The Challenges of Measuring Social Impact

April 13, 2012 at 1:48 pm

Read the full article at Sustainable Brands.

Social ventures are launching rapidly across the globe and striving to build sustainable business models that drive social or environmental progress. Yet to achieve progress through enterprise, social entrepreneurs must confront a challenge that has long plagued the nonprofit sector – quantifying and tracking social impact.

Substantive impact measurement can be costly and complex, but it’s critical for social ventures pursuing greater scale and efficacy. Recently, sector heavyweight Ashoka launched an open resource that will encourage and facilitate impact tracking across the social change sector – to the benefit of social entrepreneurs, ventures, funders, and investors globally.

Colleen Poynton

Post by Colleen Poynton, Manager of Business Strategy and Development at Investing In Communities

When we talk about measuring social impact, we generally mean measuring social or environmental outcomes – i.e. the result of implementing a program, producing a good, or consuming a product or service.  Outcomes are distinct from outputs – the amount of goods produced or products delivered.[1] While traditional business is concerned with profitably generating outputs, a social enterprise must produce outputs profitably (or at least sustainably), while also advancing a desired social or environmental outcome.

Unfortunately outcomes are not as easily quantified as outputs. They are messy results of numerous variables, only a few of which a social enterprise can hope to influence effectively.[2] The measurement challenge that social businesses face is to demonstrate a connection between output (say, # jars of honey made by formerly incarcerated workers) and outcome (i.e. increased employment and reduced local recidivism rates), and to describe that connection quantitatively (i.e. “Our operations lowered recidivism by 15% relative to control populations over 5 years.”). Quantifying and tracking this relationship is costly. It requires greater data collection and analysis upfront (before launch) as well as over time….

Read the rest of Colleen’s article at SustainableBrands.Com

RE: “Doing good is good for business.”

December 8, 2011 at 4:18 pm

Yes it is.

Ever since launched back in November 2010, we’ve brought the concept of doing business, doing good to the real estate industry. Why? Well, like most, we believe in doing right by our community. We’re also friendly Midwesterners. But most importantly, we know from experience that doing good is just good business.

Branson's Virgin Group recently acquired Northern Rock and is resurrecting the troubled bank as Virgin Money

But don’t take our word for it. Really, don’t. In fact I would much prefer if you took Richard Branson’s word for it. Or maybe Colin Dyer’s. These guys know a thing or two about business. The founder of Virgin Records, Virgin Atlantic Airways, Virgin Mobile, and the much-hyped Virgin Galactic (yes that’s on-demand space travel) among others, Branson is worth around $4.3 billion.   Dyer oversees the second largest publicly traded commercial brokerage firm in the world – Jones Lang LaSalle – with over 40,000 employees in 750 locations across 60 countries.

Both are on record with very public declarations that social responsibility is  good business.

In 2010, Dyer released a white paper titled The Business Case for CSR in which he provides bottom-line arguments for JLL’s commitment to socially responsible business practices. He frames the company’s six pillars of corporate social responsibility (CSR) in the context of competitiveness, market opportunity, efficiency, enterprise risk, and reputation – metrics that even “the most single-minded profit-oriented shareholder” can endorse.

And recently, Richard Branson sat down with The Telegraph to discuss the upcoming release of his book, unpoetically titled Screw Business as Usual.

Okay. We’re Listening.

Defining CSR (and why we need to) – How Language Builds New Sectors

July 1, 2011 at 4:30 pm

Definitions. Not the sexiest topic, I know. But they can be pretty darn important, especially when you’re building something new. The role that definitions and terminology play in building new sectors and new business models has been on my mind a lot recently- for several reasons.

For starters, I work for a social enterprise. Ergo, I find myself in an emerging sector that’s awash with competing terminology, jargon, business models, and practices. Furthermore, the social enterprise I work for – Investing In Communities - is introducing something entirely new to the worlds of real estate and philanthropy. As a result, IIC has been challenged to articulate an unfamiliar model to very different stakeholders: nonprofits, real estate professionals, individuals, and businesses. These are not groups that tend to, as they say, speak the same language.” The language we choose to communicate our model impacts crucial first impressions.  Just like any start-up, we can’t afford to have first impressions be wrong impressions. So we continue to think critically about our terminology, and the essential role it plays in defining and growing IIC.

Second, I recently had the opportunity to attend the Impact Investing Summit here in Chicago. There, I found that Impact Investing, like social enterprise, also lacks clarity with regards to the diverse investment models, standards, and practices that exist (if you’re curious to learn about SII, check out this great video of Antony Bugg-Levine, Managing Director of The Rockefeller Foundation). Unified language has yet to emerge that categorizes these activities and communicates them effectively to stakeholders, such as investors or social ventures seeking funding. I expected the conference to resolve some of my own confusion about the multitude of activities currently lumped into the “SII” sector, but instead I learned that the experts all agreed on one thing: the sector is too broad, too diverse to be talked about as a monolithic entity. Doing so is unproductive, and ignores the distinct needs, challenges, and opportunities faced by different branches of the SII sector.

Distinct SII categories and investment vehicles must be clearly defined. Those definitions must in turn be tied to specific standards and measurement practices if social impact investing is to go mainstream. Investors need to know what they’re backing (what’s the blend of expected social and financial return? What’s the payback period?), investors need to know what they actually get (what was the social impact and financial return?), and social ventures – nonprofit or for-profit – need to know what financing options are out there. None of this will happen without uniform Definitions across the sector. As legal and policy infrastructure is built to support SII, some convergence of language will naturally occur. But in the meantime, broadly understood, consistent, and clear terminology is needed to communicate effectively with stakeholders. Imagine if all SII participants – VC firms, foundations, banks, financial advisors, etc – created unique terminology to describe their own particular activity. Well, you can probably see how that might inhibit broad understanding and widespread adoption.

Finally, the third reason I’m writing this ode to Websters -and the true catalyst for this piece – is this blog post by Ethical Corporation founder Toby Webb. The post struck me because, while I agreed strongly with the spirit of the argument, I find its logical implications troubling. The author argues that CSR terminology is irrelevant. Therefore,  consistent and shared definitions are unnecessary. Creating shared definitions within CSR is unnecessary, he reasons, because what matters is implementation not description – what matters is doing it, not naming it.

Well yes, but also….no. If we don’t know what “it” constitutes then determining whether companies’ CSR activities are actually as sustainable, humane, and socially just as claimed becomes time consuming and costly. Here lies the value of definitions – they demand clear standards.  Standards can be translated into to official certifications or designations, which in turn are tied to measured outcomes. So for example, when someone tries to sell me a “green” building I don’t need to ask where the materials comes from, what the embodied energy is or what the projected efficiency is – I can simply ask, “LEED Gold or Silver?”

In all likelihood, CSR is here to stay. The way companies are talking about CSR, it’s the new business as usual. But – and here I am in complete agreement with the author – talk is cheap. At the end of the day, achieving outcomes and raising the CSR bar is what matters. But without unified terminology across the sector, broad-based measurement, verification and comparison of outcomes across companies is inhibited. Stakeholders will struggle to assess the substance of CSR programs and the validity of corporate claims – and that only undermines the value of legitimate CSR programs. Furthermore, with the fast growth of SII, companies will increasingly face shrewd social investors who want to dig beyond glossy PR “fluff” in search of quantifiable impact. If we are to take CSR seriously as consumers, shareholders, and practitioners, then – as with social enterprise and impact investing – we need to consider the value of definitions and the role they play in building a sector.

But what do you think?

Corporate America, Meet Social Enterprise.

June 10, 2011 at 6:58 pm

Read the article from the Stanford Social Innovation Review

As I described yesterday, much attention is now focused on using social enterprise as a development tool in emerging economies. Yet entrepreneurial solutions to social problems shouldn’t be overlooked at home. The United States may be further along the development curve, but social enterprise models can be equally effective at driving progress here in the US.

For example, Investing In Communities (IIC) aligns the interests of nonprofits, realtors, and real estate clients to create a philanthropic resource and an effective business development tool.  Creating shared value (social and financial return) is what we do. Now, large corporations are dipping their toes in the water and exploring ways to unite corporate citizenship with bottom-line goals. So naturally, we’re interested.

Recently, Panera Bread has distinguished itself from its peers by going a step further and using its brand, supply chain, and expertise to launch a line of philanthropic cafés. The effort  could practically be described as a social enterprise franchise within Panera.

Known as Panera Cares Cafés, these locations are largely indistinguishable from standard Panera Bread cafés, except for one detail – in place of cash registers, patrons at a Panera Care’s Café will find a donation box. Customers pay on an honor system. Those who can afford to pay the full price or a little extra do, those who are strapped give what they can, and those who have nothing to give are, “free to enjoy their meal with dignity” says Panera co-founder Ron Schaich.

Social Enterprise and Big Business – A New Approach to Corporate Responsibility?

June 9, 2011 at 2:28 pm

Typically social enterprise evokes images of small start-ups lead by scrappy, passionate young entrepreneurs. Big Business doesn’t exactly spring to mind.

But Fortune 500 companies and large national chains are increasingly discovering the potential that social enterprise holds to advance corporate citizenship goals in a sustainable, efficient, and potentially more effective manner. Certainly, the captains of industry are not abandoning their focus on profit margins and market share to transform themselves into multinational B corporations. But they are exploring new approaches to giving back, and are increasingly pursuing opportunities to create “shared value” through new products, services, and partnerships. And these activities are starting to look a lot like social enterprise – albeit lodged within a traditional corporate structure.

Generate Business, Generate Impact

February 24, 2011 at 4:09 pm

Stop Paying Referrals – Start Investing In Communities

IIC is a social enterprise, and we’ve paid a fair amount of attention to its social value on this blog. So today I’d like to focus on the enterprise component of IIC – the engine behind our social mission.

Inman news recently reposted a nice piece to its marketing blog, Future of Real Estate Marketing, titled “8 Ways Real Estate Agents Can Generate Referrals for Free.”

The post illustrates two fundamental truths about the real estate industry:

1) Real estate professionals receive the vast majority of their business through referrals or “business leads,” and –

2) Professionals often pay real $$ for referrals and leads.

Real estate professionals often pay for services that simply generate business leads, regardless of whether leads translate into deals. When referrals do turn into business transactions it’s customary (or mandatory) that a percentage of the commission is paid to the referring entity. Commercial RE referrals typically cost between 15 % – 25 % a commission.

Yet a broker I know is fond of saying, “Our only complaint about referrals, is that we don’t get enough of them!” So it comes as no surprise that Inman readers are interested in getting more referrals for less dough.

While the post offered sound advice, it actually caught my eye for another reason. By offering 8 strategies in response to a basic business development question, the Future piece highlights exactly why the IIC model is poised for success, and why the real estate industry is ripe for social innovation.

Below, I breakdown the Future post to demonstrate how IIC integrates these business strategies, while adding value to the real estate sector and generating a social return.

Imagining A New Philanthropy for the 21st Century

January 26, 2011 at 7:31 pm

This past weekend, the Telegraph ran a piece by Sir Victor Blank entitled, “We Need a New Philanthropy for the 21st Century.” The article highlights the fundamental importance of  corporate engagement around today’s greatest social and environmental challenges – from both a business and moral perspective. It also articulates why a more innovative approach to philanthropy is needed moving forward – one that integrates social benefit and private value creation more directly, one that aligns public and private interests for true sustainability. It’s an approach embodied by IIC.

As Blank points out, fallout from the global financial crisis ensures that governments will be financially constrained  for years to come, and ill-equipped to fight global poverty, disease, and climate change while still tending to domestic challenges at home. Corporations, he argues, not only have a responsibility to come to the table and address these issues – they also have a vested financial interest in doing so.

Customers increasingly demand substantive  social leadership from the corporate sector. In addition, companies’ long-term strategic interests often align with those of their customers. Sir Blank writes, “The idea that there is a sharp divide between charity and commerce is false – the interests of a company and its customers are often synonymous.” Harvard Business Review recently sat down with Michael Porter to  further explore this concept that Sir Blank alludes to – that of “shared value.”

The conclusions drawn by Blake and Porter read as a glowing endorsement for the model and mission of IIC. Blake argues that corporations must expand their corporate giving beyond the current average rate of less than 1% of one fifth of annual profits ( that’s less than 1/5ooth of profits for those of you counting), in order to strategically support causes relevant to the firms’ commercial self-interest.  Porter concludes that in addition to strategic philanthropy, firms must find ways to integrate social responsibility directly into their business operations and thereby create shared value (see my discussion of IIC and hybrid value chains).

Investing In Communities allows firms to achieve both goals simultaneously. IIC enables firms to increase their corporate giving as a direct result of satisfying a standard operating need – real estate. Even better, firms don’t have to pay an additional penny out of pocket to generate that philanthropy. They simply make a savvy, socially responsible operating decision  and in return get to direct all the philanthropy generated by their IIC transactions, and receive recognition for it. For firms needing thousands of sq. ft. of office or commercial space, that figure could easily be tens of thousands of dollars per transaction. Not a bad deal, eh?

IIC proves that market power and public interest truly can align to generate incredible shared value. So we couldn’t agree with Sir Blake more. We do need a new philanthropy for the 21st Century, and here at IIC we’re not just imagining it. We’re creating it.

Making the Case for Corporate Social Responsibility (Part III)

December 6, 2010 at 3:30 pm

For the third and final segment of this post (see part 1 and 2), I’ll examine the charge that corporate social responsibility (CSR) campaigns are ineffective when profit creation and the public good are directly opposed.

In “The Case Against Corporate Social Responsibility,” Dr. Aneel Karnani suggests that many of society’s “most pervasive and persistent problems” are cases in which social welfare and private interests conflict. Otherwise, he reasons, the quest for profits would have produced solutions long ago. In these cases, Karnani argues campaigns for greater CSR are ineffective because executives’ hands are tied. “Even if executives wanted to forgo some profit to benefit society,” he writes, “they could expect to loose their jobs if they tried – and be replaced by managers who would return profit as the top priority.” Once again Karnani situates his argument within an extreme and narrow framework that constrains executive choice in order to avoid a more nuanced and complex discussion. Yet this time, both Karnani’s  argument and its supporting framework struggle to hold before critical analysis, as they fail to account for the shifting landscape of present market realities.

Making the Case for Corporate Social Responsibilty (Part II)

December 1, 2010 at 10:05 pm

read the article here

Last August, the Wall St. Journal ran an article titled The Case Against Corporate Responsibility, which has since provoked much debate. In the article, University of Michigan professor Aneel Karnani warns that campaigns for corporate social responsibility (CSR) are irrelevant, ineffective, or outright harmful– a dangerous distraction from more substantive systemic regulation. Karnani’s primary message, that CSR must not be expected to supplant formal regulation, is commendable. However, his first two arguments are deeply flawed. Both depend upon frameworks in which the landscape of choice is more extreme and more simplistic than that which corporations, shareholders, and consumers frequently face.

These frameworks present a false dichotomy. They imply that firms operate in a world where social welfare and profit creation are either perfectly aligned or directly opposed. Karnani avoids a more complex and relevant debate: the influence of CSR in circumstances that fall between these rare extremes. This over simplification undermines the accuracy and relevance of both arguments, but the second one – that campaigns for CSR are ineffective when private and public interests are opposed – suffers from a more fundamental flaw. Karnani fails to consider how new tools of media and information exchange are redefining the traditional relationship between private firms and their markets. This oversight places his entire framework, and the argument it supports, on very shaky ground.

Making a Case for Corporate Social Responsibility

November 30, 2010 at 5:44 pm

Rousseau's The Social Contract

Corporate Social Responsibility (CSR) is a hot topic these days, and it’s attracting much attention – some positive, some negative. CSR is an interesting concept. The very term implies that corporations are party to the same social contract as the individuals who compose, run, and own them. It implies that corporations, like individuals, should check their unmitigated pursuit of self-interest when their actions – even if not illegal – inflict serious damage on their community or society at large. Depending upon one’s political, economic, and philosophical views this suggestion may sound like common sense or, like naive rubbish.

Yet, most would agree that law and regulations are derivative of the same understanding that underlies the social contract: sacrificing a small amount of individual freedom (or profit) in the short-term can generate significantly larger gains in net social welfare, which an individual (or a corporation) will share in. As members of a society, we do not resist stealing from our neighbors simply because doing so violates the law (i.e. fear of consequences). We sanction and abide that law for a better reason:  if everybody ran about stealing, our short-term private gain of getting something for nothing would be massively outweighed by the long-term losses suffered in an unstable society where accumulation of wealth and security would be impossible.