Everyone wants to leave a legacy and contribute to something meaningful. Many companies, non-profit organizations, donors or whole countries are asking how to measure social impact and increase it considerably?

The problem is that this question seems to confuse most of people, and it seems to require considerable time investment to get into the details of practicing social impact measurement. Therefore, we need to invest into producing understandable and short explanations, but without the oversimplification. This article claims that it is useful to take an outside view and start with prioritizing the most important problems.

Inside view versus Outside view

Many organizations want to get a stamp of approval that their activities are efficient and have an impact in real life. This need is understandable, but one can start with taking the “outside view” first – and start asking what is the most pressing need in my region, country or globally?

The famous author of Thinking Fast and Slow, a Nobel Prize laureate Daniel Kahneman describes how he failed to estimate how long will it take him and his co-authors to write a curriculum and a text book on the topic of decision making and critical thinking. Their estimates where somewhere between one and three years. But when he prompted a curriculum development expert to think of how long does it usually take to write a text book (and example of an outside view) he paused for a long time and said something shocking: maybe 40% of the teams failed to ever finish the book and the rest took somewhere between 7-10 years. But the same expert gave an estimate in the 1-3 year range, when he took the optimistic inside view.

Exploitation versus Exploration

Many of us are spending most of our days at improving our current activities, projects and daily routines. In other words, we ask how to be more efficient at what we do and how to exploit the skills and opportunities that our current situation and assets allow to make the most of what we have. But we should spend 10-20% of our time in exploration activities – this means learning or unlearning new skills, and “learning to learn” more effectively, or brainstorming brand new projects.

The famous Pareto distribution or Pareto Rule describes how 80% of results come from 20% of effort. The economist, Vilfredo Pareto observed that 80% of land in his home country Italy is owned by 20% of population. Many events and aspects of our world follow similarly uneven distribution.

We could think of e.g. 90/10 split – if we invest constantly 10% of our time in learning and exploration of new opportunities it might bring us 90% of new business and increased results in the future.

It might be difficult to take the outside view on our cherished and long-term “business as usual” project or a cash-cows. But we could start at “the edges of our organization” and invite new thinking and models to explore the possibilities for a greater social impact when planning new and future projects.

This article aims to help with fresh thinking about social impact, but at the same time it aims keep it simple and accessible to any practitioner. We want to explain some tools used by people in the Effective Altruism community that can help us to prioritize our interventions and connect them to Sustainable Development Goals framework.

How much good can you do with an additional euro or person?

Imagine some extreme and hypothetical example: There are only two scientists in the whole world who work on reversing aging - the cause of death for 66% of global population. And they operate on an annual budget of 100,000 euros.

We can suspect that they might be underfunded and would need additional funding to buy more equipment or hire more people. We can also find it strange that there are only two people doing this in the whole world. Maybe all the other scientists already concluded that to reverse aging is impossible, or that it requires tremendous amounts of time and money.

If we take an outside view – a view that an impartial donor or an investor might take, we can ask: How much good would I create if I 1) doubled the budget of those two scientists, 2) found another skilled scientist for them, 3) promoted their work in public, 4) helped them to create a company or NGO, or 5) joined them and worked directly on their research or assist them with operations?

In other words, you can make a positive impact directly with your work and career, indirectly with influencing and promoting the cause, and by donating or investing for the cause. You can also combine these approaches.

The most important realization is that very impactful projects and organizations will be rare and thus Pareto-distributed. It means they don’t follow a normal, Gauss Curve and bell-shaped distributions but a very “long-tailed” distribution (with a few very large outliers – e.g. a project that is 1000x more effective than the median one).

Finding projects with extraordinary impact is like meeting a person who is 200 meters or 20,000 meters tall. Well that is absurd in terms of height, but not in the cases of wealth distribution or social impact or popularity of musicians. Our brains cannot comprehend these differences – but they are nevertheless striking: For example, Oxfam reported in 2017 that the richest 8 people own as much as half of the planet combined.  In a “Pareto World” averages of e.g. wealth size are much less meaningful than medians.

One can find a similar situation in development cooperation and poverty eradication programs. Some economists, such as William Easterly or Ester Duflo, are famous for criticizing development projects e.g. in Africa, where some big farm or a big dam, or any so called “white elephant” flagship projects, is built by foreign donors in cooperation with local authorities. But often the project fails to deliver because of mismanagement or corruption, and sometimes money are siphoned off to Swiss bank accounts. However, these economists criticize maybe the average development project, but discount the fact that some projects might be 1000x more effective than others.

For example, Viktor Zhdanov, a Deputy Minister of Health for the Soviet Union, once proposed a novel idea to World Health Organization – a project to eradicate smallpox from the planet. Despite the Cold War this idea was implemented by an international team of doctors and experts from all around the world and managed by an American, Donald Henderson. The project lasted for 10 years, and the last case of small pox was eradicated in Somalia in 1977.

It was the first disease that the humanity eradicated from earth. And some estimates say that since then the eradication saved around 60 million lives on planet, or 5x more than a hypothetical world peace would save. The program was so cost-effective that if development cooperation didn’t produce any other benefit, only this program, it would be still very cost-effective according to Western standards for costs to save lives e.g. by improving road infrastructure.

Look for the most neglected, solvable and important problems

As we mentioned earlier – there are huge differences between a typical project and an extraordinary project. We can say the same about comparing various problems, some might be much more important than others. For example, over a million people in the world die each year from traffic related accidents, and 4.6 million people die from small particles pollution – this is almost 10x more than people who die from violence globally. And people who die from aging are then again in another magnitude – some 36 million people each year.

I picked up these extreme examples just to make a broader point – in any sector or cause area we can find specific causes or problems that are orders of magnitude more neglected, or more important than others.

Take the cause of animal rights. Around 3400 farm animals are killed in the US for every dog that is euthanized in the animal shelter. But the biggest 90 animal shelters receive together 1.2 billion dollars every year. Compared to that, the biggest farm animal advocacy organizations receive together only 19 million dollars of donations each year. So there is a three orders of magnitude difference between various types of animals who might suffer (dogs and cats vs farm animals) and there is two orders of magnitude difference in funding. If we add importance of the problem (number of animals killed) and neglectedness (annual budgets for these two types of charities), together these would make five orders of magnitude. This is exactly what the ITN Framework does.

ITN Frameworks stands for Importance-Tractability-Neglectedness Framework, and works in a similar way as a Richter earthquake magnitude scale – where the difference between two points is 10x – or one magnitude.

So if you are a donor or a company that wants to conduct a brainstorming session about new future projects and cause areas that would radically increase your impact a good way to start is to rate various problems on these four criteria: Importance, Tractability (Solvability), Neglectedness and Personal Fit (how close it is to your mission, interest or skillset).

In our example above, if you are a person who just wants to decrease animal suffering and you have no preference of dogs or cats above other animals, if you donate towards farm animal advocacy groups your euro or dollar will travel further than if you donate towards animal shelters. Actually much further, like 100,000x further – this difference of five orders of magnitude is so huge that our brains are not accustomed to work with these numbers and we experience something called scope insensitivity – a cognitive bias also described by Kahneman and his friend Tversky.

But what about Solvability? We can ask a simple question and make a very crude estimate – How much of the problem would we solve if we doubled the current funding that goes to those organizations? For example, if we estimate with the 10% probability that doubling the funding for organization that advocate for farm animal welfare, would reduce the number of killed animals by 10% the total expected value is 10% x 10% = 1% reduction in killed animals. But since there are 9.2 billions of farm animals slaughtered in the US alone, it would mean saving 92 million animal lives for another 19 million dollars (doubling the total current budget of organizations that deal with this cause in the US). Or almost 5 farm animal lives saved per dollar.

It needs to be stressed here, that this is only statistical approximation and many people would object to these “cold hearted” calculations. But they are important to help us to combat our cognitive biases like scope insensitivity and allow us to be actually more emphatic to others.

But it is important to understand that our resources in terms of time, attention, career capital and social capital are limited. And there are many opportunities that might produce results that are orders of magnitude more beneficial and socially impactful. An illustration of this thinking is the ranking of Sustainable Development Goals and its targets by Copenhaagen Consensus Center – their economists estimated that e.g. tripling preschool education in Africa would bring 33 dollars of benefit for every dollar invested. Compared to that increasing secondary school enrollment would bring “only” 4 dollars of benefit for every dollar invested.

The pattern in similar rankings is straightforward – it is cheaper to invest early than later – in preschools and primary schools then universities. One can suspect that it is due to decreasing marginal returns – early interventions might produce much more value than if one “comes relatively late to the party” – or to the process of learning.

Again this doesn’t mean that we shall abandon for example the ambitious goal of universal secondary education enrollment – but that preschool is much cheaper and it shall have a larger weight in our portfolio of interventions.

How to scale our solutions exponentially?

If we increase the number of our beneficiaries, people who use our solution or are enrolled in our program, we talk about the breadth of impact. If we talk about improving the quality of their lives, we talk about the depth of our impact.

Increasing the number of beneficiaries is not the same as scaling our impact. Scaling means doing more with less – it implies reduction of costs per every new marginal customer or beneficiary.

For example, in our Sote ICT Clubs in Kenya we had in 2017 around 1000 students at 12 schools and our annual budget for this activity was around 50,000 euros. So the cost per student was very roughly 50 euros. At our Sote Hub in Voi town we had a community of around 50 members who came repeatedly to our events and were interested in developing their own startups and pitched at our competitions. And running Sote Hub also cost around 50,000 euros a year. So the cost per each active member was very roughly 1000 euros.

We have around 500 members who signed up for Sote Hub membership, we also had around 500 visitors who took part at our events in 2017. But still in this case, the cost per member or visitor is around 100 euros.

But how could we provide our services and acquire new beneficiaries 10x cheaper? These questions are crucial if we want to grow exponentially. To scale Sote ICT Clubs or to scale Sote Hubs would mean to find ways to reduce the marginal cost of acquiring new members, opening IT clubs at new schools, or creating a community of entrepreneurs in new towns more cheaply.

One clear answer is to digitize our services more. For example, every lecture we put on youtube can be viewed by many more people than just the event at a particular school or day in Sote Hub.

Another way is to use the pull approach instead of push approach – instead of going to new schools and proposing new Sote ICT Clubs and then equipping them – we can organize more Startup Idea competitions and open them to schools outside our current program. This way we will gain contact to a broader pool of new motivated teachers. And we will pull the teachers and students who are already motivated but lacked means to join our competitions or to create communities that are similar to ours.

The third option is to build a movement of teachers that would self-organize some regular peer learning groups in their towns or villages and start their own new Sote ICT Clubs.

The fourth option is to empower these teachers further by certification to start their own franchise and somehow formalize the informal communities.

The fifth option is to nurture online communities and platforms where e.g. students and teachers compete in innovative content creation or problem-based learning.

The sixth option is to create open source material that can be used by other actors and thus spread our indirect reach.

Out of these options we feel that a greater digitalization, community-building and organizing competitions are the three main elements. We are also particularly interested in a certain time of competitions like X Prize modeled after DARPA tournaments – that aims to produce very concrete solutions that are radically cheaper due to exponential technologies.

If we were to take an outside view – we could spread our program to primary schools where the costs of nurturing digital and business skills might be cheaper and benefits greater. We might also focus more heavily on coding and STEM to bridge the numeracy gaps between rural and elite schools.

But all these options are good candidates when we think how to scale our impact – spread our program to additional beneficiaries but reduce the costs 10x at the same time. This is a challenge that needs radically different ways of thinking and doing.

I will write about why competitions are important for scaling innovation in a follow up article. For now, I wanted to outline ways how organizations could aim to improve their impact by at least an order of magnitude. One way is to focus on new projects that try to solve an order of magnitude more important, neglected or solvable problem. Another one is to look for solutions that scale – and reduce the costs of acquiring new clients, or beneficiaries by an order of magnitude or more.



Author: Jakub Šimek / Pontis Foundation