Proof of Impact CEO Fleur Heyns is someone with a multifaceted understanding of the investment industry. She’s been an investment banker at JP Morgan, the Co-Founder of an emerging market derivative trading platform, and seed funded Europe’s largest early-stage EdTech accelerator fund.
But after a number of years as an impact investor, she began to notice a problem: while interest in impact investing had reached an all-time high, very little money had actually moved into the hands of social entrepreneurs to help their businesses scale. Why was it that this interest wasn’t being translated into impact?
Part of the issue is a lack of consensus around the meaning and measurement of impact. Together with her Co-Founder, Fleur developed a hypothesis: by using technology to measure impact from the bottoms up, social enterprises could gather verified non-financial key performance indicators (KPIs) to demonstrate the impact that their businesses ultimately made on the planet and its inhabitants. From this idea, Proof of Impact was born.
Now, the world has moved even one step further. Even “traditional” and “mainstream” companies face a real risk by not reporting on their triple bottom line. It’s not enough to simply make a profit — businesses are now facing increasing pressure from investors, consumers, and even employees to measure and report on the social and environmental impact of their operations. Failing to do so opens them up to a severely negative impact on both their valuations and performances as key stakeholder groups are increasingly making decisions based on positive contribution to society. In this new normal, positive social and environmental impact leads to improved financial results, not just for social enterprises, but for all types of companies – making the need to prove impact more important than ever before.
We recently had the pleasure of hosting Fleur and her colleagues, Shannon Boselli (a MovingWorlds Institute alumna) and Evan Vahouny, on a webinar for members of our S-GRID program to share more about the importance of impact measurement, and how to get started measuring impact at your social enterprise. Below is a summary of key points along with helpful resources to develop your own impact story.
Why measuring your impact matters
As we’ve reported before, the social enterprise model is on the rise. The World Economic Forum is betting on social enterprises for a more sustainable future, SOCAP highlighted the importance of impact investing for systems change, and cross-sector partnerships are on the rise as we move from recovery to reimagination. Impact investing is more in-demand than ever before, as you can see from the data shared by Proof of Impact below:
But in order to receive these impact investing dollars or secure lucrative partnerships with global brands, social enterprises must do more than have a compelling mission: they need the supporting evidence to prove it. As you can see from the statistics below, being able to quantify the impact of your social enterprise is something that will only continue to become more important as time goes on:
- 84% of investors want to use their investment dollars to fund social and environmental impact
- 92% of social enterprises have challenges collecting quality data
- 86% of consumers say they’re more likely to purchase from purpose-driven companies
With the right data, social enterprises can not only tell their impact story, but demonstrate their impact with quantifiable impact metrics. Applying those learnings to sales, partnership, and investor materials can then help social enterprises unlock new opportunities to scale their impact and revenue – whether that is through sales, partnerships, or funding.
In the session, the Proof of Impact team broke the process down into three practical and actionable steps:
- Develop an Impact Thesis
- Choose core impact metrics
- Convert impact data into sales and marketing materials
How to Develop an Impact Thesis
The first step in measuring and reporting on impact is to develop an Impact Thesis, defined by the Global Impact Investing Network (GIIN) as “A clearly articulated thesis is coherent and evidence-based, stands out among competitors in the market, and can be distilled to a concise and persuasive pitch.”
To help its clients begin this process, Proof of Impact has developed this Impact Thesis Worksheet. As Evan explained, “These are the building blocks for what will go into an impact thesis, based on experience with investors and social enterprises. It’s broken down into a series of questions that, together, will formulate the beginning of a really robust impact thesis.” The worksheet is broken down into the following four elements, which we’ll explain in more detail and give examples of below:
Your mission is the reason that your organization exists. “Really thinking about how your mission relates to the impact you make. You want to make sure that you’re building the language around the impact you make into that mission statement itself,” Evan suggests.
Here is an example of what that could look like: “ABC Organization is dedicated to improving healthcare outcomes and reducing disparities among children in Ethiopia by increasing access to critical vaccinations.”
II. Supporting Evidence
The second step is to identify what evidence supports the claim you’re making in your mission statement about how you’re making a measurable difference in the world. As you think through this, Evan suggests, “Try to think of this from a researcher’s perspective, because that’s how potential partners and investors will approach it when deciding whether or not to work with you. Being able to cite research and evidence is a really important part of your impact thesis.”
Here is an example of what that could look like: “ABC Organization has a policy that all doctors follow clinical quality best practice guidelines and conducts annual audits to verify best practices are followed. The guidelines and audit results are available as proof of the impact occurring.
ABC Organization operates in the Jimma region of Ethiopia serving primarily farmers, who have an average annual income of approximately $1,200 USD. The GPS coordinates of the health centers are available as proof that the centers exist in these areas.”
III. Impact Objectives
The third step is adding more definition and clarity around the actual objectives you are trying to achieve. It answers the question, “what are your intentions?” From a sales perspective, there are a lot of purpose-driven companies out there competing with you; this section helps you define your specific objectives to set your company apart. For guidance, look at the resources below:
- For social impact objectives, see IRIS+ metric Social Impact Objectives (OD6247) for a list of selections.
- For environmental impact objectives, see IRIS+ metric Environmental Impact Objectives (OD4108) for a list of selections.
Here’s an example of what that could look like: “Increasing Access to Essential Medicines, Medical Supplies, and Devices”
IV. Beneficiary or Staff Testimonials
The final steps in the worksheet are related to testimonials. As Evan explained, “Beneficiary, staff, and customer testimonials are an important way to show how the impact your organization is creating makes a difference in the life of one person. Despite focus on large scale impact and data, what really moves people to make decisions is emotions – including testimonials and photos in your impact thesis humanizes your work in a way that moves people to action.”
Here’s an example of what that could look like: “20 year old Darmi is pregnant for the first time. Always an exciting period of course, but thanks to the regular checks in the health centre, she can enjoy the bright side of being pregnant without too many worries. Darmi: “I was very nervous before my first visit to the clinic. I found it difficult to answer certain questions. Now I feel at ease…It is comforting to know that when something goes wrong, I can get help.”
Once you’ve answered all of the question prompts, you can then take that raw material and synthesize it together in a way that you could put into a pitch deck, marketing materials, and/or on your website.
How to Choose Impact Metrics That Will Help Your Social Enterprise Scale
As Fleur shared on the webinar, “The goal of Proof of Impact is to integrate meaningful social, environmental, and other metrics into your ongoing activities. The sooner you capture metrics, the more data you’ll have which can be useful in the future for decision making, partnership building, and raising money from investors.”
The Proof of Impact Team suggests considering four dimensions to choose the right metrics:
1. Metric Title
This is a brief title for the metric, which can be of your own creation or taken from the resources in the “Impact Objectives” section above. For example, ‘number of customers,’ ‘number of products sold,’ and ‘number of services offered’ are all good metric titles. One great resource to look for metric ideas is the Global Impact Investing Network’s IRIS+ Metric Catalogue. You can browse and search for metrics, or even create an account and based on your impact focus and sector, be provided with a suggested core metric set.
2. Relevant SDG(s)
The United Nations Sustainable Development Goals (SDGs) are a helpful framework for organizations around the globe to align their work. Select the primary SDG relevant to the metric you chose above, using this list as a guide. For the healthcare related example we used above, the relevant SDG could be “Goal 3: Good Health and Well-being.”
3. Relevant SDG Indicators
Each SDG has a subset of targets and indicators, outlined by the United Nations. View the SDG indicators by clicking on the relevant SDG and selecting “Targets and Indicators” here. From there, select the SDG indicators that your organization is helping to achieve. For examples, two relevant indicators that fall under SDG 3 are “3.1.1 Maternal mortality ratio” and “3.2.1 Under-five mortality rate.”
4. Data Source
In this section, you want to describe where you plan to collect the data that allows you to quantify this impact metric on an ongoing basis. Examples could include your CRM, ERP, HR system, or cloud solutions like Google and AWS.
Tying it all Together: Conversion to Sales Materials
With an impact thesis and metrics in mind, now it’s time to apply these to sales/marketing materials that you can share with the world. There are a number of ways to do this, including:
- A stand alone report or whitepaper
- An interactive dashboard
- Presentations, landing pages, or brochures
Here are a few examples of social enterprises that are using metrics to help build trust with consumers, partners, and other stakeholders:
A Final Note
The process of developing an impact thesis, capturing the right metrics, and translating the results into sales materials takes time. But if there’s one thing that you can start doing, right now, to move yourself in the right direction, it’s to start capturing data on an ongoing basis. As Fleur noted, you might not have an immediate intention in mind for this data, but sometime in the future a use for it might emerge that will make the effort of collecting it well worth the effort.
For more support building the internal capacity, network, and connections to help your organization grow and scale, apply to the S-GRID social enterprise support program. For more information about Proof of Impact and its services, visit their website or reach out to the team directly at firstname.lastname@example.org.