What is social impact?“, asked someone anonymously on Quora.

Social impact is:

  1. Empowering people and creating more equal societies.
  2. Carrying on activities in ways that do not exploit people and planet and reducing activities that do.
  3. Taking care of the village.

All other definitions (positive social change, reduce negative externalities, do good, do things that matter) are vague and dance around the truth and the heart of what we’re getting at with social impact. Until we take a stance, stand up and strive for the three things I’ve noted above, they we will continue to run around in circles and do things the same way we’ve been doing them for decades and centuries.

Empowering people and creating more equal societies

By more equal, I mean that everyone has improved access to the things (read: resources) they need to do the things in life we do to survive, thrive, and be happy. The things we do in life fall into six categories:

  • We need resources to sustain ourselves (food, clean water, shelter, energy)
  • We need resources to express ourselves (through speech, writing, creative and artistic endeavours, in what we wear, our culture)
  • We need resources to connect with others (we meet in person, we talk over the phone, we travel to see each other)
  • We need resources to manage change (information, bank accounts where we can save for a rainy day, insurance)
  • We need resources to make decisions (again information, decision-making tools)
  • We need resources as a means of exchange (currency aka money, barter goods)

Societies become more equal when people who do not have the resources they need get improved access to the resources. Changes in the type of access happen:

  • Basic access: people who do not have access, gain access (think homeless shelters and social housing, think agriculture systems for communities on the brink of starvation)
  • Efficient access: people who have basic access are now able to access resources more efficiently (think wide-scale agriculture for more efficient production of food, larger distribution systems, schools are a more efficient system of delivery of education than 1-to1- tutoring (more efficient, not necessarily better all around!)
  • Choice: people who have basic and efficient access, now have choice in the type of resources they access (think Fairtrade, organic products, mass-produced overseas versus buy local)
  • Convenient access: people who have basic and efficient access, now have convenient access (think apps that help people find the nearest coffee shop, think Starbucks on every street corner)
  • Luxury access: people who have basic, efficient, choice, and convenient access, now have access to things they don’t need, but want (think luxury cars, McMansions, etc.)

Social impact tends to focus on changes in access that relate to Basic, Efficient, and Choice access.

People also access the resources they need through Employment or as a Supplier to others.

  • Employment: people can access resources as a means of Exchange (money) or some of the other types of resources (such as free room & board provides someone with resources to sustain themselves).
  • Supplier: more subtle and less direct, but companies may not employ people directly, but rather source supplied good via companies that do give others access to resources (such as sourcing coffee beans from a co-operative, Organic coffee producer in Peru or sourcing clothing wholesale from factories that pay a living wage or buying fresh produce from a local, urban farm that hires people from the local community experiencing barriers to traditional employment)

Carrying on activities in ways that do not exploit people and planet, reducing activities that exploit people and planet.

This point really came to light when I realized some businesspeople exploit other people’s problems or manufacture needs and problems, make money from the need and desire, and widen the inequality gap. There is a line between solving people’s problems and exploiting them. It’s a fine line… but a line that is visible when you look closely enough. This point is closely related to creating more equal societies, but it very explicitly calls out whether the activities we undertake or support in others exploits people, and planet for that matter, versus empowers and nurtures them.

Taking care of the village

This is my way of describing doing things that take care of ourselves, our families, our neighbours, our communities, future generations and our places and planet. The idea of “taking care of the village” encompasses a philosophy that it takes a village to do the things that matter, that there are a number of different interests to be met, and that it is possible. We don’t need to only serve self-interest, we also don’t need to just be in service of others. It’s both… and look at all these other things we keep in mind… because we are taking care of the village.

This is distinguish from doing things like it’s an extrinsically rewarded game, which is what business and many things in life have been reduced to. We think game-play is a good motivator or incentive structure, however this is where negative consequences can happen. Games can be manipulated, especially where they are just extrinsically rewarded. People aim for high scores (higher and higher profits, large valuations, chasing more and more money for themselves), whilst knocking all their opponents off the playing field (creating greater inequality), with less and less regard for other people. Business and life as an extrinsically rewarded game puts us at risk of forgetting that real people and their lives are involved.

Taking care of the village puts the intrinsic motivation back into our activities and puts people, many people, back into focus.

Thats what social impact is all about after all. People.

This post first appeared on Quora.  I continue my exploration and thinking around impact and a more integrated approach to investing.  This post is a progression on a number of earlier ideas about impact:

 

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