Businesses have traditionally had fairly simple metrics that they use to evaluate their work: sales and profit. However, three factors are driving businesses to consider social benefit as well:
- Competition for customers, employees or investors forces companies to seek differentiators.
- People around the world prefer to work for companies that are socially responsible.
- The ubiquity of information available through social media allows people to draw fast judgements about whether businesses are socially responsible.
Companies are turning to evaluation strategies that have long been used in the nonprofit and public sectors to document and describe social benefits. They are overcoming some of these challenges:
- Companies that donate money as a primary social benefit strategy, like Target’s 5% program, are seeking ways to equate dollars with impact. Many work with their grantees to document results, but find it difficult to develop measures for complex issues like “healthy communities” or “sustainability.” As a result, they are adopting logic models and other evaluation tools.
- Other companies offer products or services with a social benefit, and they respond rapidly to the marketplace. For example, MNPHARM uses energy- and water-efficient agriculture to grow important medicines. As a winner of the Benefit Cultivator Program, MNPHARM worked with the Improve Group to clearly articulate its benefit when the actual medicines produced will vary depending on needs.
- Just like their counterparts in the nonprofit and public sectors, business leaders struggle to dedicate resources to evaluation. For example, several of the businesses we worked with in the Benefit Cultivator Program are in start-up mode, with leaders focused on getting customers, investors, and systems in place. Their time is limited, and any discretionary funds are often put right back into the business.
Recent developments will increase attention and sophistication as companies consider social benefits. Several states have recent laws enabling companies to incorporate with a benefit corporation status. In Minnesota, consumers will have direct access to information about public benefits through reports required of companies that incorporate as a benefit corporation. And third-party rating systems, such as B-corps, provide consistent benefit measures that can be compared across companies.