Impact Research and Accounting – Solve For Impact
This week Ecotone had the opportunity to participate in an effort to collect agency data on employee diversity. Even though we are a small start-up, we believe in the value and ethics of an equitable and diverse workplace. As we grow, we will commit to a hiring strategy that emphasizes diversity on our project teams and in our decision-making and leadership.
See https://600andrising.com for more information.
Below are our current numbers as of June 18th, 2020.
Financial planning and knowledge have the potential for major social impact. They can help people achieve long-term stability, pursue higher education or entrepreneurial dreams, save to own a home or buy a wedding ring, and build prosperity for their families and communities.
But financial planning is typically reserved for those who already have significant wealth. And financial literacy education is often dry and disconnected from people’s actual lives. Even financial planners who strive to be accessible to those with lower income — like Isaiah Goodman, who set out to do that with his firm Becoming Financial — can only help so many people through traditional planning services.
That’s what inspired Isaiah to create MoneyVerbs — a tool that can serve millions of people at once, while weaving financial skills into their daily lives and using gamification to make it fun. The name “MoneyVerbs” refers to people taking actions for financial success.
As MoneyVerbs ramps up to launch, they hired Ecotone Analytics to quantify the platform’s potential impact — the value of this financial training and support, both for individuals and at the society-wide scale that the app makes possible.
Based on research, here’s what we found: A $1 million seed investment in MoneyVerbs is projected to yield up to $45 million in social impact return. For employers who offer the app to their employees as a benefit — one of the audiences that MoneyVerbs targets — we project a social return on investment of $2 for every $1 invested.
While Isaiah “had a hunch” about MoneyVerbs’ value, he was pleasantly surprised by the projections and excited to keep growing the platform for greater impact. How many more people could be positively affected once the app is available in Spanish, or if it adds training about the financial system in China?
“We really could change the world,” Isaiah says. He points out that financial limitations often prevent people from working to make a difference on issues like climate change. “If an entire generation of people over the next 25 or 30 years could improve their financial skills, they might be able to solve other problems.”
That kind of long-term impact has never been measured for this issue — when Ecotone conducted this analysis, we found very limited research on the long-term, multi-year effects of financial literacy training. For Isaiah and MoneyVerbs, that gap is an opportunity: They’re partnering with the firm Research In Action to track the effects of using MoneyVerbs on people’s lives over time.
“What we’re hoping to do and be able to encourage is to see the domino effect, the generational impact,” Isaiah says.
For now, the impact value calculation done by Ecotone is an important tool for securing investments and partnerships as MoneyVerbs launches.
“We can go to an employer and say, ‘Here’s what we’re predicting for your workforce if you offer this as a benefit,’” Isaiah says. “We think this will help your employees buy the house they want, or save for retirement, or take care of their families.”
Once MoneyVerbs launches, they will be able to use Ecotone’s valuation as a benchmark as the projected impact comes to life.
“I think it’ll knock people’s socks off to hear people say, ‘Once I took control of my finances, I was able to do all this other stuff,’” Isaiah says. “Now these communities will be better off because they’re better with money.”
They offer mentorship and custom training to help participants advance in their careers, and to combat the field’s race and gender disparities.
We used evidence-based analysis to measure Transcend IT’s impact and determine the social return on investment in their programs. The result of our research and accounting:
For every $1 spent on Transcend IT’s training programs, there is a $6.58 social return on investment.
Our Impact Value Summary illustrates how their work creates value for not only program participants, but also their dependents, society, and taxpayers:
This analysis will be refined in the future as Transcend IT develops a longer track record, serves more individuals, and continues to develop their data collection processes.
Transcend IT is positioned to support people experiencing barriers to employment and to address disparities, while providing access to career opportunities that have the potential to transform a participant’s life.
Ready to measure the value of your social impact? Contact us.
Face It TOGETHER offers coaching for people with addiction and their loved ones.
They partnered with us to understand the impact of their programs, and to use evidence-based analysis to measure the value of that impact.
The result of our research and accounting:
For every $1 spent on coaching people with addiction, there is a $12.40 return on investment.
We also mapped the organization’s impact value to show how recovery coaching benefits not just the individual, but their loved ones, their employer, taxpayers, and society as a whole.
Now, Face It TOGETHER can use this impact value map to encourage investment in their programs:
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Corporations and startup enterprises face increasing pressure to report on their social and environmental impacts — and many know that it’s good for their reputation too, not to mention the right thing to do. However, much of today’s impact reporting focuses on documenting the past, not predicting and managing risk for the future.
Most reporting falls under “environmental, social, and governance” (ESG) evaluation, using checklist-style standards to evaluate companies’ behavior. Another common evaluation is the B Labs assessment for what are known as “benefit corporations.” These approaches essentially require businesses to operate with a 2010s standard of decency — having women and people of color in leadership positions, being aware of how their supply chain affects workers and the environment.
These are truly important innovations in contemporary business, but what about the businesses who want to go beyond avoiding negative impact, and have an intentionally positive contribution to society and/or the environment?
At Ecotone, our goal is to measure those businesses’ positive contributions by:
What does this look like in practice? Here’s an example of how we communicate an organization’s impact value, with info design by our partner Background Stories:
We predict that once organizations have quantified and summarized their potential impact value, they will be able to communicate it as they seek funding, customers, and key partnerships.
Interested in learning more about how this works, and how it could work for your business? Contact Ecotone’s Ted Carling at ted@ecotone-partners.com.
Further reading:
The Investor’s Impact Matrix from the Impact Management Project: http://www.impactmanagementproject.com/investor-impact-matrix/
This framework is designed to help investors measure their portfolios’ effects on people and planet. It categorizes enterprises by whether they: