The SoCap Way

2008 marks the 5th year of the Fast Company / Monitor Group Social Capitalist Awards. From its inception, the Awards were created both to specifically assess and recognize the leading social entrepreneurial organizations that participate in the project and, more broadly, to further performance measurement and accountability in the social sector with a highly rigorous, data driven, comparative approach.

With each passing year we have enhanced our understanding of the challenges of measuring social impact and organizational performance. We continue to refine our methodology and assessment criteria as a result. We hope that, by sharing the essentials of our methodology, we can encourage non-profit organizations and their funders to measure, report, and, ultimately, maximize the social impact created with the resources they command.

The Social Capitalist Awards defines strong performance as a combination of both social impact and organizational effectiveness. This performance is represented by five critical components: Social Impact, Aspiration & Growth, Entrepreneurship, Innovation and Sustainability. The underlying theme through all of our components is the organization's ability to analyze tough social and organizational challenges and to craft solutions that create significant improvements over the status quo. Here is a more detailed perspective on each of these components.

1. Social Impact: We consider several different aspects of social impact. First, we examine the rigor and sophistication of the organization's approach to social change: the organization's understanding of the problem it is trying to address and the solution it is providing, and whether the organization's performance metrics are tightly aligned with the problem it is addressing. Organizations that look for the highest-leverage, root cause solutions and are committed to assessing their progress in "moving the needle" are positioned to have the most significant social impact.

Secondly, we assess the actual social impact that an organization generates. This includes both its direct impact in providing necessary products or services (taking into account the degree of difficulty of their challenge, the depth of impact, and the breadth of the impact), as well as its ability to drive system-wide change in addressing the targeted social need. We look for organizations that can demonstrate that they are having disproportionately large impact on the problems that they address, relative to other organizations in their area or at their organizational age.

2, Aspiration and Growth: In addition to proving that an organization is having significant impact today, we also look for organizations that dream big, aiming to push their direct and systemic impact out into the world as far and as fast as they can. We then judge whether those high aspirations are backed by a logical, achievable growth plan that recognizes relevant organizational challenges and milestones. An enormous vision that is not believable or achievable is very unlikely to create tremendous impact, and the organization may waste scarce resources in the attempt to scale.

3. Entrepreneurship: We define entrepreneurship as "the ability to do a lot with a little." For each applicant, we look for specific evidence that the organization is able to gather and command disproportionately large resources (e.g. financial, human, partnership or intellectual assets), and thinks strategically about which resources it deploys in solving its social problem. We also seek proof that these resources are being used to their maximum potential and efficiency. Finally, we look for indications that the organization is truly entrepreneurial in nature: passionate, ambitious, creative, flexible, focused on constant improvement, willing to take calculated risks and willing to hold individuals accountable for meaningful results.

4. Innovation: We define innovation as the organization's ability to generate a game-changing or pattern breaking idea--either a new solution to an existing social problem or a new business or operational model. We also look for evidence that a culture of innovation exists within the organization--that there are processes for continuously developing significant new ideas, evaluating whether or not the organization should invest in a new idea, and plans in place to carry them out. At the highest level, a Social Capitalist winner is not a one-hit-wonder of innovation, nor does it endlessly pursue new ideas without significant results; it systematically and strategically uses innovation to maximize its social impact against its targeted problem.