Think social enterprise: Think Impact

Social enterprise is gaining increasing profile and has the potential to influence the policy agenda more significantly in the next few years. But to do this effectively the sector needs to address one missing piece of the jigsaw re influencing the policy agenda – what is it?

The 2022 Social Enterprise World Forum (SEWF) in Brisbane brings with it a massive opportunity for the Australian social enterprise sector to not only raise its profile but to leverage this to influence the policy agenda more significantly. With the recently launched new social enterprise peak body, Social Enterprise Australia, now in place to mobilise collaboration, the sector is now in a far better place than it was after the last SEWF in 2009 to really drive the policy agenda. But I have a niggling feeling that there is still one critical missing piece of the jigsaw to do this.

I was recently reminded of a conversation that took place back in the early 2000s when I was CEO of a group of social enterprises back in Scotland. I was at a Chamber of Commerce networking event and looking for business opportunities. I ended up in conversation with one of the competitors of our catering social enterprise. His challenge to me was “you are just a badly run business!” because we received government funding to provide employment support to people with severe and enduring mental health problems. I quipped back that we could swap for a month, and he could have my 20 staff with mental health challenges to work in his business. It shut him up but left me with the niggling feeling that as we grew our range of social enterprise businesses, we needed to be really clear about the impact we were having and how we communicated it. It was at this point I started testing various approaches to social impact measurement.

As we delved into the data that we were collecting it became apparent that we had good information around engagement, outputs and satisfaction but we lacked ‘outcomes’ data. We didn’t know what changed in people’s lives as a result of working for us, what the flow-on effects were for their families or local communities and most importantly we had no data to prove how effective a solution we were for government. To ‘shift the dial’ we needed to start collecting impact data.

Conducting a Social Return on Investment (SROI) analysis on our social enterprise hotel was the solution to building the impact data we needed. The SROI helped us to understand the changes for people in terms of improved health, increased social inclusion, the value of being in a team and beyond just paid employment, actually having a job title! (This allowed people to redefine themselves in eyes of society). Most importantly we were able to understand the changes in people lives through reduced welfare dependence and increased financial security. 

This, combined with a cost analysis of related service provision, allowed us to develop a narrative that told a compelling story that if the people we supported were in occupational health they cost government approximately £20,000 per annum whereas we provided employment support service for approximately £5,000 per year – and for every £1 we were providing £5.87 of social return.

See also: Rethinking the theory of change & Five characteristics of good impact reporting

This type of narrative opened a wide range of doors to start to have policy discussions regarding the importance of social enterprise and these conversations were not just for our businesses, but for the wider sector. 

Imagine if the social enterprise sector in Australia could engage government, corporates and funders with a strong narrative around the social value that is created through the thousands of social enterprises operating across the country.

I recently had a few conversations with some social enterprise leaders in Australia around the barriers for the sector taking impact measurement seriously. The summary was “funders/investors don’t really care about it, so why bother”. This reminded me of the comment from an ex-colleague that “for impact investing to be taken seriously as a different approach to other forms of investing then there needed to be as much focus on the rigour of measuring impact as there is on getting investments back!” 

Within the view above there was definitely a sense from these leaders of sea change. Impact measurement was becoming more important. Through things like the Social Procurement Framework (SPF), some leading philanthropic foundations developing internal outcomes frameworks and pioneering impact investors thinking more about impact measurement, these leaders had the sense that in the future to get the funding and investment needed, their social enterprises were going to have to up their game in terms of impact measurement.

So how should the wider social enterprise sector respond? My view is that the key thing for all social enterprises to start thinking seriously about how they measure to prove and improve their impact. For each social enterprise, the initial steps are to ensure that you have impact measurement foundations in place.

This means:

• Getting clarity on your theory of change
• Developing an outcomes framework to start measuring your outcomes
• Collecting, analysing and reflecting on the outcomes data you get to drive continuous improvement
• Reporting your impact

It may sound daunting but you can start the journey and build your capability over time. As an example, over the past few years Think Impact has been working with social enterprises such as HoMie, helping them to get these foundations in place. 

Imagine if every social enterprise was publishing an impact report annually detailing the change they are making for people, their local community or the environment. The cumulative effect of this would be amazing at a policy influence level.  

Think Impact works with partners across business, government, philanthropy and the for-purpose sector to inspire, enable and support them to manage for better impact. They provide strategic advice, consultancy and training services to support organisations from all sectors to improve their impact. For more information see www.thinkimpact.com.au