The importance of social value in the charity sector

charity sector
© Andrii Yalanskyi

Amy Franklin, Director of Operations – Central at Walking With The Wounded, examines the importance of social value in the charity sector

Social value is a buzzword that has reverberated around the charity sector over the last decade. However, within charities, there are still very mixed views on what it means and whether it matters in practice.

What is social value?

Social value can be defined in several ways but, ultimately, it is about finding a way to measure and value the impact that interventions have on society. This sounds simple in principle but different approaches to measuring social value include different types of benefits and count value in different ways.

Firstly, there are traditional economic benefits; these are typically valued in monetary terms based on outcomes that are relatively easy to put a price on. For example, the value of helping someone into employment is often measured using the increase in income that the individual benefits from or the reduced burden on the taxpayer of claimed benefits.

From there, it gets more complicated. Wider benefits to the individual or society that are not traditionally paid for, are far more difficult to value. For example, what is the right way to value the improvement in quality of life that someone feels when they are supported with their mental health? What is the right unit of measurement to capture improved social cohesion in a neighbourhood?

The key to understanding the plethora of options for measuring social value and to decide which one is appropriate for a given charity is to start by asking “why”. Why are charities worrying about social value? What are they hoping to achieve by measuring it?

The main reasons to think about social value

Broadly speaking there are three main reasons to think about social value: firstly it can help to motivate and galvanise staff and stakeholders if they can see and feel the impact they’re having; secondly, it can help when comparing outcomes across different projects or programmes to identify where a charity can get the biggest bang-for-its-buck and; finally, it can help to influence the decisions of funders, particularly those in central and local government (but also, increasingly, trusts and grant-making foundations).

For the first two of these reasons – motivating staff and assessing the benefits across alternative internal projects – the exact methodology matters far less, the important thing is that internal stakeholders agree that the relative value of different types of outcomes feels sensible.

For the final reason – influencing funder decisions – it is far more important to understand the funder’s perspective on what the right way of measuring social value is and ensure that the approach taken is aligned.

For local or central government funders and public bodies, this should be relatively transparent, the Treasury’s Green Book outlines how government departments should make funding decisions using a five-step business case. This encourages the benefits from different outcomes to be measured in a consistent way – typically allocating a financial value on what is otherwise a non-monetizable outcome – so that funding can be allocated in a way that will generate the most benefits for every £ spent.

However, despite the latest version of the guidance running to 152 pages, there are still plenty of grey areas when it comes to charities relating to non-monetizable outcomes such as those discussed earlier.

Social value: Emerging approaches

There are emerging approaches that can help with this. The rapid development of the science and practice of well-being measurement offers an alternative way of capturing a lot of the benefits that are not monetizable outcomes using standardised measures of people’s well-being. For example, a charity providing legal and practical support to help a vulnerable person access statutory housing services will find it hard to demonstrate a traditional economic benefit as, if anything, they will be increasing costs in the near term. However, it will undoubtedly provide a valuable well-being benefit to the person supported, dramatically improving their quality of life when they are at their most desperate.

In short, measuring social value is not a perfect science, but it does matter. It is important for making decisions both inside charities and ensuring that funders, particularly public sector funders, get the biggest impact for the money they spend. It is worth thinking about, to workshop internally, to read up on, to speak to organisations that support charities to calculate the social value of their interventions. Without recognising social value, we risk neglecting the very real value to the individuals and communities we aim to support.

Contributor Profile

Director of Operations - Central
Walking With The Wounded
Phone: +44 (0)1263 863 900
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