Assessing the Impact of Social Enterprises Using the U.N. Sustainable Development Goals and IRIS
By Joe Schuchter, Associate Director of Social Impact Assessment, Miller Center for Social Entrepreneurship
Social entrepreneurship is increasingly recognized as a means of addressing the world’s most pressing social and environmental problems. However, assessing the impact of social enterprises continues to be challenging. Part of the challenge is to find a shared language of impact in the myriad approaches used by social entrepreneurs, impact investors, and development agencies to code, classify, and interpret impact.
Two of the more prominent approaches are the United Nation’s Sustainable Development Goals (SDGs) and the Global Impact Investing Network’s (GIIN) IRIS. At first glance, the SDGs and IRIS appear to use different “languages” for different audiences. To better support social entrepreneurs, Miller Center for Social Entrepreneurship decided to explore the alignment of these two approaches, and its ability to support impact assessment more broadly.
What Are the SDGs and IRIS?
Adopted by the UN in September 2015, the SDGs were introduced as an iteration of the Millennium Development Goals, which were established in 2000.[i] The SDGs include 17 goals formulated into 169 targets, and additional indicators for those targets.[ii] Collectively, the SDGs are focused on ending poverty, protecting the planet, and ensuring prosperity and well-being for all. The users of the SDGs extend beyond the United Nations to include governments, the private sector, and civil society in all parts of the world. The SDGs are measured routinely at the country level to show progress toward specific goals, often aimed at the year 2030.
IRIS is a catalog of 559 impact investment metrics, grouped into 12 sectors (e.g., agriculture, education, energy). The stated purpose of IRIS is to measure the social, environmental, and financial performance of investments. With leadership from the Rockefeller Foundation, it was introduced in 2008.[iii] Now in its fourth iteration, IRIS has become the preferred taxonomy for impact investors to measure the impact of their financial investments.
Which language do social entrepreneurs speak?
At Miller Center, we observed that the social entrepreneurs we target were using various means of classifying and assessing their impact. Because these entrepreneurs fall into roughly equal thirds of for-profit, non-profit, and hybrid incorporation types, they would seem to represent a broad range of perspectives and languages within the overall development ecosystem. However, we also know that entrepreneurs that have participated in our Global Social Benefit Institute (GSBI®) programs are intensely mission-focused, therefore we suspected SDGs might be more popular among them.
To address this question, we analyzed the data from our GSBI programs for accelerating social enterprises. We found that 71% of GSBI applicants reported using SDGs, and only 10% were not familiar with them. On the other hand, we found that only 14% of the applicants reported using IRIS metrics, and 40% were not even familiar with them. In other words, the SDGs seemed to resonate more with these entrepreneurs, while IRIS — the primary metrics used by impact investment — were not being widely applied.
How do we “translate” these languages?
Based on these findings and to help bridge this disconnect between SDG and IRIS languages, we “cross-walked” SDG targets and IRIS metrics to identify gaps and overlap.
In our first pass at the crosswalk, we found that 25% of the SDG targets have related IRIS metrics, while 30% of IRIS metrics map to SDG targets. This included very high alignment in content areas like education, but very low alignment in broader areas like eliminating poverty. We conducted this process focused only on close matches of SDG targets and IRIS metrics.
Through this process, we identified opportunities for a combined IRIS-SDG framework. IRIS focuses on more discrete, near-term results, while SDGs aim at bigger, broader, and long-term changes. Although only roughly one-quarter of the metrics and targets matched directly, we saw the potential for much greater alignment were we to apply a theory of change logic. For example, IRIS metrics around education match directly with the SDG targets for education, but also contribute to and therefore align to the longer-term SDG of poverty elimination.
Together, SDGs and IRIS offer a powerful framework and catalog for impact. With its broad goals and specific targets, the SDGs help align social enterprise to other development actors. But IRIS is what helps align social entrepreneurs with investors. Therefore, Miller Center believes that social entrepreneurs should learn the basics of the investor language, IRIS, while continuing to use the SDGs to articulate their systems-changing goals and ambitions. At the same time, investors could benefit from a better understanding of SDGs. As an example, Sonen Capital has already aligned its portfolio with the SDGs.[iv]
Miller Center is working with partners at GIIN and the Aspen Network of Development Entrepreneurs (ANDE) to refine and enhance the crosswalk.[i] We are also working to integrate this into our own application and assessment system. Using this shared-language taxonomy as a teaching tool can help social entrepreneurs navigate the growing glut of options for classification and measurement, ideally arriving at indicators optimally suited for their own operations as well as their investors and stakeholders. Ultimately, the SDG/IRIS crosswalk should enable social entrepreneurs to better leverage the resources they need to achieve the disruptive systems changes that they seek.
Note: The first pass at “crosswalking” these two prominent sets of indicators was conducted by Miller Center for Social Entrepreneurship in the spring of 2016, and presented at the Aspen Network of Development Entrepreneurs conference in June 2016.
[i] John W. McArthur. The Origins of the Millennium Development Goals. SAIS Review vol. XXXIV no. 2 (Summer–Fall 2014)