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Last week we had a debate with Patrizia Bussi from the European Network of Social Integration Enterprises (ENSIE) and Nicole Alix from Confrontation Europe on how to measure the social impact of social enterprises.

​Nicole Alix from Confrontations Europe highlighted that, depending on the approach taken, some essential features of social enterprises might be forgotten. To mention some:

• What do we measure?

“If most of the time we do measure exactly, we do not exactly know what we measure.”

Therefore, focusing on what should be measured is a first and decisive step. The Commission is nowadays rather keen on measuring social enterprises “activities”. But to get a full overview of the social impact created by a social enterprise, not only activities but also the impact on policies of social programs carried out by social enterprises should also be taken into account.

Besides this, all information cannot be quantified and measured. Social outcome is not the only purpose of social enterprises. The framework / indicators that are being developed need to cover three essential dimensions of social enterprises: its social or societal objective, the reinvestment of profits to develop the enterprise's social objective, and also the participatory and democratic governance of social enterprises. Frameworks should capture all the three dimensions and not only the “economic” dimension of a social enterprise.

Therefore, we cannot simply focus on the social outcome “produced” by social enterprises and develop a “rigorous and systematic measurement of social enterprises impact on the community” but have to consider the whole process and the way outcomes are obtained to ensure a broad understanding of their impact.

• The dangers of impact investing

More and more new actors investing in social economy are from the new international philanthropy. These are promoting impact investing which aims to solve social and environmental challenges while generating economic profit. Their growing influence called the Commission to ask for an impact investment in its Single Market Act.

Some data bases have been set up to answer to the needs of asset managers. In these data bases, some main features of social economy enterprises such as participatory and democratic governance are completely overlooked. For instance, in the United-Kingdom, an enterprise that reinvests only 50% of its profit in a social or environmental purpose, is considered a social enterprise.

If impact investing is identified as a relevant parameter, some social enterprises might be favored over others generating less profit or less social impact. Nowadays some impact investors ask to get a return on their investment of more than 6%, whereas in the social economy sector, above 2% of market return is already really important.

Patrizia Bussi is part of the sub-group that was set up by the Commission on measuring social impact. She presented the state of play of the work done so far.

Many questions were raised after her presentation: just to mention some, what is the link between the framework and the indicators the sub-group is developing? When this framework / indicators are applied in the frame of the Programme for Employment and Innovation (EASI), when would they be applied, before submitting an application for a grant or at the end of the project to evaluate the impact of the grant?

There was consensus among participants that you need to develop different sets of indicators for:

• Private investors
• Local authorities
• EU Programs.