08 aps 1015 h class 8 - managing for impact - for lecture

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APS 1015H: Introduction to Social Entrepreneurship

Class 8: Managing for Social Impact

Monday, November 7, 2011

Instructors:Norm Tasevski ([email protected]) Karim Harji ([email protected])

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Agenda

• Rockefeller Foundation• Managing for Social Impact• Preparing your investment pitches• Next Week

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Managing for Social Impact…

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Two Main Responsibilities as a Manager of a Social Enterprise…

Achieving social goals

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Achieving financial goals

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Achieving Financial Goals

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Key Concepts• Focus on your mission• Know when to say “no”• Build a business independent of yourself• Test (prototype) often, and fail fast

The Market or the Mission? (Brinckenhoff)

• The market is always right• The market is not always right for you• The mission should be your organization’s

ultimate goal

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Achieving Social Goals…

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Exercise: From Intentions to Impact

When did you volunteer?

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Exercise: From Intentions to Impact

How do you know you made an impact?

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Impact vs Net Impact

Is your effort better than what would have happened anyways?

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Impact vs Net Impact

Is your effort better than what would have happened anyways?

NET IMPACT is what matters

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Achieving Social Goals

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1. Identify your social goals– Theory of Change (defining your social value)– Embed them within/across your operations

2. Measure the social value created– How do you measure your goals?– Address the common challenges in measurement

3. Communicate your impact– Know what to say and who your audience is– Be creative around your message

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Step 1: ID Your Social Goals

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• What Social Benefit are you creating?

• How do you decide?

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Embedding “Social” across the Business Model

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Cautionary Tale

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Exercise: Balancing social & financial value

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Step 2: Measure the Social Value Created

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Why Measure, and for Whom?• Management

– Performance management (meeting needs/objectives)– Organizational sustainability, attract new investment– Demonstrate the value created by organization

• Social Investors (inc. funders)– Impact of grants, mission alignment– Accountability measures– Assess organization value, relate to risk/return (of

investment)

• Government Programs/Policy– Make the case for investment in organization/approach– Accountability measures

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Why is Measurement Important?

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“Not everything that can be counted counts, and not everything that counts can be counted”

“You can’t manage what you can’t measure”

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Challenges in Measurement

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• Outputs vs. Outcomes• Attribution vs. Contribution• Qualitative vs. Quantitative• Prove vs. Improve• Rigour vs. feasibility

“Metrics and evaluation are to development programs as autopsies are to health care: too late to help, intrusive, and often inconclusive.” (Trelsad)

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A Note on SROI

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• Discounted, monetized value of the social value that has been created, relative to the value of the investment.

• Pioneered by Roberts Enterprise Development Fund (REDF) and Jed Emerson

• Various uses for, and approaches to, SROI

• Despite “hype” around SROI, it can be resource-intensive, and issues around feasibility, replication, reporting still remain.


SROI Snapshot: TurnAround Couriers

Avg Change in Societal Contribution (Target Employees): $9,391

Average Number of Target Employees: 10

Current Year Cost Savings to Society: $93,910

Cumulative Cost Savings (prior to Y5): $191,170

Total Cost Savings to Date: $285,080

Cumulative Societal Payback Period: 1.8 years

Cumulative SROI: 285%

Note: initial SCP investment = $100,000

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Overview of Target Population (sample)• 38% recruited directly from shelters• 23% female• Average age: 21• 100% unemployed at time of hire• 54% receiving social assistance at hire• 54% been involved with justice system• 54% did not complete high school

Employment Outcomes (sample)• Increased target/non-target staff ratio to 83% • 69% continue to work at TAC (9)• 15% moved onto mainstream employment in

window cleaning industry (2)• 8% went on to post secondary education (1)

Sustainable Livelihood Outcomes (sample)• 89 youth in total have been hired over 5

years• 100% target population recruited from

shelters able to get out of shelter system and secure independent housing within 6 months of employment at TAC

• 85% who relied on income support through social assistance at time of hire able to get off and stay off

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Acumen Fund: social performance measurement in the investment process

• Due Diligence– Literature review: state of practice

– Estimate # of people served over the life of the investment

– Assess how delivery of those “outputs” compare (more or less favorably) to the “best alternative charitable option”

• During Deal Structuring– Conversations on how to think about performance management over

the life of the investment, not just “mandatory reports”

• Post-Investment– Quarterly reporting – performance, capacity, strengths/weaknesses

– Semi-annual “forced ranking” across portfolio against investment criteria - financial sustainability, social impact at scale, breakthrough insights, and high-quality leadership - as well as actual performance to date and the investment’s potential for impact in the future

• Closed Investments– Short “exit memo” looking at results generated, financial return, and

lessons learned

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Simple Measures for Social Enterprise: Lessons from the Acumen Fund

• Culture matters far more than systems– Tolerance for / learning from failure

• If you build systems, start with a pencil and paper– Start simple; technology is an enabler not the solution

• Think on the margin– Performance is always relative to what you had been doing

before (past), to what your competition did over the same time period (peers), and to what you should have done (projections)

• Count outputs and then worry about outcomes– “the conclusions you can draw from these outputs may not be

made with scientific rigor, but they can inform businesslike decisions and raise important policy questions”

• Don’t confuse information with judgment– Balance qualitative and quantitative

– Use informed judgment, hold oneself accountable (to them)

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Step 3: Communicating Your Social Impact

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How?

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Break

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Your Investment Pitches…

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Elements Important to the “Social Investor”• Overview and mission• Management and

Advisors• Problem

– social issue being addressed

• Size of the problem– how big is the social

issue

• Solution– Here’s how it works…

• Value proposition

– Inc. social benefit

• Business model• Competitive advantage• Collaboration/

partnerships• Marketing and Sales• Financial projections• Financial requirements

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Elements Important to the Angel Investor• Overview and mission• Management and

Advisors• Customer problem• Market opportunity/size• Solution

– Inc. social issue being addressed

• Value Proposition• Competitive advantage• Where the solution fits• Business model

• Marketing and sales• Financial projections• Financing requirements

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An Example…

http://www.youtube.com/watch?v=wyrFWbGiGOc