Among the most common questions asked of the nonprofit sector, individually or collectively: are you having an impact? Philanthropists and foundations ask the same question of themselves. The key to answering the question may be in defining what we mean by impact. In fact, there are many terms in our field that include that elusive word, yet they are defined differently. Below we attempt to make sense of this “word soup” by tackling just a few of the common references, with definitions and examples of each.
Of the three terms we address here, community impact is the most commonly used and the hardest to define. Generally, community impact is the measurement of what your actions or services have accomplished. The word community also implies the results should show far-reaching effects, but consider all the different ways you can define community alone. A community could comprise students in a school, residents of a neighborhood or people of a particular age group, ethnicity or who have a common need. Our work in the social sector touches each version of community, sometimes even a community of one. For example, a scholarship program may award financial assistance to a single student. The student benefits and so does the immediate family. Down the road, the impact is likely to extend to his or her future family and the economic vibrancy of their community.
Perhaps the best way to capture community impact is to measure against the goal(s) of the person, organization or partners who choose to act. They may support or deliver programs intended to expand mental health services, increase access to safe and affordable housing or increase participation in the arts. Results, however, are influenced by other factors such as reliable transportation, job opportunities and child care. With this level of complexity, we strive to view community impact as a coordinated effort in which multiple partners come together to define expectations, integrate services and measure progress with the full set of participant needs in mind…which leads us to the next term.
Collective impact occurs when organizations from different sectors agree to solve a specific social problem using a common agenda, aligning their efforts, and using common measures of success. This definition comes from FSG, a mission-driven consulting firm that provides ideas, consulting and resources for leaders – such as the Robert Wood Johnson Foundation, Lilly and the Global Fund for Women – working to create large-scale, lasting social change. After years of study, FSG released an article in 2011 called “Collective Impact,” which drew on practical lessons from several collective impact efforts and identified five core elements that lead to successful alignment and powerful results. Those elements are: a common agenda, shared measurement systems, mutually reinforcing activities, continuous communication, and backbone support organizations.
Here in Richmond, Homeward – the region’s planning and coordination agency for homeless in the Richmond region – was founded on these principles, as was its signature initiative to implement a collective action plan to end homelessness in 10 years’ time. More than 30 organizations and agencies worked together in teams to collect and interpret data, align funding and report results to the community. Homeward executive director Kelly King Horne and local consultant Saphira Baker co-wrote “Second Generation Collective Impact” for the Stanford Social Innovation Review to share how to maintain the energy and focus of a large-scale collaborative project when the health and enthusiastic support of the community is at stake.
Impact Investing (from Global Impact Investing Network)
Impact investing is a hot topic as of late. Though not a new concept, it is a growing market. The Global Impact Investing Network defines impact investing as investments in companies, organizations and funds with the intention to generate measurable social and environmental impact alongside a financial return. This is a practice not limited to philanthropy, but certainly coincides with the mission-driven purpose of individual and institutional funders, with a direct impact on the causes and organizations they support.
There are multiple approaches to impact investing, each designed to align with the investor’s values and philanthropic goals. In simplistic terms, the Case Foundation’s Short Guide to Impact Investing identifies two possible routes. Mission-related investments may include traditional investments in companies with positive social or environmental impact, or loans to small and emerging for-profit social ventures. Program-related investments are loans, guarantees or equity investments in nonprofits with revenue and earned incomes streams. The purpose is to help an organization launch or scale an initiative beyond what a typical grant could do. Local opportunities may include investments in affordable housing developments or local food co-ops.
We will continue to study these varied approaches to “impact,” report on our learning and share new opportunities as they emerge.