In a time when economies are failing and funding is tight, it’s hard to imagine that any investor would put funds into an organization that can promise little more than an attempt to meet a set of guiding principles. But they do. Repeatedly.
Imagine you went into a restaurant and rather than a menu, you were handed only a culinary Code of Conduct.
For your contribution of $10, we declare our intention to*:
1) Hire employees from the area surrounding the restaurant
2) Buy ingredients from a reputable supplier
3) Cook them into something we hope you will enjoy
4) Serve it to you in accordance with local health guidelines
5) Ensure we compost our food waste and donate leftovers to the local shelter
6) Send you an email once each year (with your permission) to let you know how many meals we’ve served
*These guidelines, developed by the Foundation Of Restaurant Knowledge (F.O.R.K.), are aspirational and we cannot guarantee they are met in all situations.
For a few very laid back customers, the F.O.R.K. guidelines may be enough to get them to put their money down and get ready for dinner. They seem fair and positive. Granted the customer has no idea what they get for their money, but it feels right and nothing else is being offered so they assume the best.
This situation is analogous to many social enterprises and their funders. In a time when economies are failing and funding is tight, it’s hard to imagine that any investor would put funds into an organization that can promise little more than an attempt to meet a set of guiding principles. But they do. Repeatedly.
Back at the restaurant, though, most customers might have a few more questions to ask, including:
• What type of food does this restaurant serve (Thai, Indian, Italian)?
• How much food do I get for my $10? A whole meal? A small plate to be shared?
• Do I get my choice of entrees or only what the chef feels like making?
Once these next-level questions are answered, the majority of people would likely stop at this point and either choose to place an order or move on to the establishment down the road. With this level of detail, most people will feel they have enough information to make a decision (and most do).
Still, though, some customers who are attuned to the particulars of achieving social benefit through business might want to really test the F.O.R.K. Code of Conduct itself, with questions like:
• What percent of employees are indeed from the local neighborhood?
• How much of the ingredients are local and/or organic?
• Does the restaurant support community gardens with its compost and provide job training in its kitchen?
• How much of the above is achieved for each $10 spent by a customer?
Guidelines such as those put forth by the fictitious F.O.R.K. are pervasive in the social sector. They are everywhere, from niche voluntary carbon programs to broad consumer goods. Though it may seem counter-intuitive, investors and funders in the social sector often stop at the first level of detail- a Code of Conduct not even suitable for dinnertime decision-making, let alone one that affects positive social change.
One field that is notorious for this approach is sustainable tourism (or ecotourism). There are literally dozens, if not hundreds, of ways to get certified as an ‘ecolodge’ or ecotourism operation simply by making efforts to adhere to some set of guidelines. The primary means of certification is an evaluation of operational elements that point to efforts to meet the guidelines (such as intention to hire local staff, intention to protect the surrounding ecosystem, intention to build with native materials, etc.). Annual renewals simply check the continued attempts to meet the guidelines as opposed to setting benchmarks and tracking actual progress towards these guidelines.
Despite significant financial investment, it is rare that investors ask the simple question: Is this sustainable tourism operation indeed benefiting the local community and environment? And once in a great while, the question has a Part 2: If so, by how much, and in what ways can we improve our practices to achieve even more impact per dollar spent? It’s as if investors have forgotten to hold their social investees accountable as they would the financial recipients. To be clear, expectations should very different than a financial investment, but no less rigorous.
Recently, a coalition of heavy hitters (including the UN Foundation, Rainforest Alliance, UNEP, National Geographic, IUCN and several others) came together to develop a set of internationally recognized ‘criteria’ for sustainable tourism… with a major difference. The Global Sustainable Tourism Criteria (GSTC), released last year, operate in a similar fashion as most guidelines with the important exception that they are actively developing processes and tools to help organizations know if they are actually achieving positive social and environmental benefit, in a quantifiable way. The goal is to give operators actual tools to use in assuring they can deliver on their multiple goals (social, environmental and financial) and be able to communicate that to investors and funders. This should benefit more stakeholders involved – operators, investors, tourists, communities, and in general anyone spending money in this system. (Full disclosure: SVT is assisting in the development of these tools, as a volunteer member of the GSTC).
Tracking the real results of investment in the social sector is not as daunting as many believe. It is possible and critical. It happens every day in business with simple tools (as basic as an Excel spreadsheet); it is only a matter of rethinking how we define the ‘return’ in return on investment. Just as few of us would order from a restaurant that could only tell us they would try to make us good food without knowing what it is, especially in times when cash is tight, so should we know what our social investments buy us.
This entry was originally published on the Skoll Foundation’s SocialEdge.org website on our other blog – SVT on Impact.