The social impact world is growing fast and social enterprises are core to this new sector, philanthropists and investors are intrigued by them and are pumping more money into social enterprise. However, it’s not a well-defined sector and some people appear to be riding the wave without really committing to the impact. Are some organisations purpose washing to lure in young talent, impact investment and customers?

If you can’t answer the three questions below, you might be purpose washing for the benefits that come with it.

Are you able to clearly define your theory of change? 

Your theory of change should describe how your core business inputs and processes lead to an outcome that has a social impact. This doesn’t have to take much time or be particularly detailed, but you do need to be able to clearly define how you are going to reach your long-term goal. If you can’t articulate how you are going to create the change you seek and you can’t describe the change you seek in specific outcomes, how will you measure your impact and therefore the success of your social enterprise? 

Some organisations claim to be social enterprises because they invest a certain percentage of their profits to a cause of their choice. However, the theories of change these organisations have look nothing like a social enterprises and the impact they are having isn’t a core aspect of their business. This is a clear case of purpose washing and while it might help another business solve a social problem it doesn’t solve a social problem itself.

Does your impact scale proportionally to your business? 

If you can’t prove that as you scale, your impact grows, then you may not be giving your profit and purpose equal importance. This is something experienced impact investors will be on the look out for when evaluating what companies to invest in, so it’s important to get right. Corporate social responsibility projects like volunteering, one off hackathons and events don’t scale with the growth of a business and can’t really be defined as the core purpose of the business, so make sure your solution is part of the business and will scale as you grow. 

A great example of a social enterprise with an impact that scales to its business is Social Traders. For every buyer they get on board they create multiple safe, sustainable and open job opportunities for disadvantaged Australians.

Do you have impact goals that are reflected in your KPI’s? 

The above two questions test whether you are genuine about the impact you want to see, and if it’s the core purpose of your business. This question now is about being able to prove your impact convincingly. Your Key Performance Indicators (KPIs) have to be linked to your social impact and they have to be measurable. 

Impact measurement can be overwhelming, especially if you are taking into consideration unexpected or unintended consequences of your intervention. However, it’s always better to give it a go and be honest, instead of tweaking some rough estimates to make it look like you are having the impact you want to have. If you are genuine about the change you want to see, not immediately achieving the impact you want won’t stop you from refining your solution until you do.

Alexandra Blackwood is the the Social Enterprise Coordinator and Corporate Communications Manager for White Box Enterprises a new company creating 5,000 jobs for disadvantaged Queenslanders by 2030 using large scale employment-focused social enterprises as the tool. She has a postgraduate in Social Enterprise from ‘Year Here’ based in London, and a Bachelor of Business from Griffith University that she studied for with Open Universities Australia while living in Beijing and London.