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Measuring Social Impact

Measuring Social Value

Funders, nonprofit executives, and policymakers are very enthusiastic about measuring social value. Alas, they cannot agree on what it is, let alone how to assess it. Their main obstacle is assuming that social value is objective, fixed, and stable. When people approach social value as subjective, malleable, and variable, they create better metrics to capture it.

 

Over the last few decades, many people have attempted to measure what is sometimes called social, public, or civic value—that is, the value that nongovernmental organizations (NGOs), social enterprises, social ventures, and social programs create.1 The demand for these metrics has come from all sectors: Foundations want to direct their grants to the most effective programs; public officials, policymakers, and government budget offices have to account for their spending decisions; investors want hard data analogous to measures of profit; and nonprofits need to demonstrate their impact to funders, partners, and beneficiaries. Metrics to meet these needs have proliferated over the last 40 years, resulting in hundreds of competing methods for calculating social value.2

Despite the enthusiasm for metrics, few people actually use them to guide decisions. In the nonprofit sector, good managers are very rigorous about tracking costs and income. But few use sophisticated metrics to help allocate resources. Meanwhile, in the public sector, political judgment counts more than cost-benefit assessments. In the rare cases when decision makers do use metrics of social value, it’s far from clear that they should.

I’ve dealt with social value metrics in a variety of roles: as director of policy and strategy under United Kingdom Prime Minister Tony Blair; as director of the Young Foundation, an NGO that has created dozens of ventures, some for-profit, some social enterprises, and some public; and as an advisor to many other governments. In these positions, I’ve seen not only why social value metrics are ignored, but also how to make them more useful.

One recent project that proved particularly informative was a collaboration between the United Kingdom’s National Health Service (NHS) and the Young Foundation. The NHS commissioned the Young Foundation to develop a practical tool for assessing service innovations and guiding investment decisions. The NHS is a vast organization with a budget of around $150 billion, a workforce of some 1.2 million employees, and contracts with more than 30,000 social enterprises. It needed a set of tools that would be both robust and flexible, and that could be used for decision making as well as evaluation.

We started by scanning existing social value metrics, such as the ones described in the table “10 Ways to Measure Social Value” on page 41. We found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. In addition to discovering this segmentation, our survey suggested two more reasons why so few metrics guide real decisions. First, most metrics assume that value is objective, and therefore discoverable through analysis. Yet as most modern economists now agree, value is not an objective fact. Instead, value emerges from the interaction of supply and demand, and ultimately reflects what people or organizations are willing to pay. Because so few of the tools reflect this, they are inevitably misaligned with an organization’s strategic and operational priorities.

The second reason that current measures of social value fail to influence decision makers is that they conflate three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. In the business sector, decision makers use different tools for each of these tasks. An airplane manufacturer, for instance, would use one set of metrics, mandated by laws and regulations, to explain to external stakeholders how it spends its money. The company would then use a second set of metrics to allocate resources in the building of airplanes. (It is a brave manager who would let investors see these internal accounts.) The company would then use entirely different kinds of measures to explain how its activities affect larger economic indicators such as gross domestic product.

Yet in the social and public sectors, some proponents of new social value measures claim that their metric can play all three roles. Not surprisingly, and despite courageous efforts, these attempts to do three things at once have resulted in the failure to do any one of them well.

Here, I describe a better way to think about social value: the product of the dynamic interaction between supply and demand in the evolution of markets for social value. I then show how decision makers in the nonprofit and public sectors can use these insights to measure what can be measured without pretending to measure what can’t be. Finally I recommend better ways to make social value metrics. My main advice is that nonprofits and foundations should resist the current trend of developing assessment tools entirely separately from public policy and academic social science, and instead should collaborate across sectors.

ELUSIVE QUARRY

The failure of the social and public sectors to measure the value they create does not stem from a paucity of intelligence or good intention. Rather, it reflects four unavoidable complexities that bedevil the measurement of social value. First among these is the lack of hard-and-fast laws and regularities in the social field. Many people would love the social field to be more like natural science, so that they could definitely predict the effects of, say, a $10 million investment in a crime prevention program.

But unlike molecules, which follow the rules of physics rather obediently, human beings have minds of their own, and are subject to many social, psychological, and environmental forces. Several decades of involvement in evidence-based policymaking has shown me that although evidence should inform all action, very few domains allow precise predictions about what causes will lead to what effects. The social sciences (including business) simply do not have laws in the way that physics has. Even seemingly solid economic principles, such as the rule that demand falls when prices rise, have many exceptions.

A second reason that measuring social value is hard is that, in many of the most important fields of social action—such as crime prevention, childcare, and schooling—people do not agree about what the desired outcome should be. In other words, the public argues not only about social value, but also about social values. For example, many people want to imprison criminals to punish them, even when incarceration costs more and confers fewer benefits than do alternatives to prison. Psychologists call this willingness to sacrifice a lot to penalize others altruistic punishment.

Because people’s ethics, morals, and priorities vary, social value assessments that look only at costs and benefits are bound not to influence many members of the public and the politicians who represent them. Philosophers (from John Dewey to Luc Boltanski) have long recognized that societies are made up of competing and conflicting systems of valuation and justification. But measurers of social value have often tried to deny this.

Even without these problems, many social value metrics are inherently unreliable. Measurements of social return on investment (SROI), for example, often quite arbitrarily estimate costs and paybacks, which dramatically affects the final calculated value. SROI calculations can help in broad-stroke predictions, but they can’t help with finer-grained decisions.

Revealed preference and stated preference methods are also notoriously unreliable. Although they try to provide precise numbers, they are not very rigorous about the means of deriving these numbers. As a result, these methods confuse rigor with precision—a point that REDF and others in the SROI field increasingly recognize.

A final reason that measuring social value is difficult is the problem of time—estimating how much good an action will bring about many years in the future, relative to how much it will cost to implement it now. In predictions of commercial returns on investment (ROI), businesspeople use discount rates to account for the assumption that a given amount of money will be worth less in the future than it is in the present. With a 5 percent discount rate, for example, $100 of today’s money will be worth only $35.85 in 30 years, and only $7.69 in 50 years. Many current measures of social value, such as SROI, likewise use commercial discount rates—perhaps because of a mistaken belief that treating social discount rates as equal to commercial ones will make social value metrics seem more rigorous.

But it’s not clear why social organizations and governments should use commercial discount rates, especially as these rates radically devalue the future. Indeed, we should hope that the people in these organizations give greater weight to the interests of future generations than do commercial markets. A closer analysis of discount rates suggests that they do.3 In health, many countries apply a very low or zero discount rate, on the grounds that younger generations should not be disadvantaged relative to older ones. Governments ignore discount rates when investing in education and defense technologies. And in climate change policy, a furious debate has raged about what discount rates to apply—again in part a moral argument about how to weigh the needs of future generations against the needs of current ones. These examples reflect my broader point: Social value is not an objective fact. Instead, it emerges from the interaction of supply and demand, and therefore may change across time, people, places, and situations.

CONSTRUCTING VALUE

Borrowing practices from business and economics has led to many mistakes in the measurement of social value. Yet these fields still offer some important lessons for the field of social innovation. For much of human history, philosophers and economists believed that value was an objective fact. Aristotle thought that there was a “just price” for everything, for instance. And Karl Marx thought that value came from labor.

But more recently, most economists have accepted that the only meaningful concept of value is that it arises from the interaction of demand and supply in markets. In other words, something is valuable only if someone is willing to pay for it. This blunt approach upsets many people because it implies that there may be no economic value in a beautiful sunset, an endangered species, or a wonderful work of art. But this definition of value is useful because it forces economists to observe real behavior, rather than trying to uncover hidden realities.

The time is ripe for the social field to take an equally simple starting point, and to view social value as arising from the interplay of what I call effective demand and effective supply. Effective demand means that someone is willing to pay for a service or an outcome. That “someone” may be a public agency, a foundation, or individual citizens. Effective supply means that the service or outcome works, is affordable, and is implementable. I use the qualifier “effective” because social problems will always invite simple supply and simple demand. But to measure social value, the supplies and demands must be effective in the senses described above.

Markets, conversations, and negotiations then link, on the one hand, people and organizations with needs and resources, with, on the other hand, people and organizations with solutions and services. Social value metrics are useful if they give shape to these markets, conversations, and negotiations.

In some fields, the links between supply and demand are mature. For example, many voters are willing to pay taxes for police forces and primary schools, and many governments are able to supply these services. Likewise, many donors are willing to fund health care for children in developing countries, and many local charities and churches are able to deliver this care. In these domains, analyzing social value is not difficult, because the links between what funders want and what providers know they can offer is clear.

But for other social issues, the links between supply and demand are missing. In some cases, effective demand may be lacking because funders, politicians, or private citizens do not view a need as pressing enough to warrant their resources. For example, some states are unwilling to fund sex education or drug treatment. In other cases, effective demand may be present—for instance, many governments are willing to pay to reduce obesity—but the supply of cost-effective interventions is limited. In these situations any descriptions of social value are bound to be more tentative and exploratory.

In still other cases, both sides of the supply-demand equation may be murky or complex. Many social policy makers, for instance, understand that more holistic solutions often yield better results. But holistic approaches necessarily have to deal with purchasers—that is, demand—that are split across many different public agencies and NGOs, each with its own view of what really counts as valuable. The supply side may also be fragmented: Helping homeless people, for example, may depend on the contribution of many different agencies to provide therapy, alcohol treatment, job training, and housing. In these fields, too, social value can become clearer only through iterative processes that bring together supply and demand in deliberation and discussion. Even the most brilliant researcher cannot measure or even describe social value if she is not immersed in these discussions.

HEALTHY NUMBERS

All of these points have become particularly clear in our work for the NHS, which is involved in everything from routine checkups, to surgeries, to behavior-change interventions, to community programs. The advantage of a single, integrated health service like the NHS is that it has to be explicit about its demands, that is, what it needs and what it is willing to pay for. The NHS’s effective supply side is also reasonably easy to define, and it includes doctors, nurses, managers, social enterprises, private providers, and members of the public.

To help the NHS make better decisions and allocate its resources more effectively, we at the Young Foundation created a tool that makes explicit the social value of various alternatives. Earlier on I described the three very different roles metrics can play—external accountability, internal decision making, and assessment of broader social impact. The tool we developed focuses squarely on the second of these goals. It attempts to capture the value that accrues to the individual from being healthy, rather than sick; to caregivers; to the wider community (for example, from the control of infectious diseases); and to the taxpayer.

The tool we created is not a simple computer program or calculator. Instead, it is a framework for thinking about value. Like many of the tools used to assess social value, this one requires a series of judgments. The judgments fall into four main categories: 1) strategic fit (how well the proposed innovation meets the needs of the health service); 2) potential health outcomes (including likely impact on quality-adjusted life years and patient satisfaction); 3) cost savings and economic effects; and 4) risks associated with implementation.

When faced with a proposal, users of the tool apply a 0 to 5 scale to rate the proposal on items in each of these categories. Proposals range from a promising idea from a group of doctors or nurses, to an idea that has already been piloted on a small scale or a venture that is ready for scaling up. Users can also provide commentary along with their ratings.

In some cases, decision makers can draw on strong data—for example, evidence from a randomized controlled trial. In other cases, they must rely on less certain numbers. To capture this variability, the tool also includes measures of the reliability of the evidence on which judgments are based. The visual presentation of the results then makes judgments and their reliability very clear.

Once mastered, the NHS tool is quick to use and transparent. Multiple users can interrogate the judgments, and in due course compare them with what actually happened. It is also publicly available. Ten regional innovation funds (worth around $350 million in total) are using it as a basis for decisions and encouraging applicants to use the tool to assess themselves. Decision makers can also use the tool to review each other’s work, to ensure consistency in their decisions, and to communicate with other public agencies.

The net result of the NHS tool is a picture of social value that is explicit about what’s valued and what isn’t; that doesn’t try to combine everything into a single number; that is transparent and interrogatable; and that is simple enough to help decision makers having to cope with a large volume of examples. It also avoids the flaw of trying to impose a single discount rate onto diverse measurements.

MAKING MARKETS

I describe this tool because it is one approach to operationalizing social value that balances coherence, consistency, and simplicity with the flexibility needed to cope with messy and complex phenomena. Developing it was helped by the fact that the NHS is an organization with clear supplies and demands. But for most NGOs, supply and demand are fuzzier, and each field brings with it a different set of concerns.

For example, primary, secondary, and tertiary educational institutions create value for students and the wider society. They rely on a strong research base to decide which types of education deliver which returns to whom. Vocational education, in contrast, presents a different set of considerations. Certain kinds of skill may be of value to only one sector, or to a small set of employers. A program offering intensive support to a chaotic drug user will have a still more complicated set of values, including value for the individual (both financial and health-related), value for the community (for example, from lower crime), as well as value for a wide range of public agencies (from hospitals whose emergency services will be used less, to police, prisons, and welfare agencies).

Seen through this lens, the job of funders is not to alight on one particular method for measuring value. Although common frameworks for thinking about value are useful, funders must adapt these frameworks to the organization and field under consideration.

Indeed, the greatest contribution that funders can make is often not to measure value, but to forge the links between supply and demand that will later generate value. For example, they can invest in effective supply by supporting promising projects and collecting evidence of what works. They can invest in effective demand by persuading governments to use their much greater resources to pay for new services. And they can use their convening power to connect purchasers and providers and then encourage them to talk.

Foundations can also help less powerful players have a voice in the market. Many groups, such as homeless people, migrant workers, and people with mental illnesses, have clear needs but lack the resources and political power to translate their needs into demand. Foundations can turn this latent demand into effective demand. For instance, several European foundations that support undocumented migrants have developed the demand side of this emerging social market by encouraging larger NGOs and public authorities to allocate resources (for example, for housing and health care) to it. On the supply side, these foundations have funded promising projects that are more effective at meeting the needs of this group.

Some foundations are likewise developing the market for addressing elder abuse. On the demand side, they have funded research on the extent of the problem and influenced commissioners to allocate resources and attention to it. On the supply side, they have supported innovative programs to prevent or mitigate abuse.

In both cases, governments’ resources vastly outweigh those of foundations and NGOs. This is almost always the case. Just about anyone wanting to make a big social impact has to engage with the worlds of politics and public provision.

GOOD ACCOUNTS

The field of social innovation can learn some lessons from business and economics. But it should not be naive. As the collapses of Enron and Lehman Brothers revealed, even such seemingly objective metrics as profit are not the facts they appear to be in economics textbooks. And in business, accounts are just that: accounts. They are ways of explaining what is being done, with an eye toward the often conflicting interests of investors, managers, regulators, and consumers. They involve judgments as well as facts.

Anyone who wants to finance social goods and anyone who wants to provide them should use metrics to clarify how inputs can contribute to outcomes, as well as to clarify choices and trade-offs. But they should abandon metrics that obscure these choices or that pretend to offer a spurious objectivity. And they should use metrics only in proportionate ways. It’s not sensible for a small NGO to invest scarce resources in apparently elaborate estimates of social value—not least because these estimates are bound to crumble under serious scrutiny.

Meanwhile, larger NGOs that do need measures of social value should clearly distinguish between those that are primarily about external accountability, those that help internal management, and those that support assessments of broader patterns of social impact. If an organization is using the same method for all three, its findings are almost certainly flawed.

People involved in funding social value, whether at the stage of promising innovations or of large-scale practice, likewise need sharper common frameworks. Greater use of these shared frameworks would be more valuable than proliferation of ever more assessment tools. Building on these frameworks, what matters is the quality of the discussion and negotiation, and the depth of the learning several years later, when participants reflect on what worked and what didn’t.


GEOFF MULGAN is director of the Young Foundation; a visiting professor at the London School of Economics, University College London, and the University of Melbourne; and chair of the Carnegie Inquiry into the Future of Civil Society in the United Kingdom and Ireland. He was previously director of the U.K. government strategy unit, and head of policy for Prime Minister Tony Blair. His most recent book is The Art of Public Strategy, published by Oxford University Press (2009).

Notes

1. This article draws on several main sources, including Geoff Mulgan, Gavin Kelly, and
Stephen Muers, Creating Public Value, London: U.K. Cabinet Office, 2002; and Geoff
Mulgan, Gareth Potts, Matthew Carmona, Claudio de Magalhaes, and Louie Sieh, "A
Report on Value for the Commission on Architecture and the Built Environment," London: Young Foundation, 2006. The Young Foundation Web site also provides details
about many measurement methods.

2. The following books provide a good overview: C.J. Barrow, Social Impact Assessment:
An Introduction,
London: Hodder Arnold, 2000; Henk A. Becker and Frank Vanclay
(eds.), The International Handbook of Social Impact Assessment, Cheltenham, U.K.:
Edward Elgar Publishing, 2006; "Identifying the Environmental Causes of Disease:
How Should We Decide What to Believe and When to Take Action?" Academy of
Medical Science, 2008; John Dewey, Theory of Valuation, University of Chicago Press,
1939; and Luc Boltanski, Laurent Thevenot, and Catherine Porter,  On Justification:
Economies of Worth, Princeton, N.J.: Princeton University Press, 2006.

3. For a fuller analysis of discount rates, exponential rates, and hyperbolic rates, see the
chapter on value in my book The Art of Public Strategy.

 
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COMMENTS

  • Marc Brenman's avatar

    BY Marc Brenman

    ON August 12, 2010 03:42 PM

    Perhaps I don’t understand, since this seems to be an excerpt from a book, but “there may be no economic value in a beautiful sunset, an endangered species, or a wonderful work of art” is pretty clearly wrong.  Real estate with a nice view is worth more, for example.  In the San Francisco Bay area, we say that a view of each bridge is worth an additional $100,000 on the value of a house.  Regarding endangered species, I worked on a case involving a gasoline pipeline that had to be re-routed at a cost of $1 million a mile to avoid an endangered salamander under the Endangered Species Act.  And in regard to works of art, the newspapers weekly have stories on outrageous prices paid for them.

  • BY Sara Olsen

    ON August 12, 2010 06:40 PM

    Thank you for this eloquent discussion of the discrete purposes to which measures of social value can be applied, and for your ideas about the way in which the design of measures should reflect the inherently dynamic and subjective nature of this value. Having worked with investors, businesses, nonprofits and a few governmental entities for ten years on measuring impact, we at SVT Group have come to regard what is happening, and what you speak of, as the advent of a new business discipline, which we’ve begun to refer to as “Impact Management.” 

    This new discipline is larger than any one organization, metric, standard or even framework. Thousands of players, both inside and outside of academia, are contributing to its rapid emergence and evolution. This discipline reflects many of the phenomena you articulate- in particular, the difference between measures used for marketing, measures used to communicate with potential or actual investors, and those used to inform internal operations- the latter two having to do with understanding and communicating what is actually happening or may happen, and the former having to do with extracting the business value to be gained by the “social value proposition” one offers.

    I would offer one critique of what you’ve said. For several years I have been hearing tee-up statements like “everyone is interested in social value” that come with a “but” clause similar to this one: “Alas, they cannot agree on what it is, let alone how to assess it,” followed by a new solution. This framing makes it sound like there is no progress being made and I think does a disservice to the massive, complex and powerful undertaking we’re all a part of.

    What I am seeing, and would invite you to recognize more than I feel you have here, is that as more and more nonprofit and for-profit organizations and funder/investors are striving today to understand and manage the impact we are all generating, a market conversation is beginning to take place, and solutions are rising up that meet many of the design criteria you’ve said are missing from the existing landscape.

    I think the guidelines you offer are good ones, but would hope that you would simply adjust the temperature of the bath water of certain emerging approaches, rather than throwing it out and the baby with it.

    For example, a number of approaches that do account for the dynamic, subjective nature of value, including some that I think you might have dismissed as not doing so, exist and are being used for specific purposes. One example is the Social Evaluator process and online tool, and another is SROI analysis as proposed by the 500-member and growing SROI Network (both of which SVT is involved with and champions among other tools and approaches).

    Social Evaluator walks the user through the process of thinking through what one’s impact is, figuring out decent measures for it, and valuing those measures in dialog with stakeholders. This can be done sloppily or well, but all the fundamental steps are there and it’s a useful tool for building basic impact measurement capabilities in the field. Social Evaluator has naturally taken on the role of a bridge between the research community, that studies what interventions work best, and the practitioner community that’s out there doing the work. When a practitioner starts thinking about what to track often the first question is, what are others tracking? That prompts a conversation with those who’ve done the same kind of thing, and those who’ve studied what works, which can be distilled into metrics, and Social Evaluator is helping to underwrite these sorts of collaborations to simultaneously provide a useful tool and advance the state of practice. These metrics can be updated in real time as innovations are discovered in practice or by researchers- and ideally by both.

    Social Evaluator doesn’t solve the problem of data collection, and it isn’t an automatic solution to everything, but it facilitates the thinking and consensus and connections that need to be made for this new discipline to really flourish. It does get groups to think more deeply about what impact they have, and to clarify what exactly they do, for whom.

    SROI analysis is a different sort of effort that complements a tool like Social Evaluator but has its particular purpose as well. SROI analysis is getting to be a pretty sophisticated thing, kind of like accounting, that takes training to use and to understand. SROI analysis of the type now being advanced by The SROI Network basically asks that the user have a grounding in the SROI method, and investigate the context and process that was used to arrive at the results. An SROI ratio, like any other ratio, is meaningless when taken out of context, and the SROI Network is basically promoting something that requires skill to produce and use properly. Like a car, driving it without training is not a great idea.  But like a car, it is quite useful when used skillfully.

    I would love to hear you say more about how you see these and other existing efforts playing a constructive, if circumscribed, role, and what you would say their appropriate roles are.

    Thank you for your thoughts and leadership!

  • BY Jeff Mowatt

    ON August 13, 2010 10:20 AM

    As a business with a social objective our way of thinking about this is that “profit is redefined in human terms rather than pure quantitative analyses that remove human and social concerns in the name of profit”

    The statement derives from the core argument from a paper describing a compassionate interpretation of capitalism which concludes that money represented by imagined numbers has trumped real human beings.

    http://www.p-ced.com/1/about/background/

    In an approach such as the unproven social impact bond, an attempt is made to relate social outcome to financial benefit. For example, what would have been spent by government in dealing with prison re-offenders after social investment has been made to reduce it.

    The immediate problen I see with this is that for any social action there are many players, often volunteers, who might legitimately have a claim on such savings. If one organisation is deemed responsible, others will be disinclined to participate. If all are given credit, the country might soon be bankrupt.

    For a simpler interpretation of social return, I offer the main outcome of sourcing a development initiative in Siberia which was aimed at providing emergency food relief and local economic development thru microfinance. With all financial investment returned the outcome included 10,000 new businesses raising the number of those generating incomes by a quantifiable margin in a city of 600,000.

    Again from work in Ukraine which leveraged government action in doubling the allowances paid to adopters, we see after 4 years a quantifiable increase of 40% on domestic adoption.

    I suspect that we may no more be capable of measuring the full impact of actions leading to a family having an income or a child having a family, than that which exists already, for those who benefit from traditional capitalism.

    Business like ours which have a social objective aren’t investing their profits to be reimbursed. They are doing it because they are surplus to what we need for our own existence.  We should be able to borrow from an ethical investor for seed capital without the need for complex investment instruments.

  • Dae-In Cha's avatar

    BY Dae-In Cha

    ON August 19, 2010 12:10 AM

    Thank you very much for the insightful review. 

    One comment to add.  I still do see a need for a universal metric that all entities strive to use to quantify societal impact, not only to assess the impact of each initiative but also for various stakeholders to compare among initiatives, both within each respective sectors and among sectors.

    I personally hope that the Global Reporting Initiative (GRI) be utilized not only for corporations but other entities in the non-profit sectors and etc.  I do acknowledge the challenges that this poses in terms of objectivity and accurateness, together with the burden on entities to adopt this reporting initative.  However, if all entities report under a universal metric, this would allow stakeholders to engage in intra-sector comparison together with cross-sector comparison of societal impact.  And I belive that the ability to compare and trend using a common metric would be the great value for such initative, even when all the negatives associated with going this route is taken into consideration.

    I definitely would like to thank Geoff again for the great insight, as the method he proposes gives us a great way for entities funding societal impact initatives a way to better evaluate the options available to fund.  And lastly, a big thanks to Stanfordd Social Innnocation Review for allowing us access to valuable insights.

  • BY Michael Bosse

    ON October 20, 2010 08:11 PM

    Fascinating and pithy argument - thank you.  I wanted to query one element:

    “For instance, several European foundations that support undocumented migrants have developed the demand side of this emerging social market by encouraging larger NGOs and public authorities to allocate resources (for example, for housing and health care) to it. On the supply side, these foundations have funded promising projects that are more effective at meeting the needs of this group.”

    Isn’t the example you give of how to encourage the demand side for underserved groups still quite similar to traditional approaches of top down organisations providing resources/services into perceived gaps in need? I’d argue that’s really another type of more efficient work from the supply side - efficient because it is supplying to comparatively underserved beneficiaries.

    What then would be an example of truly encouraging more effective development of the demand side? How about the wording you used originally to describe this: “help less powerful players have a voice in the market”? That could be giving underserved groups tools to coalesce and find their voice such as access to the public sphere via the media or the development of organisational structures so that those groups can form and advocate a cohesive point of view. The Young Foundations’ own Uprising program model is a great example, albeit focused on selected individuals rather than broader groups. A key aspect of that program that is so impressive is that participants are not directed towards a particular social problem they should be addressing, but rather given the tools to identify a demand and then advocate for it so that supply is provided (hopefully in effective ways).

  • Jeremy Wyatt's avatar

    BY Jeremy Wyatt

    ON October 17, 2011 08:27 AM

    As other commentators have said, a useful dissection of some of the key issues surrounding social value – and one that deserves debate.  I take the central message of the piece as being that “the greatest contribution that funders can make is often not to measure value, but to forge the links between supply and demand that will later generate value”.  This seems to me to be a more mature focus than trying measure value well enough for evidence based policy or funding decisions.  Nevertheless I have a couple of quibbles and comments.

    Firstly I suggest that using an analogy of physical laws and exploration is too obviously inappropriate to be worth pursuing, except to make the most basic point.  A much more interesting comparison is with the biological sciences, the field where systems thinking originated.  The sort of multi-dimensional influences the Geoff highlights as applying in the social sciences have direct parallels in biology – most obviously perhaps in ecology.  “Invest(ing) in effective supply by supporting promising projects and collecting evidence of what works” is close to the scientific model of developing a hypothesis and then testing it.  There is an interesting discussion on this (the article and the posts that follow) on Ben Goldacre’s Bad Science site at http://www.badscience.net/2011/05/we-should-so-blatantly-do-more-randomised-trials-on-policy/

    Second I’m unclear about the third purpose in the triad of “accounting to external stakeholders, managing internal operations, and assessing societal impact”.  In my company, Hall Aitken, we ask our clients to be clear about their priority purpose in evaluation, using three options of: reporting to funders, internal improvement and accounting to their community.  The first two are obviously the same as those in the article but I’m not sure who the audience or ‘customers’ are for ‘assessing societal impact, and I’d welcome some clarity on that.

    Finally I just want to emphasize that a large number (possibly the majority) of users of SROI and other approaches would agree that with Geoff’s conclusion that “what matters is the quality of the discussion and negotiation, and the depth of the learning”.  But at the moment the temptation to focus on the end point (the SROI ratio for example) and not the journey (the thinking about how to get the best impact) deflects from this interest.  So any shared frameworks need to include consideration of how outcomes are achieved and not just what they are.

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