I just finished reading McKinsey’s new white paper, Learning For Social Impact: What Foundations Can Do, recently released by McKinsey’s Social Sector Office.  Not surprisingly, the release of this report coincided with the launch of McKinsey’s new website: Learning for Social Impact.  Although the Learning for Social Impact was chock-full of useful insights, there were two elements that really stood out.

First, McKinsey has created what it calls a “Universe of Initiative Objectives”, which is comprised of two main parts: 1) the six types of social intervention, e.g. the levers one can pull to affect social change; and 2) the four stages of solution development, or the steps one goes through to craft a workable solution to a problem.  The six types of intervention are knowledge development, product/service delivery, capacity enhancement and skills development, behavior change programs, enabling systems and infrastructure development, and policy development and implementation.  These are complemented by the four stages of solution development: frame the problem, develop an approach, demonstrate and refine the solution, and scale and sustain.

Together, these pieces coalesce to create twenty-four “generalized social sector objectives” that map to learning questions that McKinsey has developed to drive assessment planning.   In essence, this means that McKinsey has potentially created a user-friendly road map to impact assessment.  For example, if a program officer could categorize her grantee’s work as behavior change and recognize that the organization is in the demonstrate and refine stage, then she has effectively defined and narrowed the assessment parameters.  Consequently, instead of being overwhelmed by a ‘boil the ocean’ approach, she can begin to shape an assessment plan that is customized to the grantee.  This is not to reduce the act of impact assessment to a game of ‘connect the dots’; in the real world distinctions blur and clarity erodes all too easily.  However, a systematic approach to framing assessment needs and approaches can only help.

The second notable insight is the discussion of risk in the context of social impact assessment.  Understanding whether sufficient social return has been generated for a particular level of risk, and who bears the burden of that risk, raises questions that are both important and intriguing.  It seems likely that funders, social investors, program officers, and even social entrepreneurs engage in some form of risk assessment as they execute their respective functions.  But the risks they face, the trade-off decisions they make, and the compensation they require, remains uncodified. 

Perhaps understanding these dynamics better and communicating them to the social capital marketplace would ease the process of linking investors (who presumably have different risk tolerances) to appropriate investment opportunities (characterized by outcomes the prices of which could be risk-adjusted).