A recent Deloitte survey of 7,800 Millennials from 29 countries found that 73 percent believe businesses should have a positive impact on wider society. They perceive that businesses overemphasize profit generation at the expense of creating social and environmental benefit.
While profits are quantitative and measurement can be standardized based on accounting principles, social and environmental benefits are tough to measure.
While profits are quantitative and measurement can be standardized based on accounting principles, social and environmental benefits are tough to measure. First, there are many different forms of impact, as we’ve experienced working with more than 350 social enterprises from 60 countries in our Global Social Benefit Institute
(GSBI®). Some forms of impact may appear to be the same on a superficial level, but the impact model actually differs. For example, Naandi Foundation
provides safe drinking water to 3 million people in India per day. That’s broad impact. Gram Vikas
also provides safe drinking water in India, but creates sanitation systems with rural communities and insists upon inclusion of all castes. That’s deep impact, but very hard to quantify. Both enterprises are in India. Both provide safe drinking water. Which has more benefit?
A second challenge is temporal: profits are typically reported quarterly; in contrast, there is dramatic variation in how long it takes to generate the social impact of an enterprise’s product or service. For example, solar powered lanterns sold to replace kerosene lamps yield economic benefits to the end customer within months, as well as the immediate social benefits of more light and fewer health hazards. In contrast, the benefits of providing children essential micronutrients to ensure normal brain development won’t be evident for decades.
A third challenge is that standards are not well established or broadly adopted. IRIS
is a catalog of performance metrics for impact investors; however, outside of the financial services and agriculture sectors, they have not been broadly adopted by social enterprises. These measurement systems confront the reality that there are many different kinds of social impact. Broader metrics such as the Social Progress Index
may be useful for assessing overall well being, but the impact of a given organization on high-level metrics will in most cases be impossible to discern.
How then can we satisfy ourselves, let alone Millennials, that businesses of any sort are creating social and environmental benefits?
How then can we satisfy ourselves, let alone Millennials, that businesses of any sort are creating social and environmental benefits? We need evidence of impact, but the evidence may not be chiefly quantitative. Standard methods in the social sciences may be more appropriate than rigorous randomized controlled trials, especially when the impact is not immediately evidenced after the introduction of a new service or product. A standardized approach is clearly not feasible for measuring efforts to overcome wicked social and environmental problems. Practice-oriented researchers can help the social entrepreneurship movement by determining realistic yet meaningful ways of measuring and reporting impact. This is a challenge worthy of a Jesuit university.
Miller Center for Social Entrepreneurship
Santa Clara University has received a landmark gift of $25 million from Jeff and Karen Miller, longtime benefactors, friends, and -- in Jeff’s case -- an SCU alumnus. This visionary gift promises to improve the lives of millions by applying innovation and entrepreneurship to address the needs of the poor. It will also help launch fundraising for the University's new science, technology, engineering, and math complex where the Center will ultimately reside. Accordingly, the Center has been renamed The Miller Center for Social Entrepreneurship. Check it out: www.scu.edu/MillerCenter