Two recent articles on measuring impact of social enterprises deserve close attention.
“Conventional social impact frameworks emphasise the need to isolate impact (what have you changed that you can prove you did alone?) but fail to ask how social entrepreneurs might scale impact through partnership. The whole notion of attribution is irredeemably flawed when it comes to making sense of the social economy and needs to be ditched in favour of something more attune to the dynamics of collaboration, partnership and exchange.”
To scale impact, they argue that social entrepreneurs need to test their models and theories of change fast and often, and they need to become less attached to a model and more attached to whether that model meets the needs they are trying to address.
“The best way to do this is start testing from day one. There’s no guarantee that your impact indicators will be the right ones on day one, but then again, there’s no guarantee that your impact model will be the right one either. So if social entrepreneurs don’t set out with that mentality to question from the outset, they’ll quickly find themselves in the position so many later stage social entrepreneurs find themselves in today: with a model they believe in, insufficient evidence to factually back it up, but too limited resources to bring on a consultant to introduce an entirely new (impact) accounting system that their current financial and human capital didn’t evolve to handle.”
Endeavor, citing evidence from their global work and research they conducted, argued that when deciding between social and financial goals, social entrepreneurs should prioritize financial goals to maximize impact.
Acumen responded with a note of caution against relying solely on output data.
“Output-based, scale-based metrics are an outstanding way to give confidence about whether one is having impact. But when one wants to get to conclusions about what are the best ways to maximize impact, and where there are and aren’t tradeoffs, we need a less blunt instrument. Outputs are, after all, only proxies for impact. It is only when they are coupled with high-quality research on the linkages between the output and the outcome that one can have higher confidence about what social impact has been made and why.
It is great to see Endeavor asking such questions, and one day we might indeed conclude that they were right. I’d welcome such a day, since that would make the job of maximizing impact a more straightforward task: a singular maximization problem with finance at his heart. My hunch is that the challenge is far more complex, especially when we start considering some of the knottier social issues such as the value of dignity and empowerment, or even when we stop to consider that who you serve is almost as important as the service you deliver in determining impact.”
Conversations like these are important for the space, especially as the trend of launching social enterprises continues. We need to encourage what Pathak and Schlag term a “testing mentality,” and think more creatively about what impact means, how we approach it, and how we measure it.