In Part I: Which Of These You Think Can Be Called An Impact Startup I listed 3 startups from a social impact accelerator’s cohort that I thought are suitable for a discussion on defining and differentiating social impact organizations from the commercial ones. Having worked and interacted with the founders of several social impact startups, I have gained a bit of ability to identify a true impact organization. I am not claiming to be an expert in any sense of the term in the field of impact by any means.
What Is Social Impact?
Let’s examine the meaning of social impact before understanding an impact organization.
A significant, positive change that addresses a pressing social challenge
Ashoka defines impact as:
Systemic changes, affecting large numbers of people, that flow from the social entrepreneurs, their ideas, and the networks that Ashoka supports.
In my opinion, social impact is quantitative and qualitative change in the socio economic lives of people brought about by conscious and concerted intervention. This intervention can come from the government, an NGO, a business or even a single changemaker.
What Is A Social Impact Organization?
A social impact organization actually thinks of itself as an impact organization. This mindset or predisposition towards impact influences all the aspects of its business. It thinks of impact on communities and consumers it’s serving. It thinks of impact on environment its operations cause. It thinks of its branding in terms of impact it is creating. It thinks of scalability of its impact when crafting its strategy for growth.Impact is the core idea for such an organization and not a side effect.
Many businesses and organizations liberally call themselves impact organizations because they are able to affect lives of people. In reality every business positively affects the society in one way or the other. However they cannot be understood as impact organization. That is because their processes, their business practices and their vision is not designed to deliver social impact consistently and sustainably.
Social impact organizations ( be it nonprofit or for-profit) officially report their impact metrics along with conventional business and accounting numbers. I believe this is perhaps the biggest differentiator. Tracking and reporting social impact requires special attention and expertise.
Currently, the gold standard for social impact organizations is a B Corp certification provided by B Lab, a nonprofit based in the US. Businesses need to track and report metrics on governance, workers, community, environment and product or service. As of April 2017, there were over 2,000 certified B Corporations across 140 industries in 50 countries.
Which Of These Are Social Impact Organizations
Provides hygienic and packaged meals to passengers on their seat in long distance trains thru mobile app.
The primary pain point it is trying to solve is unhealthy food and the lack of cuisine options for passengers in Indian trains. It has created a network of food vendors that include small-time caterers, self-help women groups, big restaurants and food brands. Effective use of technology helps it deliver the right meal on the right train on the right seat.
This startup thinks of itself primarily as a provider of healthy and designer cuisine to its consumers. Social impact does not seem to be its core objective. It reports its key performance indicators in terms of meals served and not in terms of livelihoods of food providers positively affected. Yes it is supplementing the incomes of caterers and women self-help groups and also bringing them in the formal sector but most of them may have had thriving businesses anyways.
This is NOT a social impact organization.
Is working towards upgrading manual rickshaw drivers and cart operators to electric rickshaws so that they can double their income and become owners of the rickshaw.
Its vision is to eliminate the drudgery of pulling a manual rickshaw and help thousands of rickshaw drivers live a better life.
Its core objective is to increase the income of rickshaw drivers and to facilitate financial inclusion for the excluded by bringing them in the mainstream economy. Its vision makes its social impact intent amply clear. This startup reports number of rickshaw drivers who have secured ownership of e-rickshaws as one of its main metric.
This IS a social impact organization.
It has created a mobile app for maids, drivers and housekeeping staff to find jobs instantly and without the hassles of going through middlemen like security guards or others.
It is using technology to connect low-skilled workers with potential employers and charges the later to register with them.
This startup is a bit beyond the obvious. It defines its core objective of finding jobs for members of the lower socioeconomic strata like maids and drivers and even reports placement numbers to claim social impact.
I will refer you to the definition of social impact stated by me in the earlier part of this article. Impact needs to be both quantitative and qualitative to be real and meaningful. Here, the startup has opened up another channel for finding jobs for low-skilled workers which definitely increases the number of job opportunities for them. However getting jobs for them is mostly based on word of mouth and thus there may not be a significant change in their socioeconomic lives. Instead, it would have helped had the startup provided them micro-entrepreneurship opportunities which would have had greater impact.
This is NOT a social impact organization.
Identifying an authentic social impact organization is a matter of nuanced discussion and closer assessment. It’s the mindset, performance reporting and the substance of impact that determine a true impact organization. In this article I have applied my understanding to distinguish impact startup from the other 2 startups.