“Impact has become an important concept in social entrepreneurship. When financial resources are deployed to have more impact, the world of social change and finance combine, and they clash.”
So what is this “clash”?
The Financial World, with its impact funds and matrices, inhabits - and brings in - the logic of for-profit ventures. In this world the problems which the ventures address are linear with a measurable impact (e.g., provide/ sell X number of solar lanterns, reach Y number of customers, etc.). For such ventures, the ‘markets’ are efficient and they provide a clear-cut feedback on the performance of a venture (e.g., increase in turnover or profits, customer-base, etc.). They measure the impact in terms of “scaling of the enterprise”.
Social Ventures (whether “for-profit” or “for-people & planet” – or both), on the other hand, operate in an inefficient market. They address social problems which are not linear but systemic – and interlinked (e.g., one create a low cost infrastructure for clean water, but it remains inaccessible to people from lower castes, or one can create low cost rural schools, but the girls still drop out – perhaps due to lack of toilets). They work with other mission aligned organizations, groups of volunteers, govt. agencies, etc. to “scale up the social impact”.
The “clash” is between two logics, or as Arun Maira goes on to say:
“Large “impact funds”…. cannot have desired impact on lives of people unless they change their theory-in-use of what impact is and how it is produced. ”