How to measure and
scale outcome of social enterprises
When I took the Financial
Analysis course in Heinz College, I found that the analysis for public and non-profit
sectors are the most difficult part. In the beginning where we learned to read
and build financial reports of for-profit companies, all of the terms in
Balance Sheet, Income Statement and Cash Flow are easy to understand. All that
we have to do is to make calculations. When it comes to non-profit
organizations, however, I constantly got confused when I have to read or report
“profits”. Unlike normal financial reports where we can just calculate debt
ratios, assets and flexibilities and draw conclusions by comparing results with
bench marks, reports of activities make me feel aimless. What indicates the
operation status of a non-profit organization? How can we measure the risks it
faces and the potential it possesses? What should we adjust to make the
organization generate social welfare more efficiently? Those are questions that
no easy to answer.
The article It’s Not All About Growth for Social
Enterprises provided us some perspectives on how to scale the impact of
social enterprises. Since we cannot take some certain ratios as benchmarks to
measure the work, impact may be a good measurement for social enterprises. The author
put it that social enterprises should multiply impact rather than just grow the
organization[i].
And there are many methods, including distributing successful models and
helping other organizations to effectively achieve accomplishments.
From the business perspective,
however, the approaches are more various. The article Profits at the Bottom of the Pyramid shows us that for-profit
companies can generate profits from targeted marketing opportunity, product
redesign, distribution extension, new channel creation, new product development
and so on[ii].
Similar actions can be taken by social enterprises. Social innovators can try
to learn people’s needs, redesign products, explore wider areas, utilize
technologies and design new models to generate more social welfare.
Reporting and
scaling of social enterprises’ outcome are not simple tasks. There is still not
a certain standard for us to follow. Compared to for-profit enterprises, social
enterprise is still in its early stage.
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