Impact Development
What is Impact Development?
We know that the current system isn’t working.
Conventional economic development, which emphasizes economic growth and market-based solutions to social and economic challenges, has been the cause of some of the most significant challenges we now face in the 21st century. Although growth-focused economic processes have yielded much in terms of wealth accumulation and technological advancement, the pursuit of growth as an end in itself has exacerbated social inequality and driven us to the doorstep of irreversible environmental change.
We argue that in order to build an economy that works for Good, a new development paradigm is needed. In this post, we will lay out our definition of “Impact Development,” and explain why this new paradigm can deliver economic and social outcomes that allow humanity to thrive.
What is Impact Development?
The purpose of impact development is to promote economic and social development through equitable and sustainable means. The impact development paradigm is designed to facilitate the conditions in which individuals, communities, and businesses can all thrive alongside one another. Therefore, we define Impact Development as:
A form of development aimed at maximizing both sustainability and equity. Impact development aims to meet the needs of the present without compromising the ability of future generations to meet their own needs, while recognizing that this is only possible if development efforts intentionally prioritize the needs of underserved communities through policies and programs that reduce disparities while fostering places that are healthy and vibrant.
This definition leverages key language from leading definitions of sustainable development (Our Common Future) and equitable development (EPA), but emphasizes the mutually constitutive nature of sustainability and equity as social goals. Without intentionally pursuing sustainability, resource depletion will continue to hit underserved communities the hardest, eliminating any potential for the gains in resource access necessary to foster equity. Likewise, without intentionally pursuing equity, current and future generations from underserved communities will continue to see their needs go unmet, undermining sustainability outcomes. Impact development recognizes that sustainability and equity are interlinked and must be pursued intentionally and simultaneously in order to achieve either.
Theoretical Foundations for Impact Development
Pursuit of an economic paradigm that aims for balance rather than infinite growth is well grounded in economic and social theory. While much research points to the harmful ecological outcomes of endless growth, it is equally important to ensure that the economy continues to develop in a way that meets the social needs of communities and the entire population. Kate Raworth’s “Doughnut” is a visual representation of an economic paradigm in which the purpose of economic development is to find an economic equilibrium in which social needs are met without over-taxing the biosphere.
Researchers Christopher Koreonos and Dimitro Rokos propose an alternative development model called Worth-Living Integrated Development, arguing that conventional development models offer too narrow a definition of prosperity. The authors’ development model includes economic development, social development, and environmental protection. Similarly to Raworth’s model, Koreonos and Rokos argue that we must intentionally define desired outcomes at the “educational, research, economic, social, political, technical/technological, and environmental levels” in order to build a better world based on shared values including peace, justice, democracy, and respect for nature.
If we consider different metrics for economic success, the idea of growth as a primary goal that precedes social and ecological needs quickly loses its luster.
How Does Impact Development Work?
The implication of Raworth’s design is that we have the ability to rethink our economic goals. Although we are frequently told that our primary goal is to pursue growth, and that growth will yield desirable social outcomes, Raworth’s model asks to skip the middle-man, so to speak. Rather than pursue growth and wait for the economy to meet our needs, Raworth asks us to identify our needs (for example, clean air and water, a living wage, and democratic access), and build an economy that leads directly to all of those outcomes.
When meeting our social needs requires growth — for example, through investment in green infrastructure — an impact development framework would advise us to pursue that avenue of development. Conversely, when an industry’s growth runs counter to sustainable and/or equitable outcomes — for example, continued federal subsidies for fossil fuel production — an impact development framework would direct us to rethink how to accomplish the social goal (energy production) in a way that allows communities to thrive (e.g. through the pursuit of renewable energy production or a decrease in energy consumption altogether).
Thus, just as our current economy is governed by political forces, an economic system that supports impact development would have to manage the right incentives and investments needed to meet our basic social and environmental needs without minimizing our potential for innovation.
What you can do
Of course, changing the system requires political will, and we all know that isn’t easy! So for those of us who are in power as investors and developers in communities, we can follow some basic principles that we’ve learned support impact development:
Develop a place-based approach. While global issues like climate change and affordable housing are widespread, every community has its own version of the story. Understand the unique characteristics of the communities you serve by building strong local relationships.
Identify the most important social and environmental needs of your community, even if your project does not specifically address these needs. By understanding the context of your investment or development project, you will be able to support new partnerships and relationships that can help build a more equitable and sustainable community. This may require research, interviews, and focus groups.
Create a Community Advisory Board for your project. Bring leaders to the table that represent the community’s greatest needs. This will help ensure that a community fabric is woven to support your project in the most meaningful way possible.
Leverage your investment for Good. Once you have a good understanding of the priority community needs, shift your plans to help maximize positive, place-based outcomes.
Measure your success. Don’t just believe you are making an impact; track your success in both qualitative and quantitative ways over time. The Good Economy requires a new ledger and we can’t measure our success without tracking social and environmental data.
Do you do Impact Development? We’d love to hear from you and learn your approach, too. And if you need assistance in maximizing the impact of your projects and tracking your success - we are here to help!