A New Breakthrough in Tracking Social Entrepreneurs

I’ve always valued metrics but remain wary of the extent to which numbers can be used to reveal the whole picture. Hearing about the new Portfolio Data Management System (PDMS) – an online database tracking social entrepreneurs – is proof that there is progress in the effort to measure social impact. A variety of organizations came together for this massive effort: Acumen Fund, Salesforce.com Foundation, Skoll Foundation, Lodestar Foundation, along with programmers from Google. How does the PDMS work? BusinessWeek explains:

A common set of metrics will be recorded for each organization so donors and investors can check regularly and track their progress or spot trouble. Social entrepreneurs will be able to benchmark their results against those for similar organizations around the world.

The system will allow foundations and other donors see what the return on their investment is, and compare it against other similar organizations to see if real progress is occurring. I can imagine that not only will the information be useful to investors, though, but also to other stakeholders – partner organizations, beneficiaries, almost anyone involved the same field who wants to stay informed of the value of programs and money.

Since social enterprises are relatively new entities, standards and benchmarks are not common or shared. A specific metric that one enterprise decides to use may differ with the next. The PDMS offers a solution to the current haphazard situation…

The system will provide a deep reservoir of vital stats. All listed companies will use the same financial accounting methods. They’ll be measured based on seven basic metrics, including revenue growth, net income, the number of customers served, jobs created, wage growth, local suppliers supported, and additional money raised. Additionally, investors and social enterprises can customize the system to include their own goals and accomplishments.

But how can PDMS really make a difference? The Acumen Fund is an early player in testing the database and offers evidence:

For instance, a few months ago Acumen managers noticed that an ambulance company in Mumbai, India, didn’t have enough patients per day riding in some of its vehicles. Acumen sent a representative who helped the company, Dial 1298 for Ambulance, analyze its operations and shift things around to make more efficient use of vehicles and personnel. “They came up with a beautiful model that will make it possible to break even on every ambulance,” says Sweta Mangal, chief executive of the ambulance outfit.

The ambulance example shows how this system may provide ways to make easy adjustments in programs and financing to achieve an end goal.

I am interested to hear critiques against such standards for social enterprises – do they create a restraint against the very same creative methods that set these organizations apart? Is it really possible to compare one social enterprise against another, when each seems to serve a different issue, audience, or mission? To what extent should investors look to this database to make their funding decisions?

But as the article states, there is a lot of “latent capital” in moving large amounts of money and ideas for social change – and the PDMS may be a huge shift in increasing the impact of “doing good” across sectors.

(More information can also be found at the Clinton Global Initiative’s website, and Vinay touched on PDMS back in March when discussing social investing).