Social enterprises engage in impact measurement initiatives – both formal and informal – in order to achieve two goals: the first is to use that data in order to make programmatic improvements in order to improve outcomes; the second is to use that data to communicate and demonstrate their impact to potential partners, customers, and funders.
In this learning guide, we will explore effective ways to use impact data when approaching funders.
What funders care about
Before we go any further, we must caveat this discussion with the fact that all funders are different and will have different sets of values. What follows is not by any means a universal account of all funders, but is instead an exploration of some of the themes that REDF has observed about the current funding environment, both as an intermediary and through our work with social enterprises.
When choosing which social programs to support, funders must decide which interventions offer the most compelling and proven models that will achieve the greatest impact. However, in a world of imperfect information, many funders understand that it takes a while for the evidence to catch up and that, in the meantime, they must “fund through faith”. Instead of relying solely or heavily on formal evidence, many funders will instead look for indicators about whether an intervention is working.
This is the job of the social enterprise when approaching funders: to use existing impact data to craft a compelling case that their intervention is working. To do so, make sure you are effectively:
- Describing your program in detail
- Incorporating programmatic impact data
- Leveraging existing evidence
1. Describe your program in detail
When describing your social enterprise, you want to strike the right balance of detail. You will want to include enough detail to be properly descriptive and compelling, but not so much detail that your audience becomes overwhelmed or confused.
Developing a “problem statement” is a good place to start. Use a short narrative paragraph to set the context for the need for your social enterprise. For example, if your social enterprise employs formerly incarcerated people, you might come up with a problem statement such as:
Over 2.3 million people in the United States are currently incarcerated, with 600,000 released back in to society each year. However, many are struggling to find jobs resulting in a 24.7% unemployment rate, compared to 4.9% for the general population. An estimated 68% of released prisoners were arrested within 3 years, 79% within 6 years, and 83% within 9 years.
Statistics are a good way to provide a scale to the problems you are describing, but don’t feel that your statement needs to be exhaustively cited in order to have an impact. A few well chosen data points are more effective than tables worth of data.
National level statistics will appeal especially to national funders, and will be particularly effective for social enterprises operating in multiple states. If the data is available, it is also important to describe the local situation, citing statistics that refer to the challenge as its faced by your local area – whether at the city, county, or state level. Many funders who would support social enterprises (especially the ones in smaller markets) are more captivated by local organizations working to solve a local problem, and citing local data will reinforce that.
Next, be sure to provide a detailed description of your social enterprise and how it addresses the problem statement you have laid out. Importantly, don’t undersell the level of support that participants in your social enterprise receive. Often we see all supports rolled up into the broad term “employee supports”, but this could be manifest itself in a number of ways. Provide a more detailed description of exactly what those employee supports look like – for example:
Our social enterprise addresses the unemployment of the formerly incarcerated by providing them with a job that helps them build the skills they need to succeed in the workforce. In addition to providing hard skills on the job, we provide our employees with public speaking training and resume preparation courses that help our participants find employment outside of the social enterprise.
2. Incorporate programmatic impact data
Next, you should incorporate the data your social enterprise collects as part of its impact measurement initiatives. Common metrics that social enterprises collect and that funders will often care about include:
- Number of people employed
- Transitions (positive/negative/neutral)
- Retention of jobs
- Wage progression
Use this data, or any other that you think are appropriate, to craft a story about the specific impact that your social enterprise is having to address the problem. Building on our existing example, this could look like:
Last year, our social enterprise employed 23 people who had recently been released from prison. 21 of these individuals completed our 12 month program and gained employment from a mainstream employer. One year later, 83% of them were still working and 26% had already seen a progression in their wages.
What’s most important to note here is that this is data you should already be collecting. As we discussed in our first learning guide on this topic, this is data that you can be using to understand your social enterprise’s effectiveness in achieve its desired goals. However, this data can also be useful in communicating that effectiveness to outside parties, such as funders.
3. Leverage existing evidence
Finally, incorporate other pieces of evidence that exist in supporting the efficacy of your intervention.
Randomized control trials are important when approaching the government for funding, which often requires a lot of evidence just to put your name in the hat. Foundations, on the other hand, might not need this highest level of evidence. Instead, many encourage groups to be efficient in leveraging the data that they already collect and referencing literature that supports their model already exists.
That last point is particularly important – don’t feel that because a study wasn’t done on your social enterprise that you can’t use it. Rigorous evaluations serve the whole field by deriving a high-level of evidence about the social enterprise model. While you may not be able to draw direct conclusions from a study about the efficacy of your particular model (unless, of course, the study was conducted on your social enterprise), you can still use that study to support your case that social enterprise is an effective model at large. For example:
Studies have found that the social enterprise model reduces the recidivism rates by 16 to 22%1 and increases the number of people living in stable housing from 15 to 53%.2 The social enterprise experience adds value to society. For every dollar the SE spent, the return on that investment was $2.23 for society as a whole.3
We have put together a resource tool to help you identify some of the major evaluations and studies completed on the social enterprise field and reference it for your needs- you can access it here. We encourage you to familiarize yourself with the research that has been done and, depending on the study and its relevance to your slice of the social enterprise field, leverage the findings when making the case about your social enterprise.
Using data in the ways described above is a good example of the dual-use that data can have for your social enterprise. Not only should your enterprise be collecting and measuring these metrics because it will help you build and develop your program to achieve better outcomes, but it will also allow you to communicate that efficacy to funders. If your social enterprise is collecting data that is not being used to make programmatic improvements nor being used to communicate to funders, it’s worth considering why you are collecting it at all.