How can you explain your social impact to an Investor?

By Mark Cheng, Founder and Managing Partner at Social Innovation Circle

5 minutes read

Social impact has so many dimensions, many of which are impossible to quantify.

How do you ‘measure’ the value of a clean beach? Or of rainforest that is untouched? Or the improvement in a person’s life from having sight restored?

One way is to find a variable, usually a monetary one, that can act as a proxy for the impact that you create. In other words, try to put a $ figure on your impact, even though this is very far from perfect and only captures a small proportion of the benefits that you bring.

VisionSpring, founded by Jordan Kassalow, is my favorite example of a social venture that does this brilliantly. VisionSpring sells affordable eyeglasses to people earning less than $4-a-day in emerging markets, starting in India.

Every year there are millions of people who cannot work because they cannot see clearly. For such individuals, the consequences of suffering from uncorrected poor eyesight can be devastating. Fortunately, in most cases, the problem can be fixed with a simple pair of glasses that costs less than $10.

So how does VisionSpring persuade funders to invest in a social business that sells eye-glasses to such low income customers? Given that their target market are customers who earn less than $4-a-day, it is unlikely to be on the basis of their potential profits.

Instead, what VisionSpring does is quantify the increase in income that the average beneficiary will be able to enjoy as a result of having their eyesight corrected. They cite studies showing that the average recipient of a pair of their eyeglasses can improve their productivity by up to 32%.

On this basis, given that VisionSpring has distributed nearly 8m pairs of eyeglasses to date, they estimate that they have helped generate over $1.7 billion in economic impact through enhanced earnings for their customers.

VisionSpring then uses its data to work out the economic impact of an investment in its products. It estimates for every dollar invested in VisionSpring, they help a customer achieve $43 of incremental income by having their sight corrected. This ‘Social Return on Investment’ is a large, measurable impact which is very persuasive to investors.

Funders love this approach – it is simple, easy to understand and puts some objective numbers behind the impact estimate.

More importantly, it shifts the conversation from ‘how much income will you generate for your shareholders?” (i.e., your Financial Return) to ‘how much income can you generate for society?’ (i.e., your Social Return). As a social venture, this is where you want the conversation to be.

Of course, measuring income improvement doesn’t capture all of the benefits that correcting a person’s sight brings. But for those ventures where such variables can be measured, this is often the best way to open conversations with funders.

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