Social impact is the change that an intervention or action creates in the lives of other people, communities or contexts. The term is used mainly in impact investing, public investment and philanthropy, and its aim is to create positive, sustained change in society.
It is not limited to short-term changes, temporary donations, incidental interventions or acts of charity; rather, it seeks to generate structural, lasting change over time.
Why does social impact matter?
Social impact matters because it can help build a fairer, more equitable society. By investing effort in projects that seek to improve the lives of people and communities, significant change can be achieved toward a better quality of life for society.
What's more, for those of us working in contexts of resource and capital optimisation, social impact can also generate a financial return for investors. This can help create virtuous circles in which investing resources to improve others' lives is encouraged while financial returns are obtained. It means social impact can be an effective way to generate positive change in society while also producing economic growth.
'Impact' in other contexts
Social impact is one of several types of change that can be generated in people's lives.
Social impact often encompasses other types of impact such as economic, cultural, political, technological, educational and health impact, and more — all of these 'impacts' being changes that affect the lives of people and communities across different dimensions and contexts.
In a different context sits environmental impact: a change in nature that, like social impact, can affect the environment and the lives of people and communities.
But 'impact' as a term is not always used to talk about changes in the lives of people and communities.
There are contexts in which impact is understood as 'reach' — meaning that 'impact' refers to the act of managing to interact with other people.
For example, in digital marketing, 'impact' means having got one or more people to interact with, or be reached by, a specific message. Or, in a commercial context, a company's actual customers are also commonly referred to as 'impacts'.