The performance of a social sector organization is ultimately measured by its ability to create and sustain social impact.1

Sustainable Social Impact

“Sustainable social impact,” meaning enduring social impact, is a frequently used term in social enterprise literature and jargon. In some camps, creating sustainable impact is linked to institutional and financial sustainability; the underlying assumption is that if an organization exists in perpetuity its impact is sustained. In the context of this paper, however, and for the purpose of informing social enterprise methodology, sustainable impact, has everything do with solving a social problem or market failure. In other words, when a social problem or market failure is resolved, continued impact is achieved because the problem ceases to exist.

Does that mean that the concept of creating a sustainable institution is in conflict with solving a social problem? Not necessarily. In most cases solving social problems is a long-term proposition requiring systemic change that can take generations to realize. Working toward the resolution of a social problem may require rendering ongoing social services through a sustainable institution over many, many years. In many cases the social enterprise becomes a permanent fixture, a “third sector” institution in the landscape of private, state and civil society. Nonetheless, it does mean that a social enterprise must plan formal exits or reinvent itself to address new problems as old ones fall away. Here, it is relevant to consider Maslow’s Hierarchy of Needs,2 and how the nature of human need evolved: as “base” physiological and safety needs are met, a person moves up the pyramid toward self-actualization. Hence, once one problem is solved, another one often surfaces, so new opportunities continue to present themselves.

Beyond Financial Sustainability

“Private sector practices” in social enterprise are borrowed from the commercial business and pertain to financial profit-making activities. However, for a social enterprise whose goals are to sustain social impact as well as its own existence, sustainability is a good deal more complex than simply earning money. Also, lest we not forget, one role of the social sector is to mitigate or undo harm to society, the environment, and its people, some of which is the result of unsustainable behaviors of the private sector. To fully appreciate sustainability in the context of the social enterprise, one must consider the three interrelated aspects that enable a social enterprise to become self-sustaining: financial sustainability (the ability to generate income to cover expenses), institutional sustainability (organizational capacity to execute and compete in the market) and sustainable environmental practices (the use of renewable materials, energy and processes that do not ravage the environment). A social enterprise combines at least financial and institutional forms of sustainability, and often environmental sustainability, to create and sustain social impact.

  • 1This particular understanding of the concept of performance must be accepted for the framework to be relevant.
  • 2Maslow, Abraham, A Theory of Human Motivation, Psychological Review, 1943.