If you consider your startup as a social FinTech, or social enterprise in general, then creating a positive impact is at the heart of the company's mission. What are the benefits of identifying specific aspects of the positive impact that your social enterprise can have? You can understand the characteristics of your social impact more in-depth. Furthermore, you can create metrics to measure them, then create objectives in order to improve each aspect of the company’s overall impact.
There are three main types of social impact metrics, those that measure: output, outcome and impact. We’ll explain the differences below.
In order to realize the benefits of measuring impact, we will look at this from 3 different perspectives: investors, customers and employees.
Measuring impact is also a big plus for investors. There has been an exponential rise in interest for “Impact Investments”. The total AUM for the Impact Investment sector hit an impressive high of $715 billion in 2020, according to Global Impact Investing Network (GIIN). This total AUM has been more than doubling each year (130% CAGR) since 2015. Investors believe that measuring impact is crucial for a social enterprise looking for investment. This is because investors can truly see, in a quantitative way, what positive impact their money is creating. By clearly displaying a social enterprises impact using metrics, it is easier for investment managers to get the green light, in addition to selling the opportunity to other investors.
By viewing impact metrics with a marketing perspective, it is noted that customers understand the company's aims more easily. Communicating your work effectively builds engagement with clients. Furthermore, using empirical data as evidence of your social FinTech's positive impact gives the narrative more credibility. Although testimonials are a great way of getting this message across, social impact metrics are clearer, more credible and get straight to the point.
Employees have also shown to become more motivated when they can directly see what impact their work is having. For example, seeing an increase in customers’ “quality of life” – proven by surveys sent to clients – can motivate employees. Or knowing that there are 100 more ‘microentrepreneurs’ in a rural area. Of which 75% of them state they are now more financially stable, thanks to your social FinTech. This would motivate employees at a higher level, in comparison to solely assuming their work is having a positive effect.
If you’re a social FinTech, or a social enterprise in general that is looking for some examples of metrics to implement, then you should check out IRIS+. It was launched by GIIN, which is a non-profit that has the aim of catalyzing the impact investment segment. "Impact investors" and social enterprises consider the IRIS+ list of metrics as the universal standard.