The Complexity of Defining Social Impact

In fall 2015 the first-ever Jacobs Fellows started their Entrepreneurship Career Program at the Haas School of Business at UC Berkeley. Claire Markham is one the Jacobs Fellows. She graduated from Wilfrid Laurier University, Waterloo, Ontario, with a Major in Finance and prior to her studies at UC Berkeley Markham worked in Kenya. She has been doing an independent study exploring the latest trends in social impact metrics and measurement, and creating a defining framework for social impact. Markham shares some of these findings with us. Text: Claire Markham

In October 2015, I sat in a meeting with three faculty members of the Haas School of Business at University of California, Berkeley, discussing the future of the Global Social Venture Competition (GSVC), the longest running social venture competition. The faculty members suggested that since GSVC is catered toward social ventures, we should create a definition for social impact that could be used both for GSVC and across Haas. Tasked with creating this definition, I walked out of the meeting naively believing that this would be a week or two of work. Five months later, the project is only now nearing completion and I have come to appreciate the incredible complexities of defining social impact.

As a proud member of the first class of Jacobs Foundation Fellows at Haas, seeking opportunities to strengthen the social impact community on campus is a priority for me, inspiring me to pursue an independent study with GSVC to refine the competition’s social impact assessment.

To define social impact is a challenge

Throughout my research, it became clear that a brief definition would not appropriately capture the nuances of social impact. It appeared more valuable to build a framework enabling practitioners to evaluate for themselves how impact is created from a particular solution, and whether that solution is the right fit for the challenge it seeks to address. Alongside three Haas faculty members, I embarked on designing this framework, distilling the key insights from my research into eleven key interdependent questions comprising the framework.

There were six main trends and best practices that were woven into the framework:

  1. Magnitude: Not all problems are created equal, and some are much more severe than others. It is important for social ventures to first define the breadth, severity, immediacy of the challenge it is solving. Then the social venture should estimate how much of its defined challenge it can reasonably expect to be solved through its solution to get a sense of its relative social impact.
  2. Intentionality: While a business may generate positive societal outcomes, if these outcomes were not intentional and planned, the impact holds significantly less power since it is questionable how replicable or sustainable the impact is.
  3. Additionality: It is important for a social venture to articulate why its solution, rather than common actors such as government, philanthropy or private commercial markets, is an appropriate mechanism to address this challenge. It needs to clearly define what it will provide that the other providers are not achieving. How will it create social impact beyond what would have happened anyway without its involvement?
  4. Value chain impact: Even if a business’ activities are not commonly associated with social value, if it is approaching its business in an ethical manner throughout its value chain, this can produce tremendous impact. The definition framework must capture value chain benefits and not exclusively focus on companies that strive to bring social impact to its end customers.
  5. Ripple effects: Impact should capture the ripple effects that the solution may create. For example, it may provide proof of concept that will attract capital to early-stage innovations to further build out the market, or it may substantively alter the behaviors and structures that resulted in the underlying challenge.
  6. Measurement: Unless an organization is measuring its impact, there is no way to know with certainty whether impact is being generated from the solution. It is integral that organizations striving to create social impact prioritize ongoing measurement, even if the impact is hard to measure and proxy metrics need to be used.
    Social impact is highly complex, and a one sentence definition is simply too prescriptive. It is important to leave the definition in the hands of the organization that sets out to create impact, and a defining framework of questions can help organizations build their own social impact story and definition.