Hi, we’re Jill Lipski Cain of The Improve Group and John Fetzer of Northwest Area Foundation. We recently collaborated on an evaluation of the Foundation’s Social Enterprise Initiative, which funded nonprofit social enterprises (NSEs). The evaluation explored 1) the impact of the enterprises for individuals and communities; 2) what it takes for the enterprises to be successful; and 3) the role of the enterprise in supporting the overall mission of the nonprofit.
- While the evaluation used many standard evaluation approaches (interviews, case studies, and document reviews), it focused on questions unique to social enterprises. This included an exploration of whether the nonprofit should be able to sustain itself from the revenues of its enterprise. We learned that factors other than business acumen affected whether the NSE could sustain itself, including the customer base served and the extent to which the nonprofit invested in expenses such as holistic support of employees.
- The field of social enterprises is complex, evolving rapidly, and the extent to which NSEs reduce barriers to employment and poverty at a wide scale is still unclear. Nonetheless, a wide range of strategies—from traditional investing, to loans, to grants—can support a wide variety of enterprises. This provides both flexibility in designing an approach that reflects the mission of the funder and social enterprise—and significant uncertainty about success.
- In a literature review for the evaluation, we learned that there is both significant potential and modest, demonstrated evidence of broader social benefit from NSEs. However, potential negative impacts to individuals also exist. For example, one study examined the “benefits cliff” for social enterprise workers. It found that people with multiple barriers to work experienced a net loss because their NSE employment caused them to lose public program eligibility or reduced government transfers and lowered public subsidies for housing. Our primary goal must be to positively affect people’s lives. But best intentions quickly run into complicating factors—such as the way public benefits are designed in a particular state—that require us to redesign from the perspective of those we serve. We must consider the systems in which our programs and services operate. An evaluation can help us more clearly see the effect of those systems.
- Start with what you do know, then find out where you are interested in going, what you are concerned about, and what you are debating. Learning is an ongoing process. It’s easy to get caught up in day-to-day work. Evaluations help organizations pause to reflect from a broader vantage point and course-correct.
Rad Resource: The Northwest Area Foundation’s Theory of Change helped guide the evaluation and proved to be an important lens for interpreting results. In collaboration with program officers, board members, grantees, and evaluators, we examined the results and discussed what the implications were for our initiative and future funding strategies. It can also be worth having a conversation looking at the Theory of Change through the lens of the evaluation and seeing if any change is needed to the Theory of Change.
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