Last weekend, Launcht attended the Middlebury Center for Social Entrepreneurship‘s second annual symposium on social justice. The symposium covered topics from urban revitalization to green energy. One workshop particularly stood out, however, because while it never addressed crowdfunding, it addressed a need that crowdfunding could potentially help fulfill.
The workshop, ”Measuring Social Impact is Critical for Being able to Scale Social Impact,” was led by Lisa Nitze, managing director of Mission Measurement LLC and an expert on using the power of markets to drive quantifiable social impact. Ms. Nitze discussed her experiences working with for-profit and non-profits, and how the two once-distinct categories are beginning to merge. She believes that both for-profits and non-profits must borrow from each other to survive in the current market. For-profits increasingly find that they must pay attention to social issues and be involved in their communities–to that end, 60% of companies have increased their giving since 2009. Non-profits, on the other hand, are finding that they must employ good business sense in order to be effective, encourage growth, and have long-term impact. She cited the creation of the B-Corp (Benefit Corporation) status as a clear example of the two sectors merging.
Both for-profits and non-profits find that in order to ensure that they have the greatest amount of impact possible, they need to be able to do three things: Define Success, Measure Results, and then Drive Strategy. In traditional business models, this is not particularly complicated: more money means something is working. Philanthropy work is different. How does one measure whether or not “women’s empowerment” has increased, or “sanitation,” or “overall happiness”? Organizations need to create metrics in order to define what “success” will mean before they start, and then they need to measure their results so that they can scale projects.
Ms. Nitze gave the example of the Goldman Sachs 10,000 Women initiative. The goal of the 5-year, $100 million campaign was to drive economic growth by giving 10,000 women business and management education, and access to capital, networks, and mentors. Goldman Sachs received a significant amount of press for the initiative, which could be considered one measure of success, but they wanted to be able to see if their goals came to frutition: were more women empowered, running businesses, and adding to the economy? They had to come up with some standard of measurement in order to define their project goals. Many other corporations have run into the same problem, and while they are looking for ways to invest in social good, they also want to know that their investments will have successful returns and, thus, need standards of measurement.
There is a desire, shown by both for-profits and non-profits, to measure and increase engagement in social-impact initiatives. Typically, if an organization sees greater engagement in a given project, they are more willing to scale it. A great way of vetting projects before they even begin is through crowdfunding and crowdvoting. Though total success of a project will have to be measured still through unique systems, crowdfunding and voting give organizations a way to test the waters and measure interest in projects before they put their money into instituting them and paying others to measure their impact. A great example is Ultra Light Startups, who have partnered with Shell and Launcht to create a crowdvoting platform for Future Energy Initiatives. We expect to see many more platforms like this in the future as corporations and non-profits continue to look for ways to use their money effectively to encourage social change.