Social impact is a positive change on people and the planet better understood through a well-designed theory of change designed to improve the outcome. Social impact has been historically been around in the form of philanthropy for many decades. In 1972 Bill Drayton, the father of social enterprise started a new movement that gave rise to a new social impact approach. There is a social impact revolution is taking place and COVID-19 now has accelerated this trend by putting pressure on businesses, impact investors, and philanthropy.
THEORY OF SOCIAL IMPACT
In a world facing Climate Change, Social Inequality, Injustice, and Illnesses that threaten our physical and mental health. We can count on human development initiatives working across the country or even the world to bring solutions to the table. But…in 2020 we still face.. [fires, protests, health issues, gender inequality, -- problems we’re still facing in 2020. So, what are we doing wrong? Honestly, We don’t know the impact of our activities. To see the real change, we must learn the positive and negative impact we have on people and the planet. Because only through effective Impact Management one can scale what IS working and correct what is NOT working. At Sopact, we are on the path to accelerate the world’s transition to be more sustainable and equitable. Don’t let anything come in the way, let us be your partner in social good.
SOCIAL IMPACT REVOLUTION
Listen to Forbes's video describing a shift in the way investments are made, policies are penned, funds are endowed, and careers are chosen. This movement, which has been dubbed the Impact Revolution as following Forbes video notes, advances a vision of doing well while doing measurable good.
TYPES OF SOCIAL IMPACT
COVID-19 has demonstrated wide open inequalities in the system. Businesses, Investors, and Philanthropy no longer focus on showing positive impact to hide their negative impact on people and the planet. They must account for both positive and negative social impact.
- Improving youth outcome measured based on a holistic evaluation
- Improving a profitable coffee supply chain financial and social outcomes
- Increasing gender equality through financial inclusion
- Persistently lower wages for a worker without healthcare insurance
- Increased pollution in city or ocean
- Persistent social isolation due to mental illness
- Long term refugees
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SOCIAL IMPACT THEMES
Depending on your lens (business, investors, or philanthropy), there are many impact theme taxonomy or classification. One of the cleanest and effective ones is developed by the impact investment community. GIIN's IRIS+ Impact Themes are aligned with the industry classes categorized by the International Standard Industrial Classification of All Economic Activities (ISIC). Impact Themes help describe a purpose-driven approach to contributing to social or environmental impact within a broader Impact Category.
Another popular and most popular classification is designed by UN Sustainable Development Goals. There are 17 globally accepted goals that could be considered as Social Impact Themes.
- GOAL 1: No Poverty
- GOAL 2: Zero Hunger
- GOAL 3: Good Health and Well-being
- GOAL 4: Quality Education
- GOAL 5: Gender Equality
- GOAL 6: Clean Water and Sanitation
- GOAL 7: Affordable and Clean Energy
- GOAL 8: Decent Work and Economic Growth
- GOAL 9: Industry, Innovation and Infrastructure
- GOAL 10: Reduced Inequality
- GOAL 11: Sustainable Cities and Communities
- GOAL 12: Responsible Consumption and Production
- GOAL 13: Climate Action
- GOAL 14: Life Below Water
- GOAL 15: Life on Land
- GOAL 16: Peace and Justice Strong Institutions
- GOAL 17: Partnerships to achieve the Goal
SOCIAL IMPACT EXAMPLES
From a philanthropy perspective, there are many examples. Following examples are extremes of social impact both positive and negative social impact
- Employment vs unemployment
- Livelihood vs wealth
- Education and training vs Digitial Divide
- Skills, knowledge, and competences vs Low-skilled labors
- Health and physical wellbeing vs Obesity and Chronic Disease
- Wellbeing vs continuously depressed or mental health
- Privacy, safety, and security vs Insecurity, unsafe
- Social inclusion vs. social isolation
- Connected, social ties, and networks, social mixing vs. professionally isolated
- Social interaction and communication: families, communities, etc. vs. social isolation
- Living, accommodation vs. homelessness
- Equality, equity, and equal opportunities vs. discrimination
- Citizen participation, democracy vs. Autoratariasm
- Sufficiency vs. lack of political and regulatory frameworks.
SOCIAL IMPACT ASSESSMENT
The effect of an activity on the community's social fabric and the well-being of the individuals and families. The social impact landscape is full of a maze, many frameworks, many tools.
This article will learn about different social impact methods and understand how they differ from each other. Before we dive into understanding them, let’s look at the popular rating system in a financial industry called MorningStar. MorningStar measures standardized metrics such as profit, revenue, and other important benchmarking between different business enterprises. The nearest equivalent to social impact in the social sector is MIX Markets for Micro-finance and IRIS for SGB/SBA. IRIS is the catalog of generally-accepted performance metrics that leading impact investors use to measure the social, environmental, and financial performance of their investments. Investment Funds report data for an individual investment through a B-Analytics that can be reported in IRIS format, which can later be used to communicate and benchmark various social impact. Frequently these self-reported data can be falsely reported because of wrong intentions and lack of proper interpretation. If an organization uses standardization data, context is frequently lost, making data irrelevant.
Watch and Learn
Chris Gaines, SoPact' Lead Trainer, explains social impact strategy for any social impact ecosystem partners, asset managers like impact investors, grantmakers, social impact accelerators, or assets like enterprises, nonprofits, and social businesses.
SOCIAL IMPACT INVESTING
The financial ecosystem is broken, public services fail to deliver and improve the quality of life, and poverty and inequality subsist in the developing markets. Today businesses are using their capabilities to optimize their positive impact on people and the planet alongside their financial return.
On the other hand, investors and social investors use capital to optimize business impact by adding and creating value beyond what would otherwise be achieved.
The momentum is now and urgent to generate financial returns alongside measurable social and environmental impact to address global complex challenges.
Good Social Impact
Impact investments seek a financial return across the spectrum, from below-market-rate to risk-adjusted market-rate returns. Unlike philanthropy and non-profit, businesses and investors aim to generate both financial and social returns - ultimately delivering shared value.
As capital mobilized to pressing challenges in delivering social innovation and a growing adoption globally, the evidence is encouraging, bringing increased capital flows towards those Sustainable Development Goals or other globally accepted goals.
Financial returns, listening to stakeholders' voices, and a commitment to impact transparency and integrity give relevance and credibility that the impact ecosystem needs to thrive.
SUSTAINABLE INVESTMENT VS SOCIAL IMPACT INVESTING
Sustainable investing (also known as ESG investing) and impact investing are often confused, and rightly so. However, they are pretty different from an investment approach.
Sustainable investments are primarily aligned towards business looking to improve operations and improve positive Environmental, Social, and Governance (i.e., ESG) metrics and reduce the negative impact.
Sustainable investment is often confused with impact investing. In reality, they both have completely different parameters to work with. Impact investing often focuses on multi-dimensions of stakeholders. Impact investing focuses on products and services a company is offering, directly impacting sustainability and social welfare. An impact investing do often have also to build strong environmental, social and governance practices. However, they primarily focus on selling solutions, products, and services that align with sustainable development goals.