Look in the Books?: Assessing Progress in Social Innovation

As social innovation becomes more mainstream and continues to become a viable alternative to pure non-profits by linking the private and non-profit sector, a reoccurring issue that continues to arise is how we measure the success of these ventures. With more hybrid models that blend business practices with alleviating social ills, success can no longer be measured by simply looking at profit and revenue models. There must be a broader discussion that examine the potential costs and benefits of these projects and find ways to make them sustainable in a competitive market, while continuing their mission of doing good for society.

For many people, these two worlds do not naturally blend - the ol' oil and vinegar problem. For others, the hybrid model allow social innovation to be sustainable, efficient and cost effective. As social innovators and entrepreneurs continue to play a more dominant role in shaping society, methods to measure the success and impact of these organization and projects must continue to evolve.

One organization tackling just this challenge (or should I say opportunity) comes out of the UK. Called Social Innovator, it was begun by a collaboration between the National Endowment for Science, Technology and the Arts (NESTA) and the Young Foundation. They connect organizations and individuals working in the field and have great resources on their website for exploring growth and opportunities in social innovation. One such resources compiles an extensive list of potential markers and matrices that can be utilized to evaluate progress and potential areas of growth for social innovation. Social Innovator puts forth that the tools of evaluation already exist and are being used, however, application in the social realm has been lacking because of different interest:

"One reason why this field has failed to make progress is that there is often confusion between three different tasks for metrics: to provide funders or investors with data on impact; to provide a tool for organizations to manage their own choices internally; to better understand long-term processes of social change and impact. Although these purposes overlap, any one metric cannot do all three of these tasks simultaneously, and there are direct conflicts of interest between the players involved in each of these."

Social Innovator has compiled a list of these potential markers and how they can be applied to social innovation. This examines tool from financial and accounting practices and cost-benefit analysis to surveying practices and social impact assessment. These measure seek to determine financial viability as well as impact on society to determine the sustainability and the need to continue certain programs. With these measures in place, governments can then reward projects with great impact who are financially secure, while helping those whose benefit outweigh their cost on a social level, but may need help on the funding side. We must also broaden our perspective on what constitutes social innovation. As many of these entrepreneurs blend practices and ideas that have been in existence for some time, the tools we use to evaluate them should also look to what has come before and move them to a higher level of use.

A few questiosn to ponder: Should more weight be placed on one side of the spectrum over the other (financial considerations over social good)?

Often, environmental regulation looks at externalities and passive use cost and benefits associated with decisions to regulate. Can these methods be used in the realm of social innovation? Can social good be taken into account when speaking of accounting?