Framework Purpose

Social enterprise has been touted as the answer to achieving performance gains in the third sector, yet as a field it has been slow to develop its core methodological components. The purpose of this framework is to support the social enterprise community by developing an integrated methodology, one that goes beyond splintered factions and works to unite social enterprise around common challenges and performance criteria, thereby furthering the development of social enterprise as an established field and a means for achieving sustainable social impact.

Social enterprise achieves social impact by creating social, economic, and environmental value. Using a market-based approach, social enterprise incorporates commercial forms of revenue generation (and thus creates economic value) as a means to accomplish its social mission (and thus creates social value and/or environmental value);1 the combination of these results is a “blended value” outcome. Simply put, it is difficult to dissect value produced by the social enterprise and assign it to discrete activities because value production is a function of the interdependent nature of all social enterprise activities. For example, the social value of wealth generated by a successful microfinance institution (MFI) can be directly correlated to the economic value created to keep it afloat: the greater the number of productive loans disbursed, the greater the benefit to poor entrepreneurs, and the greater the amount of interest collected to sustain the MFI.

In the social enterprise, the means by which value can be created are as diverse as the social enterprises themselves. For instance, social value can be achieved through any or all of the following modalities: a direct result of executing the business; ancillary social programs; social services embedded in the social enterprise model; management and/or governance philosophy or processes; procurement of supplies and raw materials; strategic partnerships; and socially and/or environmentally responsible policies. To complicate, trade-offs occur whereby one type of value is compromised, curtailed, or forsaken to achieve another type of value. Most often this relates to economic value at the cost of social or environmental value to ensure the social enterprise’s survival. For instance, microfinance institutions went upmarket, making larger and higher margin loans to the “less poor” as a means to commercialize. The concession was reduced group loans to the “poorest of the poor,” while the benefit was being a going concern that could lend to many more poor people over time. The goal is to be strategically intentional about where and how to create maximum value and to view value creation as a holistic outcome of social enterprise performance.

Questions we seek to answer:

  • How is performance defined and measured in social enterprise?
  • What do we mean by ‘integrated methodology’?
  • How can integration lead to higher performance?
  • 1. Social enterprise may add environmental value by employing environmental sustainable practices in its activities, or in the case of an environmental social enterprise—e.g., Nature Conservancy—environmental benefits are baked into the organization’s mission and integrated with its social programs.