Introduction
Organisations today are increasingly committed to generating positive social impacts alongside their economic objectives. However, quantifying these social contributions presents significant challenges due to their often intangible nature. To address this, frameworks such as Social Return on Investment (SROI) and Key Performance Indicators (KPIs) for social value have been developed, providing structured approaches to measure and communicate social impact.
Challenges in Measuring Social Contributions
Organisations encounter several obstacles when attempting to quantify their social contributions:
- Intangibility of Social Outcomes: Social impacts, such as improved community well-being or environmental sustainability, are often qualitative and not easily translated into numerical data.
- Lack of Standardised Metrics: Unlike financial reporting, there is no universal standard for measuring social value, leading to inconsistencies and difficulties in benchmarking.
- Attribution Difficulties: Determining the extent to which a specific initiative contributes to a social outcome can be complex, especially when multiple factors are involved.
- Data Collection Challenges: Gathering reliable data on social outcomes can be resource-intensive and may require innovative methodologies.
To overcome these challenges, organisations can utilise established frameworks designed to assess and communicate social impact effectively.
Social Return on Investment (SROI)
SROI is a comprehensive framework that assigns monetary values to social, environmental, and economic outcomes, allowing organisations to calculate a ratio of benefits to costs. This approach facilitates a deeper understanding of the value generated by social initiatives.
Key Steps in Conducting an SROI Analysis:
- Stakeholder Engagement: Identify and consult with stakeholders affected by the organisation’s activities to understand the changes experienced.
- Mapping Outcomes: Develop a theory of change that links activities to outcomes, detailing how inputs lead to outputs and desired impacts.
- Valuing Outcomes: Assign financial proxies to outcomes to quantify their value.
- Calculating the SROI Ratio: Compare the total value of benefits to the investment made, resulting in an SROI ratio (e.g., an SROI of 3:1 indicates that for every £1 invested, £3 of social value is created).
UK Case Study:
The Expert Patients Programme (EPP) in the Wirral conducted an SROI analysis to evaluate its impact. The study revealed that for every £1 invested in the program, approximately £6.09 of social value was generated, highlighting the significant return on investment in terms of health benefits and reduced healthcare costs.
Key Performance Indicators (KPIs) for Social Value
KPIs are specific, measurable metrics that organisations use to track progress toward their social objectives. Establishing relevant KPIs enables organisations to monitor performance, identify areas for improvement, and communicate achievements to stakeholders.
Examples of Social Value KPIs:
- Employment: Number of jobs created for disadvantaged groups.
- Environmental Impact: Reduction in carbon emissions or waste generation.
- Community Engagement: Hours volunteered by employees in local communities.
- Diversity and Inclusion: Representation of minority groups within the organisation.
UK Case Study:
Altogether Better, a UK-based organisation, conducted an SROI analysis across 15 case studies and found that all projects demonstrated a positive SROI, ranging from £0.79 to £112.42 for every £1 invested. This analysis underscores the substantial social value generated through targeted community health initiatives.
Government Initiatives and Policies
The UK government has implemented policies to encourage the integration of social value into organisational practices.
Public Services (Social Value) Act 2012:
This legislation requires public sector commissioners to consider how the services they procure can improve the economic, social, and environmental well-being of their area. It emphasises the importance of embedding social value in procurement processes.
Introduced to guide government departments in evaluating social value in procurement, the model outlines key policy outcomes and metrics to assess the social impact of suppliers’ proposals. It aligns with the United Nations Sustainable Development Goals, promoting a holistic approach to value creation.
Conclusion
Quantifying social contributions remains a complex endeavour for organisations. However, by adopting frameworks like SROI and establishing relevant KPIs, organisations can effectively measure, manage, and communicate their social impact. These tools not only enhance transparency and accountability but also enable organisations to optimise their strategies for greater societal benefit.
By
