What is the value of a cup of fair trade coffee? To a for-profit business, the value of the fair trade coffee is its price. To a not-for-profit organization, that cup of coffee has a “social impact value.” But how do we measure the profitability of social responsibility beyond zero-sum goods and services?
Toronto-based startup Social Asset Measurements has created a Software as a Service (SaaS) platform, called Embedded Metrics Service, which helps to measure and analyze the social impact of an organization’s products and services. This impact is called your “social return on investment” (SROI).
The concept has been around since the 1990s. However, many social-based ventures are challenged with figuring out how to properly measure and produce something equivalent to an SROI, while saving the world at the same time. In addition, most of them cannot afford to pay a consulting firm to do it for them on a frequent basis.
Yesterday, I spoke with Anshula Chowdhury, founder of Social Asset Measurements to find out how the Embedded Metrics Service software helps social ventures to save money, while learning how to measure their SROI themselves.
What is the true benefit of measuring social impact value?
If a social venture can communicate their social impact value in a language that investors and grantors understand, then funders will be more willing to donate to a high-impact project. Once they know their value, social ventures can also identify opportunities to work with complimentary organizations, as partners, to help resolve each others’ problems and share resources.
That’s why we developed the Social Return on Investment software. Our team members have backgrounds in economics and computer science. Together, we developed ﬁnancial analysis tools to help social ventures discover and communicate their social impact.
How does your product work?
The first part of the process is to work with the social venture to understand their unique challenges and identify the appropriate “indicators of success.” From there, we can attach financial values to those indicators.
We then teach them how to collect the appropriate data for their measurements. This often requires a bit of a culture shift within their organizations. As a result, we need to make sure they understand why they need to collect the data in a particular way. From there, it’s a matter of inputting the data into our software and learning how to manipulate it. We train them on how to do all of this.
How do you help social ventures to save money?
Let’s say that an organization can afford to measure their SROI once per year. Typically, it would cost them roughly $50,000 if they worked with a consultancy firm. With our product, Embedded Metrics Service, we can help to reduce that cost by 60% in the first year. After that, they would simply pay for an annual licensing fee for our software, plus any customizations required to manipulate the data in new ways.
Who have you helped so far?
Social Asset Measurements has engaged key Canadian clients, with particular attention towards larger, keystone organizations such as the Centre for Social Innovation and Causeway Social Finance. However, many of the clients/participants in the social-based ventures that we’ve worked with so far must remain anonymous. Our clients work with a lot of marginalized populations that would never input their data if they thought the data would not remain completely anonymous.