Putting £s to social value By Liz Holford

Companies are increasingly seeking to put £s to their social impacts, to calculate the social value they have either generated or plan to. We call this ‘monetisation’. But how to monetise?

1. Pick your monetised values carefully

‘Monetised values’ are the financial proxies that are applied to social impacts to calculate social values.  The most robust are those that are compiled through valuation methods that align with HM Treasury Green Book and/or OECD (2006, 2013) guidance or that have been used in government policy analysis. These are based on ‘welfare’ economic methods and measure changes in people’s wellbeing or welfare. Values within the HACT Social Value Bank and Calculator are calculated in this way.

Values prepared in different ways (e.g. based on the cash value of staff time spent on an activity) are nowhere near as robust and should be treated with caution.

2. Focus on outcomes

The most meaningful measures of social value are changes to people’s wellbeing or welfare (‘outcomes’) resulting from interventions or activities (‘inputs’).

For example, it’s relatively easy for a company to measure – and perhaps even monetise – their inputs (e.g. time spent by staff mentoring unemployed people) but it’s much more meaningful – albeit more difficult – to identify, report and monetise the results of those inputs (e.g. people entering sustained full time or part time work as a result of that mentoring).

3. Beware projecting social value!

There’s a trend for companies to project the value of the social value they claim they will create in delivering a contract, when responding to an invitation to tender.

This approach should be treated with caution, because:

• There’s a tendency for bidders to over promise when bidding
• Bidders typically value the ‘inputs’ they will contribute (e.g. mentoring to unemployed people) but often without any indication of quality; and if the quality of those inputs (e.g. mentoring) is poor then no one will actually benefit and no social value will be generated.
• The best measure of social value is change to people’s wellbeing or welfare – no one can know who those people or changes are until after they’ve been achieved.

4. Use the ‘six stage’ social return on investment (SROI) methodology

Yes – it’s complicated and it requires training, but it’s a great way to monetise social impacts in a way that stands up to scrutiny.