The Editor’s Post: What is the ‘impact economy’?
NPC’s new mapping of the UK’s ‘impact economy’ has triggered a debate on what should and shouldn’t be included in this ecosystem. To be expected, but was it really the primary purpose of the research? This week’s view from the Pioneers Post newsroom.
What is the ‘impact economy’? It is a phrase that we often use at Pioneers Post, to refer to the broad range of actors using entrepreneurship, business and finance to have a positive impact on society and the planet. It is a somewhat flexible concept and people use it in many different ways; what or who exactly is included or excluded from it is not a question we’re ever trying to answer, which enables us to keep open conversations as we explore solutions to society’s challenges. (We are, however, intransigent on impact washing.)
But this week, a debate over what the impact economy actually is emerged following the publication of an ambitious report from New Philanthropy Capital, Impact UK, which sought to map and size the UK’s impact economy. The researchers needed, as a starting point, to agree on a definition – “an ecosystem of individuals, organisations, and capital intending to prioritise public benefit over private gain” – and decide on what’s in, and what’s out.
Included are obvious actors like charities, CICs and B Corps, but also universities and political parties. Meanwhile, co-operatives and employee-owned businesses are left out, because while they “incorporate elements of value sharing”, they do not “clearly satisfy” the report’s definition.
Many consider co-ops and employee-owned businesses as prime examples of how good business governance can be a driver for positive impact, so their exclusion did not go unnoticed: “It is quite surprising and very disappointing to see this effort to ‘bring together... a single, connected whole... a coherent system…’ and find that sports clubs, building societies, employee-owned businesses and cooperatives are not included,” Dan Gregory, former head of policy at Social Enterprise UK, wrote on Linkedin.
The report’s authors explained that this first mapping of the UK’s impact economy is a starting point for further conversations. While one of the stated aims of the paper is to build a “shared narrative” and foster a “shared identity”, I think we should be indeed mindful that the purpose of the research is not to establish an official definition of what the impact economy is – nor to restrain the use of the phrase to a particular set of organisations.
It is first and foremost a sizing exercise: the report demonstrates that the UK impact economy is large. Putting a number on it is essential to convince politicians to recognise its importance and give it more support: advocates and policymakers will probably be referencing the report for years to come – “the impact economy, which is worth nearly half a trillion pounds, 15% of GDP”. Talking in GDP percentages to a government obsessed with an elusive economic growth makes a lot of sense.
The Labour government has shown great interest in the impact economy, going so far as to create an “Office for the Impact Economy” last autumn, and this report gives tangible data to comfort it in this choice and encourage it to go further. Next week, Darren Jones, the chief secretary to the Prime Minister, is scheduled to deliver a keynote speech at the Beacon Forum in London; we can reasonably expect him to say that the impact economy, which contributes 15% to the country’s GDP, is a key driver of economic growth and deserves more attention.
This week's top stories:
‘Impact economy’ contributes 15% to UK GDP – new estimate
Pioneers Post launches second year of journalism training for young education campaigners
Top image: Freepik.
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