MaRS Library Social Entrepreneurship: Social Impact Metrics
Investors in either for-profit (FP) social purpose businesses or funders in not-for-profit (NFP) revenue-generating social enterprises are investing in exciting social ventures in order to generate social and/or environmental impact. The capital placed in these businesses is expected to provide at least a nominal financial return. Success in a traditional FP business can be easily measured using established and readily understood financial metrics. In comparison, social metrics or impact performance measurements are much more difficult to identify, quantify and measure. Imagine, for example, how you would measure “goodness.”
Social entrepreneurs are successfully mobilizing both the human and financial capital required to start and scale their social ventures. At MaRS, we see tremendous momentum building around these new opportunities. However, unless there is a clear understanding by funders and investors (and the social entrepreneurs they support) around the importance of establishing and reporting on appropriate social and financial metrics, the amount of capital made available to this emerging sector, including patient capital, loans or equity investments, will be limited. Lack of sufficient capital will impede the development of new market-based solutions to address the complex social problems that social entrepreneurs are keen to address.