What Is Social Impact?

A Dictionary of Terms Related to Community Investment

Social impact is instrumental in our current society. We hear about it and the terms surrounding it all the time, but what is social impact? And what about all those other terms like changemaker, angel investor, and sustainability? It can be difficult to navigate a world of buzzwords and lingo, but this dictionary should help you!

Advocacy is the act of generating support for a cause. This support can be of a public nature such as political advocacy or legal advocacy.

An angel investor is a financial investor, typically a wealthy individual, who funds an economic opportunity in return for ownership in the enterprise.

Beneficiaries in terms of social impact refers to the people or groups that are receiving or are meant to benefit from the project.

Capacity Building is when those working on the development of an idea or business train community members to do development-related activities. Think of this as building the capacity of the community to meet its own needs.

Capital, in economic and financial terms, refers to wealth which can be accumulated through properties, assets or money.

A changemaker is a person who desires and is actively working towards positive social change.

Co-ops, or Agricultural Cooperatives, are groups of farmers who pool their resources into one company in order to benefit the whole group. This allows them to share profit and risk among the community.

A community is any group of people with something in common. Typically, we consider the common thread that ties communities together to be geography, but communities can also be formed around a common belief system or trait.

Community development is when a community experiences growth. Growth, or development, can occur on many fronts: socially, economically, or with infrastructure.

Corporate social responsibility has become more common in this age as some corporations add a moral component to their operations. This can take many forms, such as partnering with local nonprofits, donating funds or products, or examining the supply chain to ensure any output is produced ethically.

Crowdfunding is a type of fundraising that relies on smaller donations from large numbers of people.

Development banks are banks which are backed by one or several governments and used to fund development projects and organizations.

Environmental sustainability is concerned with using resources only at the rate at which they can be replaced. For non-renewable resources, the focus is on finding alternatives to use.

Experiential learning simply utilizes both experience and reflection on that experience to gain knowledge. An example would be a workshop in which you have an activity and then discuss what you learned with a group.

A foundation is a type of charitable organization that receives a portion of their funding from an endowment, or money gifted for a specific purpose. Foundations are often funded by a for-profit business which channels a portion of the profit to the foundation.

Fundraising is the act of gathering financial donations for a charitable cause.

A grant is money given by a government or organization for a specific cause.

Grassroots comes from the concept of starting from the ground up. It refers to an organization or movement which begins with local people and community leaders working to improve their community.

Green tech, sometimes referred to as clean tech, is technology developed with an ethical supply chain, meaning that all the many parts that make up the end product don’t use exploitative labor or environmentally harmful practices.

An impact assessment measures the results of a project. Data are ideally gathered before, during, and after the project, then run through a statistical model to determine what changes (whether positive or negative) can be attributed to the project, and what changes occurred by other means.

Impact investing occurs when investors choose to place their money in opportunities that create positive change in society.

Key Performance Indicators (KPIs) are measurement points assigned to a project to determine progress. This ideally takes place before the project begins.

Microfinance, or sometimes microcredit, refers to small loans given to individuals and businesses in poverty in order to substantially improve lives and stimulate the local economy.

The Millennium Development Goals (MDGs) (also see Sustainable Development Goals) were developed by the United Nations in 2000. Members of the United Nations pledged to work toward eight humanitarian-focused goals with a deadline of 2015. These goals are to:

• Eradicate extreme poverty and hunger

• Achieve universal primary education

• Promote gender equality and empower women

• Reduce child mortality

• Improve maternal health

• Combat HIV/AIDS, malaria and other diseases

• Ensure environmental sustainability; and

• Develop a global partnership for development.

A needs assessment is conducted to determine what the needs of a business or community are.

An NGO, or non-governmental organization, is any organization that operates independently of any government. While typically non-profit, they can be a for-profit company and can operate either domestically or internationally.

A nonprofit organization, sometimes referred to as a 501(c)3, is a tax-exempt company with a charitable purpose.

A philanthropist is a person who is involved in charitable causes, typically by donating funds.

Pro bono refers to legal advice or an action given at no cost.

Quantitative impact refers to quantifiable changes (whether positive or negative) in the state of aspects of life which are easily counted. Examples of these are assets, income, shelter, and family size.

Qualitative impact refers to changes (whether positive or negative) to the state of aspects of life for which we are primarily concerned with quality and are not as easily measured. These include happiness, support, and self-esteem

Recycling is the act of taking a product which would otherwise be waste and using its basic elements to construct a new product.

Renewable energy is any energy production process that can be replicated indefinitely. Some examples of renewable energy are wind and solar.

Rural geographic areas have a low population density, or fewer people. Rural areas face unique challenges in distributing social assistance as people generally live farther away from social resources, and there tends to be less developed infrastructure. (Also see urban.)

Social impact refers to the result or impact of an organization’s actions on the community. Although social impact is more often used to mean positive change, it can refer to negative impact as well.

The social sector refers to all of the businesses, organizations, and activities related to improving society.

Stakeholders are people or businesses who have a vested interest in the outcome of a project but are not the beneficiaries of that project. These people can include community leaders, local business owners, or government officials.

Sustainability is the act of creating products without draining existing resources. While many products require using resources, sustainability requires finding a way to contribute back to those resources.

The Sustainable Development Goals (SDGs) were released by the United Nations after the 2015 deadline of the Millennium Development Goals. The Sustainable Development Goals, like their predecessors, have a 15-year cycle with a deadline of 2030. These further-reaching goals are:

• No poverty

• Zero hunger

• Good health and well-being

• Quality education

• Gender equality

• Clean water and sanitation

• Affordable and clean energy

• Decent work and economic growth

• Industry, innovation, and infrastructure

• Reduced inequalities

• Sustainable cities and communities

• Responsible consumption and production

• Climate action

• Life below water

• Life on land

• Peace, justice and strong institutions; and

• Partnerships for the goals.

A theory of change, also called a theory of value creation or logic model is necessary for every project. A theory of change states what the desired change is, and how it will be achieved.

Urban areas are geographic areas with a high population density, or lots of people. While those who live in urban areas are geographically closer to social resources, they can suffer from greater pollution, over-crowding, and stiff competition.

Women empowerment is the movement which leverages education, awareness and economic programs with the goal to raise women to a point of equality with men around the globe.

Have a story about your own experience with community investment? Tell us about it in the comments.