonprofit-Millenial-Bloggers Alliance post I wanted to write about how I’m sick of this stigma in the market place: To have more “social impact” a company or organization has to trade financial benefits to maximize its social benefit. Plain and simple, this just isn’t true. The logic isn’t there to support the notion that this trade-off exists. But if we’re going to talk about social impact we better define what that specifically is and how to measure it.
Let’s break down “social impact” into its components. First, what do we define as “Social.” I like the definition proposed by Alison Lingane and Sara Olsen in their California Management Review article “Guidelines for Social Return on Investment.”
Social: A non-investor stakeholder affected by the business/organization: individuals, employees, communities, and society. These stakeholders may also be described as those affected by market externalities.
“Social” is the benchmark your business/organization is working to help. It’s so important that businesses/orgs clearly define their “social” component. Use “homeless” as an example. So many orgs say they help the homeless. I can think of at least a hundred different definitions of homeless and each definition has different implications. My example of a clear definition of homeless would be: Individuals living below the poverty line as set by the U.S. Census Bureau. This is only one definition. inevitably, there will be varying definitions, some narrower and broader then what I’ve proposed. What’s important is this definition clearly defines the “social” component the business/organization is working to benefit.
Now how should we define impact? People have written books on how to define it and what does and doesn’t constitute impact. I’m not going to attempt to define it here. I don’t even think a clear definition of such an abstract idea is necessary. What is important is that organizations individually define what impact is to them.
On the not-for-profit side I think Do Something.org does this well. Their social component is anyone under the age of 25. The impact: 2 million active doers in 2011. And Do Something.org goes on to define an “active doer” as an individual under the age of 25 participating in one of their programs.
On the for-profit side, I think Impact Foods is making a solid start. They make it very clear: For every bag of their granola you buy, through their partnership with Feed the Children, a hungry child gets a meal for an entire day. After meeting with them, they’re making a move toward greater transparency on who they define as a hungry child, a clear definition of their goal, and a transparent process showing how they measure reaching that goal. They’re not there yet, but they serve as a great leader for others wishing to add a social impact component to their bottom line.
A uniform construct to measuring social impact doesn’t exist and I’m not sold on the idea that society needs one. Instead, I believe that organizations and businesses wishing to measure their social impact need to clearly define the social component their organization is addressing, a specific tangible goal, and show a clear transparent method to measuring progress toward that goal. There will be flaws and people will question how much good a company is actually doing. This will inevitably lead to greater accountability and transparency and this is a good thing.
