The case for a values-oriented approach to impact

Can we do good, better?

By Vincent Sanchez-Gomez
In collaboration with Elizabeth Lepro

Suppose you’re trying to be a better friend.

You identify some goals you associate with goodness in friendship, including comforting your friends more often. But how can you evaluate your success toward this goal? You need something tangible to measure. You notice qualities like comfort, warmth, and support are typically associated with hugging. So, you think, if I give more hugs, I become a better friend, I improve my friends’ lives, and we’re all happier for it. More hugs = more good. 

There are some obvious flaws in this logic. To begin with, there are innumerable ways to quantify comfort, warmth, and support. “More hugs = more good” assumes that everyone experiences hugging as a sign of friendship; it fails to account for the actual experience of the person you’re hugging. It also assumes there’s no limit to how many hugs make you a better friend.

Your intentions may be sincere, but the metric you’ve chosen doesn’t require sincere intentions. What if someone who was only interested in appearing to be a better friend replicated your model? They could force hugs onto those who don’t want them or pay off others to give hugs on their behalf. The “more hugs = more good” logic crumbles when applied to new contexts and used by disingenuous actors.

If this example seems absurd, that’s because it obviously isn’t possible to judge a person’s impact on others by one or a set of predefined, universal goodness metrics. As a business owner, I don’t think it’s possible to judge a company’s impact that way, either. 

I co-founded a design and technology studio that creates websites, apps, branding, strategy, and other solutions for mission-driven clients. We define impact by the influence we have on people, the environment, and the industries and communities in which we work. I want, like many people, to make a positive impact on the world, and I think of my business as a vehicle for activism. 

For about as long as my company has existed—just over five years—I’ve been thinking about how to sincerely assess its impact, and I’m not sold on the conventional approaches. 

Introducing the Three Complexes

Before we jump in, let me clarify that there are a few terms used within the impact field to describe slightly different but related processes, including impact measurement, evaluation, management, and assessment. I’m using “impact measurement,” as an umbrella term to refer to the ways we assess an organization’s influence on society. I’m far from the first person to question the right approach. 

Impact measurement has a long, and sometimes muddy, history. Over time, policymakers, investors, and researchers have produced a litany of methods to evaluate the results of positive changemaking efforts. To name just a few: IRIS+  is a framework for impact investing; theory of change models guide nonprofit program and social policy evaluation; and the B Corp Certification is one of the most well-known certifications for modern for-profit businesses interested in social benefit. There’s some utility to each of these methods. But when it comes to assessing the impact of businesses like mine, I see a slew of dead ends.

I’ve observed three logical fallacies at work within the field of impact measurement: an over-reliance on quantitative metrics, a rigid definition of scale, and a tendency to compartmentalize rather than effect meaningful systems change. For ease of explanation, I’ve created labels for each of these fallacies, which I call complexes. My company works with clients in the for-profit social enterprise sector and with nonprofits, and the insights I’ll share here are applicable to both types of organizations. 

• The Quantitative Complex encourages organizations to condense their impact—a beast of varying dimensions—into a narrow set of variables. These are typically statistics, like “people served,” “dollars donated,” or, to return to our earlier example, “hugs given.” Over time, the original values-based goal (becoming a better friend) is replaced with a metrics-based goal (give one million hugs). 

• The Scale Complex comes into play once those metric goals are defined. Growing impact becomes a matter of scaling metrics: doing good means doing more. The organizations that then appear to be the most impactful are those that make their numbers (i.e. hugs given) rise the highest and fastest. 

• The Compartmentalization Complex describes the church-and-state separation between how organizations—especially capital-rich corporations—do business and how they do good. The values that drive an organization’s philanthropic initiatives are often ignored when it comes to their business strategy. When organizations can afford to pump up their impact metrics, they can ignore the harm they do in terms of worker exploitation, and environmental destruction. Achieving impact, for these organizations, doesn’t require any values-oriented operational changes because their charitable giving appears considerable. 

I’ve given some thought to a different system, one that doesn’t rely on pre-defined metrics, growth, or compartmentalization. In this system, a company defines its values and internalizes them—meaning, it makes those values central to the incentives and culture that drive organizational behavior. Then every decision—from the smallest business decisions, like where to order office supplies, to the largest, like which clients to work with—creates an opportunity for impact evaluation. 

To return to the hug example (for the last time, I promise). Rather than saying My friend is crying, so I have to hug them, a values-based impact framework requires that we first ask a series of questions: Because I value friendship, supporting my friend is my goal. So, what are the circumstances making my friend upset? Does my friend actually want to be hugged right now? Am I trying to comfort my friend or am I trying to meet a hug benchmark? These questions acknowledge that impact doesn’t happen in a vacuum. They may even lead to a seemingly counterintuitive result: Maybe hugging your friend, in this instance, isn’t the most impactful choice. Maybe what your friend really needs is space. 

But enough about hugs. Let’s dive into each of the complexes.

The Quantitative Complex

Impact, in both nonprofits and for-profit entities, is often tied to a mission statement, a vision statement, a set of organizational values, and/or a “commitment to corporate social responsibility.” 

These broad mission-type statements are usually based on an organization’s core principles and values such as diversity, sustainability, accessibility, and transparency. In the case of for-profit entities, implementation of these values is tied to marketing, shareholder reporting, and annual budget planning. For nonprofits, implementation is similarly tied to donor engagement, grant funding, and board reports. Most organizations have to tell stakeholders exactly how impactful they’ve been, usually in relation to the money spent generating that impact. To make these reports, organizations reduce impact to surface-level quantitative metrics, which then become quarterly or annual goals.

Most organizations acknowledge the shortcomings of a purely quantitative approach and attempt to balance qualitative data (like survey feedback) with quantitative data (like number of people served per year). But I’ve noticed that even with this balance, the original purpose of the goal becomes obscured by the need to report progress toward the goal. The goal to be more sustainable, for instance, might become a matter of how much an organization recycles in a quarter.

The pressure to collect reportable data clouds strategic decisions over time, forcing outcomes to align with pre-planned metrics, even when conditions and expectations change. Meeting the impact goal becomes its own goal, divorced from its initial purpose. This is also called metric fixation.

Encourages metric-gaming

Here’s a situation where this complex might apply to my company: A nonprofit dedicated to ending food insecurity in Chicago hires us to design and build its new website. One of the organization’s goals in creating the new website may be to “increase awareness” around the issue of hunger and food deserts in the city. With good intentions, it may seem like “increasing unique website traffic” is a fitting impact-related metric; more new people coming to the website = more people “becoming aware” of the issue. 

There are numerous ways we can help the organization increase traffic without aligning with the values and foundational purpose of the organization. We could spend a lot of time on Search Engine Optimization, or SEO, which means doing everything we can to get the website to show up at the top of Google searches, and often requires re-writing copy to include certain keywords. We could suggest that the organization pay for ads on social media that draw people in using flashy images and dramatic language. 

If we employ those strategies and 5,000 more people visit the new website in the month after it launches than had visited the month before it launched, we would have technically met the impact metric. But did we actually make an impact in terms of raising public awareness of food insecurity in Chicago? Not necessarily. What we did was game the internet—a solution that doesn’t ultimately contribute to ending hunger in Chicago (or anywhere).

Wouldn’t one person visiting the nonprofit’s website to actually read its articles and engage with its research be more impactful than 10 people visiting essentially by accident? What counts as “awareness” and how can it possibly be quantified using surface-level analytics?  Website analytics aren’t useless; they can help us understand how a public service campaign is performing and what kind of audiences it’s reaching. These metrics can inform impact goals, but shouldn’t define them.

Metrics-based assessments are not just internal; they’re also used to assess impact by outside observers. B Lab is a nonprofit organization that issues a certification, called B-Corp, to companies that meet certain environmental and social standards. Its B Impact Assessment is a quantitative score-based framework meant to help companies “measure, monitor, and improve” their impact on the environment, communities, customers, suppliers, employees, and shareholders. In the assessment process, companies answer a series of questions to earn points toward certification. The baseline requirement for becoming a certified B Corp is that organizations earn 80 points.

Assessments like these do provide a starting point to assess and adjust behavior, the possibility for incremental improvement, and an incentive to be more transparent—for organizations that are genuinely interested in improving their practices. But with enough effort, there’s always going to be a way to “win” metrics-based impact assessments. Purely profit-driven companies can treat these frameworks much like they do their taxes, by optimizing the accounting to produce the desired outcome. 

Discourages collaboration

In addition to creating misguided goals, quantitative impact measurement can be dangerously myopic. As individual companies and organizations sort out their own measurement systems, they lose sight of the bigger picture and start competing rather than collaborating.

Let’s say a healthcare start-up invents a life-saving software technology. In order to actually bring this technology to market, the most common route is to rely on investors to fund the research and development. To maximize the return these investors will eventually receive, the company patents its software to enter the market as the sole vendor. The software saves 100,000 lives in five years and is worth $2 billion. Those are undeniably great metrics. An impact report to the investors would argue that this is profit and impact maximization. It’s not. 

Here’s why: The report wouldn’t mention that if the software were open-source—meaning that anyone could use the tech—it could save 300,000 lives, though the company would only be worth $75 million. The company didn’t go this direction because open-sourcing would require shareholders to compromise on the size of their return by allowing opportunities for competition. Some impact (lives saved) has actually been sacrificed in order to maximize profit.

When metric impact measurement only happens at the level of a single institution, it’s not possible to know how one organization’s work affects a larger ecosystem. This impact navel-gazing isn’t always the result of a company being nefariously profit-hungry; sometimes it’s just an oversight.

“It is getting too common for impact measurement to focus on the granularity of individual projects, companies, or initiatives with the expectation that measurement at these levels will somehow add up to overall impact across much broader fields such as sectors, industries and even systems,” the team at the Griffith Centre team writes in an article on impact measurement. “Measurement does not generate magic.”

The Scale Complex

The healthcare tech example makes use of a recurring argument in discussions about impact in the for-profit sector, which is that it’s possible to pursue impact and profit at the same time and it’s possible to maximize both simultaneously. According to this logic, if you do impact investing “right,” every increase in profit will lead to an increase in impact. 

Take Sir Robert Cohen’s “Guide to the Impact Revolution.” His new “paradigm of risk-return-impact” “inspires us to maximize both profit and impact at normal levels of risk, for the benefit of society as a whole.” Similarly, the “triple bottom line” approach encourages businesses to maximize their impact on three dimensions: profit, people, and planet. In line with Cohen’s Revolution, it’s meant to be a new approach to social responsibility: where businesses once only cared about profit, they now have multi-dimensional interests. 

I would argue that these “new” approaches are hampered by their refusal to let go of an old ambition: unfettered economic growth. While the new paradigms are slightly better than a singular focus on profit, they still valorize a specific definition of scale in which company growth is inherently good. In theory, if a social enterprise—meaning, an organization whose essential mission benefits people or planet—maximizes profit, it will inherently maximize impact. In practice, that’s not what happens. 

Encourages entity growth over values growth

Here’s another simplified example to demonstrate how the Scale Complex interferes with genuine impact: A talented chef is motivated by the desire to make people feel good through food. By prioritizing fresh ingredients, staff precision in the kitchen, friendly customer service, and affordability, they succeed in this ambition and run a high-quality restaurant that serves 100 people a night. An investor notes the critical acclaim the chef’s restaurant is receiving and makes a pitch: Instead of serving just 100 people a night, what if we created a chain of restaurants capable of serving 10,000 people a night?

Eager to make more people feel good through food, the chef agrees and uses the investor’s funds to open more restaurants. But in order to provide the investor with the required returns, the chef now has to start mass ordering lower-quality ingredients, speed up food prep, and sacrifice direct communication with their staff and customers. The food at the chains isn’t as good, the environment isn’t as warm and welcoming, the staff is disconnected from the mission, and the customers aren’t as happy. 

The chef realizes too late that scaling the business required sacrificing what made it special. What made their original restaurant so impactful wasn’t that it sold a lot of food to a lot of people, but that it sold excellent food to people who really appreciated it. 

To be clear, scale isn’t a bad thing if the actions you take to grow align with your organization’s core values. If something does well and is having an impact, one good way to scale that impact would be to spread the values that made that organization successful, rather than assuming that the organization itself should grow. 

In this case, the original restaurant, which served 100 people, was part of a network of local, values-aligned restaurants. It didn’t have to become bigger to become more impactful: A small organization can be connected to a larger, and growing, network of people and organizations, all working together to scale impact. 

My first business was a start-up funded by venture capital (VC), so I’ve seen the perils of the above example first-hand. The VC model forces companies to view scale as something that’s necessary at an entity level, rather than a mission level. Through this conventional business lens, intentionally remaining small is often demeaned as unambitious. We’re forced to compete and grow, even if collaborating and staying the same size—or even downsizing—would be more beneficial to our missions. 

The same thing happens in the nonprofit and social enterprise sector, where organizations squabble for limited funding and larger institutions are seen as definitionally more impactful. In a values-oriented framework, remaining small and/or inviting collaboration can be seen as a different form of ambition—one that prioritizes a collective benefit through a collective effort, rather than individual gain. 

Applies to philanthropic missions

Social entrepreneurs tend to think of ourselves as immune to the logic of capitalism and scale because we’re not singularly focused on profit. That’s a mistake. We often replicate the scale mindset and apply it to impact when we assume that the best way to do the most good is to do more.

To use an example from the social enterprise sector, the initial concept of the company TOMS was that it would donate one pair of shoes to someone in a (so-called) developing country for every pair of shoes purchased in the United States. The premise was simple: More shoes = more good (sound familiar?). In 2010, the company invited researchers to check whether it was having the impact it intended on people living in low-income rural communities in El Salvador. 

The researchers found that, although Salvadorian children were wearing TOMS, the shoes weren’t necessarily having the “life-changing impact” the company promised its customers they would. The issue with the company’s original approach to impact measurement was that it misunderstood the problem and oversimplified the solution. 

“The problem isn’t that people don’t have shoes,” wrote Kelsey Timmerman, in response. “It’s that they don’t have the means to buy shoes.”

What TOMS learned—and has since tried to rectify by creating a more complex impact assessment system and focusing on grass-roots community partnerships—is that more shoes did not necessarily equal more impact. 

Genuine impact is not always easily marketable; it can be hard to quantify your positive influence on an ecosystem over which you have no direct ownership. For that reason, a values-based, rather than scale-based, approach may win less public recognition, but generate more genuine impact.

The Compartmentalization Complex 

As companies get bigger and more all-encompassing, and individual business owners accumulate more and more wealth, calls for ‘corporate social responsibility’ have increased. And companies have acquiesced—sort of. You’d be hard-pressed to find a major corporation that hasn’t produced a yearly impact or corporate giving or sustainability report in the last five years.  

Although it may not be immediately clear, the efforts summarized in those reports are usually not considered alongside the company’s business practices, but instead are viewed as separate achievements. Companies don’t often say “We gave $1 million to charities” and “We reduced our lowest-tier employees’ hourly pay by 25 cents company-wide” in the same sentence. Part of the reason that happens is because we think of “impact” as its own sector, rather than something any entity has, no matter the industry in which it operates. Self-described nonprofits and social enterprises aren’t the only organizations that can make a positive impact; a company that manufactures dining table chairs can be impact-oriented if it structures its business in a progressive way.

By separating impact from business, we’re left with a system where the world’s largest corporations, like Amazon, can afford to fund entire departments dedicated to doing good. Taken together with the previous two complexes, which valorize scale and metrics-based impact measurement, these companies can do a lot of “good,” because they can generate a lot of profit. The problem is that by creating a philanthropy department, these businesses aren’t actually doing anything to account for the negative impacts they may be having elsewhere and which are the most harmful to the planet and our shared future. 

Sometimes, corporations even receive awards for philanthropy while continuing to make business decisions that are harmful to the very communities their impact initiatives support. 

This year, B Lab stripped several agencies owned by the French advertising firm Havas of their B Corp certification status because the company has a contract with Shell, a multinational oil company and major polluter. Just before that, multiple advertising agencies won Cannes Lions awards for sustainability, despite working with high-polluting clients. 

Rather than admitting the hypocrisy outright, organizational leaders may even justify harmful practices that earn more profit in order to fuel more philanthropy. The cynicism of that mindset is summed up in this quote from an anonymous PR executive: 

“Ultimately, all [PR] agencies are hypocrites,” the executive told City A.M. “Pretty much every [international] agency will have a fossil fuel company on its books. And the amount they are willing to pay will allow you to do everything else…. You don’t get to have a sustainability team if you don’t have a fossil fuel company somewhere else in the agency.”

Incentivizes philanthropic offsetting

Compartmentalization, in business as in psychology, allows us to avoid the subjects that make us feel “bad,” by distinguishing them from the subjects that make us feel “good.” By compartmentalizing its mission from its internal operations, an organization can ignore the fact that it’s treating workers poorly if it’s successful in its mission. Impact becomes an offset, rather than a direct incentive.

“Impact Management and Measurement (IMM) is still part of the capitalist project,” writes Do Big Good. “It does not problematize, except perhaps in whispers, the fact that accumulation of wealth by clients is a fundamental cause of the very poverty and vulnerability those clients seek to remedy through their investments.”

To be clear, I’d rather live in a world where corporations and billionaires put their money toward some public benefit than live in a world where they operate exactly the same but make zero social impact. That said, adding a charitable initiative to a business model that relies on extractive and harmful practices is a bit like frosting a rotten cake—it might taste a little sweeter, but the cake is still going to make you sick. 

In a values-driven impact framework, mission is baked (cake pun intended) into the business model. Impact is not just a measure of how many good deeds you’re doing, it’s a self-interrogative process that requires integrating your values into every aspect of how your organization works, and changing your strategy when it becomes clear it’s doing more harm than good.

A Values-Oriented Approach in Four Commitments 

I’ve complained enough. Now we can shift to the good stuff; the hopeful stuff.

For context, the company I co-founded along with two others is called Outside and is made up of roughly 45 team members. We’re distributed globally, but a majority of our team is in Kathmandu, Nepal, where the other two co-founders are from and continue to call home. 

Below are four commitments my co-founders and I are making to avoid the pitfalls of these complexes in our company’s approach to impact. I’m going to keep writing about our successes, failures, and observations in fulfilling these commitments, and I encourage other business owners who resonate with what I’ve written to create their own and contribute thoughts and feedback. 

Because this writing is not meant to be about my company specifically, but rather a jumping-off point for larger discussions, I’m keeping the descriptions here brief, but look forward to having more in-depth conversations with those interested.

A commitment to values-based impact assessment

Because: Metrics-based impact assessments can be too rigid, too granular, and too easily gamed. They force organizations to rationalize decision-making in line with predetermined quantitative goals.

We built Outside on a set of core values. These include “social progress,” “post-growth,” “sincerity,” and “sustainable epicureanism,” among others. Our goal is to align Outside’s incentive structures, employee compensation valuations, and decision-making frameworks—including which clients we will or won’t work with—with these values. (For a similar framework, check out Principles-Focused Evaluation.)

For example, another of our values is “collectivism.” Through a more conventional metrics-based approach to impact assessment, we might measure our success by how many clients we serve. To drive client growth and serve more impactful clients, we could run a social media ad campaign to get in front of more social entrepreneurs and pitch our offering. But that would be misaligned with our dedication to collectivism. By spending money on this kind of ad, we are fueling an attention economy we believe to be ultimately exploitative because it monetizes people’s time without delivering value. This prioritization of our goals at the expense of others cannot be justified through a values-based approach. 

Because one of our values is “post-growth,” we’ve turned down e-commerce projects with brands that prioritize total sales volume above all else. While we are interested in making sites easy and intuitive for users to buy items they feel they need, we won’t design coercive interfaces designed to sell as much as possible. 

Our intention is to assess our impact consistently by addressing every decision from a values and impact perspective as we’re making it, not just at the end of a project or the end of the fiscal year. If we’re consistently working with values-aligned clients, our primary lever of impact is the work we do every day to benefit those clients’ missions.

A commitment to disentangle growth & impact

Because: We have been taught to think that growth and scale are good for business but this isn’t a productive way to think about impact.

Outside’s ultimate ambition is to work primarily with nonprofits and small and/or mission-oriented businesses, meaning companies whose products or purpose we see as benefiting the public good. 

As you can imagine, these organizations have tight margins, which means we have tight margins. That said, we don’t have to report to investors, because we’re a founder-owned company, and the founders have capped earnings. The only people we’re beholden to are our clients and each other. We make enough money so that everyone on the team is paid more than a living wage, and when we earn a profit, the surplus is distributed among the entire team. 

This structure, which undoubtedly comes with its own challenges, allows us to place impact before growth. 

We recognize that this means there is likely a constraint on our growth rate, and that’s OK. In fact, if we’re successful in creating a business that is values-oriented, rather than purely profit-oriented, we won’t experience exponential growth—our profit and company size will probably ebb and flow along with other realities, including available clientele, market conditions, environmental factors, etc. 

We’ve tried to create a system where the opportunity to create more impact fuels growth, rather than the other way around. Because we have no ulterior incentive to grow, expansion of the company is only something we would pursue if it’s required to take on more value-oriented clients. 

A commitment to acknowledging complexity

Because: Positive impact that’s funded by negative impact can only bring about incremental change, or maintain an equilibrium, but cannot be transformative.

Optimally, all of the work our company does for clients has some impact if it furthers their missions. But, as I’ve said, what constitutes impact is infinitely complex. 

Two of Outside’s three founders live in Nepal, along with all of our development team. On top of the work we do, our assessment of impact also includes:

• Our internal team culture, which affects employee wellbeing, satisfaction, and health

• Team member pay, benefits, personal growth, and hierarchy

• Our participation in the tech and design landscapes in Kathmandu and globally, which includes the impact we have on these landscapes by hiring new team members

• Our commitment to diversity, equity, and inclusion

• Our involvement in Kathmandu

I won’t use space here laying out all of our internal processes, but I will explain a specific initiative we’ve created to address the last point: our involvement in Kathmandu. 

Part of Outside’s self-descriptor as a company has always been to “dedicate a portion of our profits to community initiatives in Kathmandu.” Figuring out exactly how to do that effectively has been a years-long and ongoing process. We’ve experimented with a few projects, but ultimately wanted to create something intentionally tied to—not separate from—the work we do. In 2023, we created the Outside Impact Initiative.

Through the initiative, we choose one of our mission-oriented clients and find an organization doing related work in Nepal, then we invite that organization to host a workshop, presentation, or other learning activity for our Kathmandu-based team members, and we make either a financial or volunteer contribution. 

Our hope is that these sessions keep us connected to Kathmandu, encouraging further investment in the area and bringing us closer to the diverse array of organizations tackling important social issues here. By extension, we’re more engaged in our work because we learn how our clients’ missions are tied to our own lives. 

In one of these sessions, representatives from Social Changemakers and Innovators came to the office to talk about the effects of the menstruation taboo in rural Nepal, a partnership inspired by our work with Mauj, a sexual and menstrual wellness platform created by and for Arab women. We also contributed funds toward the organization’s mission.

A commitment to the ‘permanent drawing board’

I don’t see impact as a “solvable” problem. 

Rather than believing that we are working toward a final solution, writes the Griffith Centre, “we need methods that help us navigate forward in a direction—but, importantly, don’t fixate or confuse that direction with a destination.”

The reason I have framed the final four sections of this essay as “commitments” is because I recognize that a lot of work still lies ahead, and always will. Every decision I make as a business owner, or that we make as a team, is an opportunity to re-think how we’re staying aligned with our values. The Impact Initiative Model described above, for example, is still experimental. After a few more iterations, we plan to assess and adjust the model as needed.

We are regularly faced with difficult decisions about how to choose which clients to work with—a balance between how aligned we are with a potential client’s values and whether we’re able to continue paying our team. 

Sometimes we decide to work with a client with whom we feel there’s a values alignment, but when we check back in with that organization later on, we find that their business model has shifted into something we would no longer feel comfortable supporting. Sometimes we just make a misguided decision. The benefit of continuous impact evaluation is that we are giving ourselves constant opportunities to redirect time, energy, and resources to change our minds or have them changed by a new perspective. 

I’d like to keep writing about what we experiment with and what we learn, so I hope that this outline serves as the starting point for further discussion and introspection. I welcome input from others facing similar challenges and questions in their work and lives.