What Makes a Social Capitalist?

In 2004, Fast Company and the Monitor Group launched the Social Capitalist Awards, an assessment of leading social entrepreneurial organizations and an explicit effort to further performance measurement and accountability in the social sector with a highly rigorous, data driven, comparative approach.

Click here to view the entire article that shares their methodology that encourages non-profit organizations and their funders to hold themselves accountable for publicly demonstrating and maximizing the social impact created with the resources they command.

Here is an excerpt of the article:

Defining a Social Capitalist: From its inception, the Social Capitalist Awards have defined strong performance as a combination of both social impact and organizational effectiveness. This performance is represented by five critical components: Social Impact, Aspiration & Growth, Entrepreneurship, Innovation and Sustainability. The underlying theme through all of our components is the organization’s ability to analyze tough social and organizational challenges and to craft solutions that create significant improvements over the status quo. Here is our perspective on each of these components.

Social Impact: We consider several different aspects of social impact. First, we examine the rigor and sophistication of the organization’s approach to social change: its understanding of the problem it is trying to address and the solution it is providing, and whether its performance metrics are tightly aligned with the problem it is addressing. Organizations that look for the highest-leverage, root cause solutions and are committed to assessing their progress in “moving the needle” are positioned to have the most significant social impact.

Secondly we assess the social impact created by the organization. This includes both their direct impact in providing necessary products or services (taking into account the degree of difficulty of their challenge, the depth of impact, and the breadth of the impact), as well as the organization’s ability to drive system-wide change in addressing the targeted social need. We look for organizations that can demonstrate that they are having disproportionately large impact on the problems that they address, relative to other organizations in their area or at their organizational age.

Aspiration and Growth: In addition to proving that an organization is having significant impact today, we also look for organizations that dream big, that aim to push their direct and systemic impact out into the world as far and as fast as they can. Having said that, we look for those high aspirations to be backed by a logical, achievable growth plan that recognizes relevant organizational challenges and milestones. An enormous vision that is not in any way believable or achievable is very unlikely to create tremendous impact, and the organization may waste scarce resources in the process.

Entrepreneurship: We define entrepreneurship as “the ability to do a lot with a little.” For each applicant, we look for specific evidence that the organization is able to gather and command disproportionately large resources (e.g. financial, human, partnership or intellectual assets), and thinks strategically about which resources it deploys in solving its social problem. We also seek proof that these resources are being used to their maximum potential and efficiency. Finally, we look for indications that the organization is truly entrepreneurial in nature: passionate, ambitious, creative, flexible, focused on constant improvement, and willing to hold individuals accountable for meaningful results.

Innovation: We define innovation as the organization’s ability to generate a game-changing or pattern breaking idea—either a new solution to an existing social problem or a startling new business or operational model. We also look for evidence that a culture of innovation exists within the organization—that there are processes for continuously developing significant new ideas, evaluating whether or not the organization should invest in a new idea, and plans in place to carry them out. At the highest level, a Social Capitalist winner is not a one-hit-wonder of innovation, nor does it endlessly pursue new ideas without significant results; it systematically and strategically uses innovation to maximize its social impact against its targeted problem.

Sustainability: Sustainability has two primary dimensions in our assessment. The first establishes that the organization has a strong income strategy to support the organization and its future growth plans. This means reliable, renewable funding sources that are strategically aligned with the mission and business model of the organization. We are purposefully agnostic on the subject of earned revenue. If an organization earns revenue in a way that is fully integrated with its model for creating social impact, that organization gets high marks; if the earned income seems to be an unrelated add-on business, a distraction from the social mission, we’re not impressed. In addition to sustainability from a financial perspective, we also look for indications of the general strength of the management team and board and their combined ability to anticipate challenges within the organization and or its operating environment.

Customized Approach: One of the most challenging aspects of our assessment methodology is the need to understand and take into account the unique context and choices of each individual organization and their social mission. There are no standardized, universally applicable metrics for any of our criteria that would allow an apples-to-apples comparison across all applicants. Instead, we invest significant effort to develop a sound understanding of each organization and the environment in which it operates. For each organization, the unique challenges and influences of the problem it is tackling, its chosen business model and organizational form, and its relative age or life stage all influence how we define strong performance for that organization.

Identifying Extraordinary Partnerships: For the first time, this year we decided to focus the Social Capitalist feature article on a single theme of importance and relevance to the field of social entrepreneurship. Given the increasing prominence of cross-sector initiatives, this year’s focus is on organizations that have forged unique and high impact partnerships with for-profit corporations.

All Social Capitalist winners were invited to submit a second application describing a corporate partnership. To guide us in identifying and selecting high performing partnerships, Monitor Group created a second assessment framework through consultation with leading thinkers on this topic.

Partnerships between a for-profit and a non-profit organization had to demonstrate five key elements: Social impact (defined very similarly to our original criteria), Impact on the Non-profit, Impact on the For-profit, Innovation, and Structure and Governance. Our framework examines the impact of the partnerships from three angles – impact on the social issue targeted by the partnership (Social Impact), the strategic and operational benefits to the non-profit organization (impact on the non-profit) and the strategic, operational and financial benefits for the for-profit. In addition, we prioritized partnerships that created innovative solutions to the social issue or created innovative partnership arrangements (Innovation), which allowed the partnership to be more successful that it would have been otherwise. Finally, we looked for partnerships that were designed and structured to meet the goals of the partnership and to productively manage the relationship to maximize its benefits.

The authors of this article (excerpt), Tammy Hobbs Miracky and Amy Lieb, lead the Social Capitalist Awards assessment process. They are consultants with Monitor Institute, a member of Monitor Group dedicated to customizing and innovating strategies for solving complex social challenges.

If you read through this material, and found it inspiring, then consider the desire of Collective Roots to reach for the kind of vision that is described in this article:

Collective Roots is interested in building partnerships and development strategies based upon principles of social enterprise and venture philanthropy (“social capitalism”). We are interested in applying social enterprise and venture philanthropy principles in order to establish a stronger network that supports garden-based learning, food system change, environmental action, and youth development. We believe that we will have a stronger chance of closing existing funding gaps if we reach beyond the typical nonprofit funding spectrum and search for mission and value alignments with leading for-profit companies in Silicon Valley and beyond. Silicon Valley investors are envisioning and funding new “green” markets that serve both environmental and economic interests (e.g., solar energy, and other green technologies). Collective Roots has already begun taking some small steps in this direction – for example, we are a member of the 1% For The Planet Network that has already generated two corporate sponsors – but we need additional partners and funding to develop new alliances and to grow our Board capacity to be able to develop new endeavors involving entrepreneurial social enterprise. Outcomes of these relationships might include the development of earned income from products and services that are integral to the mission of Collective Roots AND have strategic and economic values for our corporate partners.

Please click here to contact Wolfram Alderson, Executive Director of Collective Roots, if you are interested in knowing more.