Earlier this year, our company was commissioned to develop an investment evaluation framework for a group of high net worth individuals who were exploring the development of an ecolodge in Rwanda as a means of addressing, at least in part, the social challenges stemming from the genocide and the ecological stress of decades of environmental neglect plus the repatriation of survivors to previously unoccupied areas that lack the necessary carrying capacity to rebuild communities.    

Depending on how you read it, that last paragraph describes either a worthy attempt to use commerce and local assets to help solve a social problem or a grandiose vision that seems unattainable even with the best of intentions. As such, there are a few key questions you might be asking yourself:

1) What on earth is an ‘impact evaluation framework?’
2)    How does one set boundaries around this almost limitless challenge?
3)    Can a single ecolodge really make any difference to the people and ecology of a devastated country like Rwanda?

What on earth is an ‘impact evaluation framework?’
Think of this as social and/or environmental due-diligence. Any seasoned traditional investor will undoubtedly research the company s/he is about to give money to or the NGO about to get funding. They’ll base their decision to invest on some expectations of past performance, expected future returns, etc. What is often missing from those investigations is to what extent does this investment help or hurt local communities and ecosystems (excepting government-mandated environmental impact assessments). As social investment—financial relationships designed specifically to benefit people and planet— continue to grow, this type of evaluation becomes exponentially more important.

For our ecolodge project, SVT developed what we call the “ECOframe”- the Ecolodge Choice and Evaluation Framework. The Framework gives investors/funders/donors a linear process by which to determine their own priorities, evaluate opportunities, set expectations and ultimately create a dialogue with their investees/grantees.

How does one set boundaries around this almost limitless challenge?     
This question has no easy answer, though one is absolutely required for any social enterprise regardless of issue area, geography or financial structure. Answering this question allows an organization to set goals, prioritize them, manage to them and ultimately produce continually increasing social and environmental returns.

You have likely heard the saying “what gets measured gets managed.” While that may be true, it is only half the story. Einstein’s view on this helps paint a much cleaner picture, as he is usually credited with saying, “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” Thus, it is critical to first determine what matters enough to be measured, then what from that set of things can be measured and finally what should be managed to ensure maximum positive impact for the resources available.

For the ECOframe, we developed a defined process for determining what information should be collected and can be managed to. This process clarifies characteristics about the addressable challenge, the value the project can (and cannot bring), the primary and secondary stakeholders, key indicators for tracking social value, and quantifying and analyzing results.

Going through these steps adequately allows both the investor and the enterprise itself to clarify goals, assess the value created/to be created, include key stakeholders, continually improve impact and ultimately to tell a story. Of course there is an art to each of these steps...

Can a single ecolodge help the people and ecology of a devastated country like Rwanda?
This third question is a fair one and must be asked of any impact-driven investor, funder or ground-level manager/implementer. It is true that the answer might be no. That is ok. This is the equivalent of market research for a new consumer product and is critical for any endeavor. Supplier passions alone do not drive market demand.  But, by running a project through a process like ECOframe, it is possible to not only determine if positive impact will be made, it is further possible to allow managers to set expectations of impact and work to continually improve upon them, thus simultaneously maintaining control and having an open dialogue with project supporters, thus shifting the focus from ‘all or nothing’ results to management skill and growth.

For the Rwanda ecolodge, we were able to determine that should the lodge be built, it would indeed benefit the local community and ecology in the ways in which it could control—namely through employee hiring practices/wages, access to healthcare and education for families of staff, energy efficiency/composting/construction materials, etc. Can this one ecolodge truly solve the tremendous social and economic strains in the area? No. Should its success be judged by its ability to do so? No. Can it help improve conditions and act as an example for similar social investments in the area? Absolutely.    

In our next post, we’ll address a fourth question that may be on your mind… are all investors the same and if not (they’re not), how do tools like ECOframe accommodate their differences?