Before you dismiss me as the crazy shoe lady, perhaps I should clarify a bit. As someone who once took a 67 percent pay cut to serve the urban poor, I’ve spent much of my life thinking about ways to maximize social impact. In addition to joining Peter Singer’s campaign to give to the bottom billion, I pretty much donated everything I could get my hands on as a child, at times to my mother’s chagrin: jewelry, jackets, shoes, clothes, toiletries, books, CDs, canned goods, toy, etc. You name it, I probably tried to donate it at one point or another—though I tried most vigorously if the item happened to be, say, my piano workbook.
So I was horrified when I discovered that my donations could sometimes not only fail to help but actually hurt the very people whom I was trying to help. For example, donations of old shoes can not only exacerbate health conditions but also hurt local entrepreneurs by disrupting local shoe markets. Simply put, good intentions aren’t enough, and high-impact giving requires a thoughtful, thorough understanding of concepts such as return on investment, the market landscape and stakeholder analysis.
Ultimately, the desire to fortify my good intentions with quantitative analysis and empirically based decision-making skills led me to Yale, where I could hone these abilities in a context that engages students in achieving both business and social impact. And I realized during class this week that I am getting exactly what I came for.
In my “Managing Social Enterprises” elective yesterday, we were walking through examples of discounted cash flows in social return on investment (SROI) calculations when traumatic flashbacks of first-year finance came back to haunt me. (Terminal values and risk premiums aren’t really my thing; upon being invited last winter to TA for a class on that subject, I emailed my own TAs and asked if the professors were playing a cruel joke. “This isn’t funny, guys,” I wrote.)
Yet, flashbacks notwithstanding, I loved how these concepts facilitate the derivation of enterprise and social purpose values in an SROI analysis. As imperfect and emergent as it is, the SROI analysis marks one step toward identifying high-impact programming and, therefore, informed and effective giving.
In other words, it could mean the metaphorical end of those dreadful old shoe donations…. And I understand how it works!
I couldn’t be more excited. I pumped my fists as I walked out of class. In my non-donated shoes, of course.