Whether you are a social enterprise, NGO (non-governmental organization), non-profit, policy-maker or an investor interested in a quantifiable social return on your investment, measuring social value remains an elusive goal. A new article by Geoff Mulgan suggests a new approach in measuring social value that calls for collaboration across sectors.
In a recent collaborative project between the United Kingdom’s National Health Service (NHS) and the Young Foundation which attempted to develop a practical tool for assessing service innovations and guiding investment decisions, Mulgan found three main reasons why few social value metrics guide real decisions:
(1) By scanning existing metrics, the Young Foundation found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. There is no consensus in valuation across sectors.
(2) Most metrics assume that value is objective, and therefore discoverable through analysis which misaligns valuation tools with an organization’s strategic and operational priorities.
(3) Current social valuations attempt to merge three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. Mulgan points out that, “In the business sector, decision makers use different tools for each of these tasks.”
Based on these findings, Mulgan suggests a different way to think about social value as a product of the dynamic interaction between supply and demand in the evolution of markets for social value. He points out how to decide between what can be measured and what cannot and finally recommends better ways to make social value metrics. His 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.
Can approaching social value as subjective, malleable, and variable, create better metrics to capture it? You be the judge. Mulgan’s full article can be viewed in The Stanford Social Innovation Review.
Image Credit: aussiegall via flickr under CC license.