What follows is a series of short posts written while I attended the Social Enterprise Conference (#SECON12). The conference (February 25-26) was presented by the Harvard Business School and the Harvard Kennedy School.
What is a social enterprise?
The concept of a social enterprise is messy. By various definitions, it can include:
- A for-profit company that seeks to benefit society;
- a nonprofit organization that uses business-like methods;
- a foundation that employs market investing principles; and
- a government agency that leverages the work of private-sector partners.
The concept of a social enterprise is disruptive. It blurs the lines separating organizations that do good for stakeholders, do well for shareholders, and do right by constituents.
The concept of a social enterprise is inspiring. It can foster flexible, creative solutions to our most pressing problems.
The concept of a social enterprise is dangerous. It can attach the patina of altruism to organizations motivated solely by profits.
The concept of a social enterprise is catching fire. The evaluation community needs to learn how it fits into this increasingly common type of organization.
Kavita Shukla of Fenugreen discussed the product she invented. Amazing. It is a piece of paper permeated with organic, biodegradable herbs. So what? It keeps produce fresh 2-4 times longer. The potential social and financial impact of the product—especially in parts of the world where food is in short supply and refrigeration scarce—is tremendous. Watch a TED talk about it here.
Next, Taylor Conroy (Destroy Normal Consulting) discussed his fundraising platform that allows people to raise $10,000 in three hours for projects like building schools in developing countries. Sound crazy? Check it out here and decide for yourself.
Evaluation moment #1: The panelists were asked how they measured the social impact of their enterprises. Disappointingly, they do not seem to be doing so in a systematic way beyond counting units of service provided or number of products sold—a focus on outputs, not outcomes.
The first session I attended had the provocative title Social Enterprise: Myth or Reality?: Measuring Social Impact and Attracting Capital. Jim Bildner did an outstanding job as moderator. Panelists included Kimberlee Cornett (Kresge Foundation), Clara Miller (F. B. Heron Foundation), Margaret McKenna (Harvard Kennedy School), and David Wood (Hauser Center for Nonprofit Organizations).
The discussion addressed three questions.
Q: What is social enterprise?
A: It apparently can be anything, but it should be something that is more precisely defined.
Q: How are foundations and financial investors getting involved?
A: By making loans and taking equity stakes in social enterprises. That promotes social impact through the enterprise and generates more cash to invest in other social enterprises.
Evalution moment #2: Q: How can the social impact of enterprises be measured?
A: It isn’t. One panelist suggested that measuring social impact is such a tough nut to crack that, if someone could figure out how, it would make for a fantastic new social enterprise. I was both shocked and flattered, given I have been doing just that for decades. Why were there no evaluators on this panel?
Ami Dalal and Jo-Ann Tan of Acumen Fund conducted a “bootcamp” on the approach their firm uses to make social investments. They focused on methods of due diligence and valuation (that is, how they attach a dollar value to a social enterprise).
I found their approach to measuring the economic impact of the their investments very interesting—perhaps evaluators would benefit from learning more about it. There are details at their website.
Evaluation moment #3
When the topic of measuring the social impact of their investments came up, the presenters provided the most direct answer I have heard so far. They always measure outputs—those are easy to measure and can indicate if something is going wrong. In some cases they also measure outcomes (impacts) using randomized control trials. Given the cost, they do this infrequently.
Looking back on the day
A social enterprise that measures social impact but does not measure financial success would be considered ridiculous. Yet a social enterprise that measures financial success but does not measure social impact is not. Why?