The man who developed the most rapidly adopted social impact in the world, the Social Earnings Ratio (S/E), a tool to help institutions measure social impact of decisions and to benchmark across private, public, third and community sectors, has shared with ZENIT his insights on how the motivation to make money and reducing poverty are linked.
Considered an authority on social innovation, Professor Olinga Ta’eed, heads an international team targeting the annual reporting of social value of 1 billion organizations by 2020. He also directs the Centre for Citizenship Enterprise and Governance in the UK, a center aimed at promoting the external research and enterprise agenda of the University of Northampton’s Business School.
Olinga also serves as impact investment advisor to the Big Society in the UK, which media sources rumor to be the “hidden hand behind all government action.” The Big Society, staunchly supported by British PM David Cameron, is an independent charity which aims to develop a better, healthier society through working with social entrepreneurs, social ventures, innovative charities, third sector organizations, business and government.
Ta’eed was speaking at Rome conference June 26-29 entitled “Poverty and Common Good: Putting the ‘Preferential Option for the Poor’ at the Service of the Poor”. The event was organized by the international think tank Dignitatis Humanae Institute (DHI) which aims to uphold human dignity based on the anthropological truth that man is created in the image and likeness of God. Conference speakers included senior Vatican officials, politicians, media and business leaders, in the Casina Paolo IV of the Vatican gardens.
ZENIT: How has the economic crisis impacted society?
Ta’eed: The 2008 financial crisis brought the world to its knees. No sector – public, private, third (NGO), community – has sufficient resources to resolve the avalanche of social pain by itself. Our future relies on more sophisticated paradigms which inevitably require blended solutions. Every sovereign state now has a version of the Big Society wrapped in their own name, culture and context. In essence, as public funds recede the private sector is expected to step into the gap and resource the community through third sector agencies. The challenge is how to make the profit motive an incentive to deliver those outcomes that touch people’s lives. It occupies governments globally, we debate it in forums like this, but the moral imperative is to connect it to real lives and not just express hollow cerebral toys to impress. At the other end of the spectrum is the daily suffering of the vulnerable who care little on how we get them relief as long as we do it. In the end it will be our capacity to deliver social good that will form the best descriptors of who we are. I encourage you to make it very personal.
ZENIT: Have these realizations affected you personally?
Ta’eed: I now define myself as someone who is there to care for and hear the voices of others 4 days a week, and in the remaining 3 days, I provide emergency respite fostering care on for children who are victims of terrible sexual and physical abuse. Before retirement, I used to define myself by numbers of cars and houses. This exposure to the suffering of others has transformed my life and drives my hopes and ambition to make significant changes to the world.
Of course, you cannot fail but be impressed at the conference surroundings at the Pontificia Accademia delle Scienze’s The Casina Pio IV, built in 1561, surrounded by the greenery of the Vatican gardens, and the architecture of frescoes and stucco reliefs. But it’s good to be reminded that ultimately the why’s, the what’s, the theology and philosophical persuasions are only signposting that life should be an act of worship to the suffering of others. Words and papers will not be sufficient in themselves. My work surrounds ‘how’ the delivery of scalable and sustainable social innovations will bring relief to large parts of the impoverished world. It requires radically new instruments to deliver resources from rich men and rich companies to the vulnerable in areas of health, education, gender, employment, children, and the myriad of other issues that torment the world.
ZENIT: How is social innovation to be understood, from your point of view?
Ta’eed: Understand that social innovation is an industry, and like any other industry it has trends. A century ago philanthropy was the driver – make money, give it away; the Catholic Church understands this paradigm very well. Around 20 years ago, Corporate Social Responsibility (CSR) overtook the corporate world. It’s transactional. You give me your charity logo, I give you a check. Very little interaction beyond that. Around a decade ago, we moved onto sustainability which argued that how green is your infrastructure is what really matters, regardless of your morals. Today, it’s Social Impact – what is the impact you are having on me now – I’m not worried about the fact that my plastic shoes will not deteriorate on a landfill in 1,000 years time; this is the problem for my children’s children’s children’s children’s grandchildren. We have people suffering today, so let’s focus on the hic et nunc of our travails. This trend has already shifted again – the future is about citizenship – the multi-stakeholder reality that we all live in. Already companies have abandoned “CSR Department” badges to “Citizenship” projections of their good.
ZENIT: Do you believe the Church can play a role? How so?
The Church must learn to articulate in this modern context. The failure to stem poverty is not the responsibility of those with money. It is the failure of us striving for social innovation to express ourselves in the language and structures that they understand. What are attributes of God to the Church, operating in within a citizenship framework to the non-religious? The two key drivers for change to our target audience are legislation and procurement. Proselytizing and preaching of the artifacts of goodness will always have their place in influencing long term transformation of souls of men, but legislation and procurement are much shorter, blunt instruments that force change. It will take another century before they result in behavioral change in CEO’s and the super rich. But that is ok – please let’s start the journey now.
ZENIT: Could you give your view on the speed at which the social innovation market is growing?
Ta’eed: There is a burgeoning social innovation market which is moving at an incredible rate. On April 1, in India, the 2 Percent CSR Law came in that forces all medium to large corporations to give 2 percent of their gross profits to ethical causes. On April 15, the EU released a directive for any corporation over 500 staff that they must now provide non-financial information disclosure annually. In the USA, the drive is towards legislating World Economic Forum Investor listing standard proposal for stock exchange requirements on corporate sustainability reporting. In the UK, they have released the Social Value Act that makes it an obligation to deliver social impact on most public sector contracts (OJEC) – generally around 20 percent of the contract value. In Wales, they are targeting 80 percent! So a construction contract worth say, £500 million, has to deliver £100 million of social value to win it.
ZENIT: Could you describe any other significant social movements taking place, that is if you believe there are any?
Ta’eed: Other significant movements are in complex financial structures such as Social Investment Bonds (SIB). Essentially, a financial bet on a social outcome. We can now pay third sector organizations substantial monies to resolve major problems in our society that have significant attending costs to the tax payer. Repeat offenders, failed children’s care, dilapidating health lifestyles, and so on, all have a financial outcome on the state running into £500,000 to £1 million per person over the lifetime of the intervention. Using payment-by-results mechanisms, we can provide up to 50 percent of those savings to NGO’s that resolve those problems for us. There are many other similar mechanisms in hyperlocality, creating social enterprises from micro-businesses, encouraging localism, etc – too many to many mention today. I am fortunate to be involved in all these initiatives around the world.
ZENIT: Do these initiatives have a common thread?
Ta’eed: The common theme in all of them is the measurement of social value. As the dollar is to financial value, Social Impact is to social value. As with business, if you can’t measure it, you can’t bill it. Enormous progress in Big Data and Sentiment Analysis using social media now enables us to calculate the social value of an organization project or service within 10 seconds without even interacting with the target.
ZENIT: Could you describe the tool you created to measure social impact?
The Social Earnings Ratio (S/E), which I created back in 2011, is now the most rapidly adopted metric in the world supported by a wiki-university approach collaborating to make it into a global offering. We seek nothing less than measuring one billion organizations annually by 2020. The S/E Ratio is the corollary of the single metric financial indicator, the Price Earnings Ratio (P/E); together they provide the total value of any organization with absolute clarity.
ZENIT: Could you describe how feasible it will be to overcome challenges that would impede progress?
Ta’eed: Let’s give an example. The largest unitary authority in Europe, Birmingham, like all major cities and regions, has insufficient funds to deliver non-statutory services to its 1 million people. It has to make savings of £822 million on a budget of £3 billion. What does this mean in reality? It means no parks, libraries, leisure centers, arts, charities, mental health units, community centers, youth centers, disability funding … a scenario the leader of the local government Sir Albert Bore has called the “Jaws of Doom”. They have decided to resolve this shortfall using the Social Value Act, asking the 34,000 companies registered on their procurement portal to deliver social impact in the city postcode if they wish to tender and win contracts from them.
It is brave, it is simple, but very difficult to do. I applaud them in their endeavors and am happy to assist to make it successful. Let us all be brave in our endeavors.