Module 5: Sustainable Impact & Learning Outcomes

The Social Venture – A Success or a Failure?

The primary indicator of success lies in the actual impact of the social initiative. To put it simply, a social venture is successful if it achieves its intended social impact.

Capturing the Impact – The Mission Statement

The social entrepreneur should state the intended social impact in a brief and specific mission statement. For example, “poor families will earn more money”(1) or “fewer people will get, and/or die of, malaria.”(2) Statements like “fighting poverty and injustice” or “improving lives” are simply too vague to be useful. (3)

Measuring the Impact & Establishing a Correlation

The social entrepreneur can now assess whether the social program actually measures up to the mission statement. To measure impact, one has to gather concrete statistical data. For instance, if the mission statement is “poor families will earn more money,” then the income data of these families before and after the intervention should be collected and analyzed. The impact can then be quantitatively measured. Of course, owing to the sometimes varied and complex nature of the impact, it is often up to the social entrepreneur to find a suitable metric that can capture results with integrity.      

However, it is insufficient to simply measure the impact. More importantly, the social entrepreneur must prove that the social programs are indeed the interventions responsible for producing the desired changes. For this purpose, scientific randomized trials involving control groups could be done to study the correlation between a particular social initiative and the perceived social changes. Otherwise, one could rely on the past studies of similar programs in similar contexts conducted by other social entrepreneurs or researchers. The social entrepreneur must provide concrete evidence to justify the efficacy of the social endeavors.(4) According to Fisher & Starr,

“A project working to reduce the incidence of malaria by distributing mosquito bed nets must demonstrate that the incidence of malaria is in fact reduced. It is not enough to simply report on the number of nets distributed - the link to impact may not be there. Nets can be improperly used, sold by the beneficiaries for quick cash, or even used as fishing nets. Simply tracking activities is not enough - you need to track the impacts of those activities…A project that aims to reduce poverty by helping poor people to start businesses needs to show that the participants earn significantly more net-income after the intervention than they did before it. Business training or access to credit may not in fact get people out of poverty—measuring incomes is the only way to know.”(5)

For more guidelines on how to gauge the impact of global health programs, see http://www.uniteforsight.org/global-health-course/module4

Cost-Effectiveness

Funding for philanthropic purposes can be extremely limited. (6) As such, it is important to keep track of the amount of donor funds required to produce a given impact. For example, for every dollar spent in a poverty reduction program, by how much do the incomes of the people rise?(7) The social entrepreneur must strive to be cost-effective, optimizing every dollar to produce the greatest benefit for the beneficiary. The programs should also be evaluated to determine if the programs are going to be cost-effective over time, in the future. Fisher and Starr also offer additional advice: “Cost-effectiveness is relative, so compare the project to other projects working to produce the same impacts in similar areas. If you have nothing to compare it to, then at least ensure that the effectiveness can be measured and that it feels reasonable to you.”(8)

Sustainability in the Long Run

A crucial question is whether the social initiative would be sustainable in the long run. What would happen to the program once the inflow of external funding stops? In an effective program, the initial positive impact should not fade away, but should continue to generate benefits even with scarce, decreasing funding. (9) Fisher and Starr urge social entrepreneurs to continually ask the following questions:

“Will the people who are given mosquito nets continue to use them? Will the nets continue to be effective? Will they get replacement nets? Will new people want, and be able to get, nets?... Will the businesses that people have started continue to prosper? Will new people be able to start new profitable businesses?” (10)

According to Fisher and Starr, in order to have sustainable impact, a social program should have one or more of the following characteristics:(11)

  • “The project can leave in place a business model and supply chain, which will continue to provide the required goods and services at a profit.”
  • “The project can hand-over the provision of goods or services to the local government – which will fund the continued interventions by collecting taxes.” Though this is a viable option, it is unfortunately not always sustainable to rely on the government.
  • “The project can leave in place a self-sustaining community process to provide a solution to a local problem with no external source of funding.”
  • "Finally, a project can work to permanently eliminate the problem it is trying to solve. Either it can get rid of the problem itself, or it can permanently change a no-cost social behavior...”

 A Case in Point: The Grameen Bank, A Model of Sustainability

Muhammad Yunus, the founder of the Grameen Bank and winner of the 2006 Nobel Peace Prize, found a solution to the plight of poor Bangladeshis who are unable to acquire funds to start their own business – microcredit. He lent $27 of his personal funds to a group of poor women, who quickly started a sewing business that was able to generate enough income to help them pay back the loan, and more importantly, to rise above poverty. Thus the idea of the Grameen Bank was born. According to Martin & Osberg, “Grameen Bank sustained itself by charging interest on its loans and then recycling the capital to help other women.”(12) Having thus proven microcredit to be a sustainable method of combating global poverty, Yunus continues to inspire organizations worldwide to adopt the Grameen model to combat poverty in their own communities.

Learning Outcomes: Sharing Knowledge With Other Social Entrepreneurs

After assessing the impact of a social venture, the social entrepreneur will know whether it is successful or not. Successes and failures are equally important because the social entrepreneur draws valuable lessons from both. More importantly, the social entrepreneur also shares knowledge of what works and what doesn’t with other social entrepreneurs to help them achieve progress in their respective social projects.(13)

Learning Outcomes: Scaling & Replicating The Impact Elsewhere

According to Fisher & Starr, “developing successful models for social change is expensive and we can’t afford to reinvent the wheel every time.” (14) The best projects are normally those that, with a few minor modifications, can be rescaled and replicated in a variety of different social contexts to address a similar problem. The Grameen model of poverty reduction is successful not only because it is sustainable and cost-effective, but also because it can readily be adapted to serve the needs of different communities with different sets of cultural and social needs. In fact, so successful is microfinance that it is now even being implemented in developed countries like the United States to reduce poverty.(15)

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Footnotes

(1) Fisher, Martin J., and Kevin Starr. "Real Good, Not Feel Good." (8 June 2009).

(2) Ibid.

(3) Ibid.

(4) Ibid.

(5) Ibid.

(6)Dees, J. Gregory. "Social Ventures as Learning Laboratories." Innovations (2009): 11-15. (8 June 2009), 12.

(7) Fisher, Martin J., and Kevin Starr. "Real Good, Not Feel Good." (8 June 2009).

(8) Ibid.

(9) Ibid.

(10) Ibid.

(11) Adapted from Fisher, Martin J., and Kevin Starr. "Real Good, Not Feel Good." (8 June 2009).

(12) Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition." Stanford Social Innovation Review (2007): 28-39. (8 June 2009), 35.

(13) Dees, J. Gregory. "Social Ventures as Learning Laboratories." Innovations (2009): 11-15. (8 June 2009).

(14) Fisher, Martin J., and Kevin Starr. "Real Good, Not Feel Good." (8 June 2009), 5.