An Impact Lexicon
Common terminology, concepts, and definitions in the social innovation sector.
An Impact Lexicon
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
achievement gap
According to The Glossary of Education Reform by Great Schools Partnership, the achievement gap refers to “any significant and persistent disparity in academic performance or educational attainment between different groups of students, such as white students and minorities, for example, or students from higher-income and lower-income households….The most commonly discussed achievement gap in the United States is the persistent disparity in national standardized-test scores between white and Asian-American students, two groups that score higher on average, and African-American and Hispanic students, two groups that score lower on average.”
www.edglossary.org/achievement-gap/
additionality
According to Paul Brest and Kelly Born, additionality means that “the investment must increase the quantity or quality of the social or environmental outcome beyond what would otherwise have occurred. The counterfactual is that ordinary, socially neutral investors would have provided the same capital in any event."
ssir.org/up_for_debate/article/impact_investing#
B
B corp / B corporation*
“B corporations are for-profit companies that have received a certification issued by B Lab, a global nonprofit organization. B Lab aims to signal to consumers that certified companies meet rigorous standards of social and environmental performance, accountability, and transparency. B corporation is not a legal form or statute.”
web.stanford.edu/group/circle/csi/ipo/SE_LegalStructure/
See also “certification.”
C
carbon emission scopes / Scope 1, 2, and 3 emissions
The United States Environmental Protection Agency defines carbon emission scopes as follows: “Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles). Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling….Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. Scope 3 emissions include all sources not within an organization’s scope 1 and 2 boundary.”
www.epa.gov/climateleadership/scope-1-and-scope-2-inventory-guidance
www.epa.gov/climateleadership/scope-3-inventory-guidance
carbon offset
The Carbon Dioxide Removal (CDR) Primer defines carbon offsets as “programs or policy regimes in which companies or individuals pay for activities that result in emissions reductions or carbon dioxide removal (CDR). In voluntary offset programs, individuals or companies pay project developers (or similar) directly to implement some activity that results in emissions reductions or CDR. In compliance offset programs, such as cap-and-trade programs, companies that are responsible for large amounts of emissions are allowed to continue to emit above a certain cap in exchange for projects taking place elsewhere that reduce emissions or remove carbon.”
certification*
A certification is a designation an organization might seek out in order to signal commitment to a specific goal. In the social impact space, certifications might be sought to indicate commitment to social or environmental goals regarding food products (e.g., organic, non-GMO, fair trade), paper/wood products (e.g., Forest Stewardship Council, Rainforest Alliance), textiles/apparel (e.g., Made in USA, Fair Trade, Goodweave, Fair Labor), employee friendliness (e.g., Great Place to Work, Just Capital), or overall corporate responsibility (B Corp certification).
web.stanford.edu/group/circle/csi/ipo/SE_LegalStructure/
See also “B Corp / B Corporation.”
collective impact
John Kania and Mark Kramer define collective impact as “the commitment of a group of important actors from different sectors to a common agenda for solving a specific social problem….[which] involves a centralized infrastructure, a dedicated staff, and a structured process that leads to a common agenda, shared measurement, continuous communication, and mutually reinforcing activities among all participants.”
ssir.org/articles/entry/collective_impact#
corporate carbon footprint (CCF) / carbon footprint
A carbon footprint represents the total annual direct and indirect emissions of greenhouse gases — measured in carbon dioxide equivalents (CO2e) — attributable to an organization, based on an accepted carbon accounting and reporting standard (e.g. GHG Protocol).
corporate social responsibility (CSR)
The term corporate social responsibility is often used interchangeably with corporate citizenship or corporate responsibility to describe the social responsibility of business. It is also used more specifically to describe the corporate function whose traditional components include corporate philanthropy and employee volunteering and is often associated with the branding and marketing functions of the corporation.
D
decarbonization
Decarbonization is a general term for processes or actions taken to reduce, remove, and/or eliminate greenhouse gas emission caused by human activities.
design thinking
Design thinking is a set of abilities for creative problem solving. At its simplest it uses a designer's mindset to identify problems or opportunities, and create desirable, usable, feasible, and viable solutions. It uses a human-centered approach to gain deep empathy for those being designed for, and utilizes an iterative process including rapid prototyping and testing to develop successful outcomes (see also “human-centered design / user-centered design”).
Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in 2010, and is considered the most significant federal legislation passed in response to the Great Financial Crisis. The Act was primarily intended to overhaul the US financial system, but it incidentally altered reporting requirements for many public and private entities.
www.investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp
E
earned revenue /earned income
Earned revenue is income generated by public benefit corporations and non-governmental organizations that comes from sources other than donations.
environmental, social, governance (ESG) criteria
“Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.”
www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp
equity
Equity is a fairness principle that recognizes how different access to opportunity, networks, or resources determines outcomes for individuals and accommodates for such differences in order to change the status quo. It is different from equality, which, while also about fairness, assumes similar starting places and involves treating everyone the same regardless of where they start. Other approaches to equity focus on “proportionality,” or ensuring that people get what they deserve. In the social sector, the manifestation of equity is often the purposeful allocation of resources (e.g. opportunity, networks, funds, time, support, etc.) in a way that eliminates disparities in desired outcomes.
externalities*
“Consumption, production, and investment decisions of individuals, households, and firms often affect people not directly involved in the transactions. Sometimes these indirect effects are tiny. But when they are large they can become problematic—what economists call externalities.” Externalities can be either negative (e.g., someone who pollutes impacts others’ quality of life) or positive (e.g., research and development activities taken on by one organization benefit others).
www.imf.org/external/pubs/ft/fandd/basics/external.htm
F
Financial Accounting Standards Board (FASB)
The Financial Accounting Standards Board (FASB) is “the independent, private-sector, not-for-profit organization...that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the U.S. Securities and Exchange Commission as the designated accounting standard setter for public companies.”
G
Global Reporting Initiative (GRI)
“The Global Reporting Initiative (known as GRI) is an international independent standards organization that helps businesses, government and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.”
en.wikipedia.org/wiki/Global_Reporting_Initiative
Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard
“The Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard provides requirements and guidance for companies and other organizations preparing a corporate-level GHG emissions inventory.”
https://ghgprotocol.org/corporate-standard
H
human-centered design / user-centered design
Human-centered or user-centered design is often used interchangeably with design thinking (see “design thinking”). When it is distinguished from design thinking, it usually refers to the interactions between designer and end-user that occur during a problem definition and solution development process, including user empathy and engagement, problem or opportunity definition, solution co-design, prototyping, and testing.
hybrid / hybrid incorporation models*
“Hybrid incorporation models mix for-profit and charitable purposes in the same entity. Common hybrid models include for-profit companies that seek to create positive social benefit in addition to profitability and nonprofit organizations that focus on earned income strategies.”
Three common examples of hybrid forms are:
- L3C - “A ‘low profit, limited liability company’....meant to provide greater ease for securing program related investments and attracting philanthropic capital by pre-clearing the charitable purpose.”
- Social Purpose Corporation (SPC) - “A type of for-profit entity in some U.S. states that enables corporations to pursue a specific social or environmental purpose in addition to profit-maximizing goals.”
- Benefit Corporation - A for-profit entity that is “required to achieve a fixed standard ‘general public benefit’ on the environment and society as measured by an independent third-party standard, and can also pursue specific public benefits.”
web.stanford.edu/group/circle/csi/ipo/SE_LegalStructure
I
impact investing
The Global Impact Investing Network defines impact investing as the act of making investments “with the intention to generate positive, measurable social and environmental impact alongside a financial return.”
impact measurement
Impact measurement is identifying and considering the positive and negative effects that an innovation or organization has on people and the planet (based on a modification of a definition by the Global Impact Investing Network).
indirect impact
Indirect impact is impact that is not directly attributable to a firm’s operations, including the delivery of its products or services. In the case of an entrepreneurial enterprise, the most significant indirect impact may be the creation of an entirely new market.
L
lean startup methodology*
Lean startup methodology is an approach to starting a company that reduces risk by “favor[ing] experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional ‘big design up front’ development.”
Lean startups create a series of “minimum viable products” (MVPs) to gauge user interest and “pivot” the product or service based on user feedback (which is often gained through human-centered design practices). This methodology was first popularized by Eric Ries’ book The Lean Startup and Steve Blank’s book The Four Steps to the Epiphany.
hbr.org/2013/05/why-the-lean-start-up-changes-everything
O
opportunity gap
An opportunity gap results when there is significant and persistent disparity in conditions, resources, effort or activities that causes a disparity in outcomes for different groups. In education improvement efforts, this term is sometimes used instead of "achievement gap" to focus on adults, policies, practices, or systems rather than student factors.
P
patient capital*
Patient capital is “debt or equity investment capital with a long-term investment horizon of seven to 12 years, a high tolerance for risk, and a goal of maximizing both social and financial returns.” Patient capital was first used as an investment approach by Acumen, led by GSB alumna Jacqueline Novogratz, Founder and CEO.
acumenacademy.org/blog/impact-capital-funding-your-social-enterprise
philanthropist
A philanthropist is anyone who gives anything — time, money, experience, skills, and networks — in any amount to create a better world.
program related investments (PRI)
The United States Internal Revenue Service defines program-related investments (PRIs) as “those in which: 1) the primary purpose is to accomplish one or more of the [investing] foundation's exempt purposes, 2) production of income or appreciation of property is not a significant purpose, and 3) influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.”
www.irs.gov/charities-non-profits/private-foundations/program-related-investments
R
randomized control trial (RCT) or randomized evaluation
The Abdul Latif Jameel Poverty Action Lab (J-PAL) defines randomized evaluation as “a type of impact evaluation method. Study participants are randomly assigned to one or more groups that receive (different types of) an intervention, known as the ‘treatment group’ or groups, and a comparison group that does not receive any intervention. Researchers then measure the outcomes of interest in the treatment and comparison groups.
Randomized evaluations make it possible to obtain a rigorous and unbiased estimate of the causal impact of an intervention; in other words, what specific changes to participants’ lives can be attributed to the program. They also allow researchers and policymakers to tailor their research designs to answer specific questions about the effectiveness of a program and its underlying theory of change.”
www.povertyactionlab.org/resource/introduction-randomized-evaluations
S
scale
Scale is the process of realizing the greatest possible impact of an innovation, so that it matches the level of its societal need and maximizes its potential. A variety of strategies may be used to that effect, including growing an organization, replicating a model, partnering with the government, influencing regulations, or changing cultures and norms.
social enterprise / social venture
Social innovation practitioners use social enterprise in one of two ways: either broadly to designate the human pursuit of social progress, or more narrowly to describe an organization, either for-profit or nonprofit, that pursues social and environmental goals. In situations involving trade-offs, the social mission guides decision making. For-profit social enterprises maximize social impact alongside financial return, whether as a concession to profitability or in addition to market-rate returns.
Social ventures are organizations (for-profit, nonprofit, or hybrid) whose primary purpose is to solve a social or environmental problem to benefit society as a whole. The cost of operations are offset, as much as possible, through income earned by the venture. A social venture may be structured as a nonprofit, a for-profit, or as a hybrid structure.
social entrepreneur / impact entrepreneur
Impact professionals use the term social entrepreneur in one of two ways: The first one designates a person who pursues an innovative solution to address a social problem regardless of the form the solution might take. The second describes a person who establishes a social enterprise as a means of addressing social problems or effecting social change. Impact entrepreneur can be used interchangeably with social entrepreneur to refer to entrepreneurs concerned with social or environmental issues.
social entrepreneurship
Roger L. Martin and Sally Osberg define social entrepreneurship as having “the following three components: (1) identifying a stable but inherently unjust equilibrium that causes the exclusion, marginalization, or suffering of a segment of humanity that lacks the financial means or political clout to achieve any transformative benefit on its own; (2) identifying an opportunity in this unjust equilibrium, developing a social value proposition, and bringing to bear inspiration, creativity, direct action, courage, and fortitude, thereby challenging the stable state’s hegemony; and (3) forging a new, stable equilibrium that releases trapped potential or alleviates the suffering of the targeted group, and through imitation and the creation of a stable ecosystem around the new equilibrium ensuring a better future for the targeted group and even society at large."
ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition#
social impact
Social impact is the change (either positive or negative) for people and communities which happens as a result of a deliberate activity or service. The term is sometimes used as the reflection of social and environmental outcomes as measurements.
social impact bonds / pay for success bonds
“A social impact bond is a contract with the public sector or governing authority, whereby it pays for better social outcomes in certain areas and passes on the part of the savings achieved to investors. A social impact bond is not a bond, per se, since repayment and return on investment are contingent upon the achievement of desired social outcomes. If the objectives are not achieved, investors receive neither a return nor repayment of principal. SIBs derive their name from the fact that their investors are typically those who are interested in not just the financial return on their investment, but also in its social impact.”
www.investopedia.com/terms/s/social-impact-bond.asp
social innovation(s) / social innovator
Social innovation is the process of developing and deploying effective solutions to challenging and often systemic social and environmental issues in support of social progress. Social innovations may result from that process in the form of products or services that (a) present a significant or disruptive change in model or approach; (b) provide for the most vulnerable, or low-resourced communities; (c) will have enduring and sustained positive impact. Social innovators are those who undertake social innovation, whether as individuals or organizations. They may rise from any sector and, as a matter of fact, most social innovations involve some form of multi-sector collaboration (across public, private, and social sector organizations).
social progress
Social progress, as defined by the Social Progress Imperative, “is the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”
www.socialprogress.org/index/global/methodology
social sector
When used in contrast to the public and private sectors, the term social sector includes those organizations and enterprises whose primary focus is social impact and are neither public nor private sector organizations, including but not limited to nonprofits and non-governmental organizations (NGOs), research and academic institutions, and philanthropic organizations. The term is sometimes used more broadly to designate all organizations created with the intention of producing a societal benefit regardless of sector.
social value
Social value is the value accrued to society (as opposed to a private individual) that results from activities by a variety of actors such as businesses, social enterprises, philanthropists, governmental agencies, or non-governmental organizations (NGOs).
Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) is “an independent nonprofit organization that sets standards to guide the disclosure of financially material sustainability information by companies to their investors. SASB Standards identify the subset of environmental, social, and governance (ESG) issues most relevant to financial performance in [multiple] industries.”
T
theory of change
A theory of change is a comprehensive, research-based description of how a social innovation will actually achieve the desired impact. It includes a series of cause-and-effect relationships that map the multiple, intermediate steps by which a social innovation achieves social impact.
V
value chain
A value chain is an analytical framework that describes the full range of activities needed to create a product or service, usually comprised of defined steps or stages that describe the journey from research and ideation, to distribution at scale.
value proposition
The value proposition is the value an innovation or enterprise promises to deliver. A social value proposition tells stakeholders how the solution will serve current and unmet needs, what benefits it will provide compared to other solutions, and what impact it will have on a community.
venture capital
Venture capital is “a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.”
Courtesy of Frontiers in Social Innovation
This glossary has been provided courtesy of the co-authors of the forthcoming volume Frontiers in Social Innovation, expected for publication in 2021.
The volume’s co-authors, a selection of Stanford University leaders in social and environmental innovation, compiled a glossary of terms to supplement the book, using both their own definitions and those of other sources they frequently cite in their teaching and practitioner roles.
The terms noted with ✳ do not appear in the original glossary and are supplemental terms commonly used in the social innovation space.
Contributors
Neil Malhotra (Editor), Laura Arrillaga-Andreessen, Gordon Bloom, Matt Bannick, Paul Brest, Bernadette Clavier, Stephen Comello, Stuart Coulson, Steve Davis, Colleen Honigsberg, Suruchi Kothari, Gloria Lee, William F. Meehan III, Sevda Memet, Julia Reichelstein, Stefan Reichelstein, Sara Singer, Kim Starkey, and Rob Urstein
Glossary compiled by Liz Peintner