Who Wants To Pay For Social Impact Data?

Measurement of social impact is famously difficult, but the relentless march of new technology is making it easier for social entrepreneurs to look forward to the day when they finally have plentiful data on the impact that they are making. Reports on the topic regularly point out the many ways that we all should be using impact data to strengthen the performance of social enterprises and drive new capital to the most promising approaches. While it is hard to argue with this prescription, it is even harder to explain why so few social enterprises or investors are actually using data in these ways.

Screen Shot 2015-03-03 at 4.40.56 PMIn order to better understand this apparent failing, I conducted interviews with practitioners who are managing innovative social impact data projects across a wide range of domains. My suspicion was that most social sector leaders already know what they ‘should’ do but that we have yet to find a reliable approach to paying for this work.

Inspired by “lean startup” style analysis in which many web businesses systematically search through the landscape of potential business models to find the best way to deliver real value to customers and generate scalable revenue, I was curious about whether existing data projects were built around replicable business models and whether some of those models were more promising than others.This site provides detailed profiles of several dozen projects that capture or catalog data about the outcomes or impact of nonprofit or for profit social enterprises.  In spite of the real diversity of approaches to social impact data, these profiles tell a surprisingly similar story about why we aren’t making more progress in building social impact data infrastructure.

Overwhelmingly, my interviews pointed to a single problem holding back development of the whole sector in numerous ways.  Stated simply, the problem is a fundamental misunderstanding of what value social impact data can provide and who is most likely to benefit from (and ultimately pay for) that value.

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In short, funders are the wrong customers for social impact data.  While traditional investors have shown a willingness to invest in better and better financial performance data, the profiles on the following pages show that foundations, donors, and impact investors have been surprisingly resistant to making comparable investment in systems that capture data on social performance.  In spite of the popularity of metaphors like ‘double bottom line’ that equate social and financial performance, social impact data appears to be fundamentally different from financial data.  Collecting meaningful social impact data will require a different approach.  Luckly, these profiles also suggest that data projects focused on the needs and priorities of the social enterprises themselves may offer a way to sustain the scale of ongoing investment necessary.

5 Sources of Value

In the social sciences the term “social impact” has a very specific meaning; but in wider professional practice “social impact data” is used more loosely, referring to a wide range of information about the results a program achieves. There are important distinctions to be made between different types of ‘results” data, and clearly some data is more ‘valuable.’ But there are several contrasting ways that people find value in this data.

Science

Proves the effectivness of a given intervention

Science

Historically, social sector data has primarily been the concern of social scientists who value data based on the extent to which it contributes evidence of effectiveness of a social intervention. It is important to realize that most users of social impact data are not scientists, and they rely on the scientific value of the data to differing degrees.

Investment Decision Making

Helps identify the best investments

Investment Decision Making

While many donors are interested in the scientific value of data, more often they are willing to accept a much lower standard of evidence. Philanthropic funders and impact investors want data showing their investments are making a difference, and that helps them choose new recipients likely to have a significant impact.

Differentiation

Helps secure additional funding

Differentiation

Social enterprises most frequently look to impact data as a way of differentiating their organizations from competitors – as one tool in raising funds and attracting staff, volunteers and other resources. While funders and donors may not always make data driven decisions, social enterprises find value in highlighting results in their funding appeals and proposals.

Program Design

Helps design a more effective program

Program Design

Another entirely distinct form of value is the value that impact data can have in the design of social interventions. While this can easily be confused with the social scientific value, here the value comes not from proving effectiveness of a specific program model but rather from using the data to iterate through many different design choices to discover the most effective alternative.

Program Implementation

Makes program administration easier or better

Program Implementation

A related form of value is achieved when programs are able to use social impact data to refine or improve the implementation of a given program design. Here instead of using the data to think about which of several potential approaches works best, managers would use the data to evaluate staff, redirect outreach efforts or make operational changes that might improve outcomes.
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