Business Models, Scaling Impact and the Need for Data

Courtesy of Cathy Clark, Adjunct Associate Professor at Duke University’s Center for the Advancement of Social Entrepreneurship

When Greg Dees and I started our blog over 6 months ago, it was to get feedback on some of the patterns and trends we had been seeing in our research on business models for social entrepreneurs. We shared the results of our global surveys, posted individual profiles on some of our case study subjects (more will be available at www.caseatduke.org in 2012 for educational use), and hosted several online discussions about trend lines we were seeing across many different ventures.

One of the biggest trends we saw in our business model interviews was a newfound attention to sources and uses of capital. The lure of impact investing has taken root among social entrepreneurs around the globe, and we decided to let those inquiries take their course. Can a more robust capital market help bring ideas that work to a scale that matters? Would the new market players across the capital spectrum offer better help to social entrepreneurs struggling to build significant and sustainable models? The conversations have been wonderful – folks in every impact area, geography, stage and business model type are asking the right questions at the right time.  But the fact remains: I am entirely dissatisfied with the state of knowledge about how capital is used to help ventures scale their impact.

I think we do have great stories of exemplary ventures. Ask for an example of a great business model, and you get a diverse but relatively known handful of nonprofit ventures, ones that are on a convincing path to self-sustainability, such as Kiva, VisionSpring, and Root Capital. On the for-profit side, what comes up are innovative ways to integrate mission into business, like Better World Books’ equity model, or Greyston Bakery’s hybrid structure. Very few of the conversations can tell you how successful the field has been as a whole or which strategies lead to the best outcomes. Everything seems to be a one-off.

I’ve come to the conclusion that what the field needs now is fewer anecdotes and more data.

(Victor d’Allant, editor of SocialEdge, gets to chuckle here, as we first met at a wintry foundation conference in coastal Maine, where I presented on the power of metrics and he presented on the power of stories and we publicly dubbed each other “data girl” and “story boy.” Yes, Victor, data girl is back!)

But it is aggregated and well-collected data, not more case studies, that are going to help us see universal trends and challenges, dispel myths, and identify overall opportunities. How many nonprofit ventures have ever accessed debt that gave up basis points for mission? How many impact entrepreneurs are able to scale membership organizations to the point of self-sustainability?  I’ve worked in this field for over 10 years and given the growth of the field, the lack of basic data is appalling – how many social entrepreneurs are there in the US that operate with over $3 million in revenues?  How many actually scale their organizations or their impact to reach 5-10x of the people they reached in year 3 of operations , and how long does it take them to do it? What is the value of being selected by a prominent fellowship grantor or funder?  How much debt capital is being utilized by social entrepreneurs and has it worked?

Luckily, we have some models for this. We have field panels and databases set up purely for research purposes in a variety of academic disciplines.  And we at CASE, in close collaboration with  Pamela Hartigan and her team at the Skoll Centre at Oxford, are starting some serious conversations with top practitioners around the globe about the need for universal data collection and analysis.

My CASE colleague Paul Bloom and I have written an initial paper on this topic that Paul will be presenting soon at the NYU research conference.  Our paper  talks about the datasets that already exist (like Urban Institute’s work with IRS data, or the data being collected on impact practices by B Lab and GIIRS) and some of the challenges in creating a datasets for research purposes, but I wanted to pose some questions  here :

• Isn’t it high time we got beyond anecdotes and individual accolades and started to understand the field of social entrepreneurship as a field?
• What are the critical questions you think we should be asking at a field-level?
• What would you as practitioners most want to know in terms of benchmarking yourself against or learning from your peers?
• What challenges do you think we face in trying to define and capture the behavior and results of social entrepreneurs? For example, will people be truthful?
• If you are interested, how could you help us?

Cathy Clark