The notion that goods, services, projects and other activities should all be able to demonstrate their ‘social value’ is gaining popularity in the UK.
To this end, the idea that commissioners of public services should be able to evidence the social, economic and environmental benefits of such activities was first enshrined in law on 31 January 2013 in the Public Services (Social Value) Act.
Since being applied to all new public sector procurement activity as of 1 January 2021, the legislation’s impact is increasingly making itself felt among commercial companies bidding for contracts too as they are now required to produce tangible social value plans.
But this shift has not been sufficient to please membership body, Social Enterprise UK. In its report entitled ‘Social Value 2032: Creating a Social Value Economy’, the organization pointed out that “progress in raising awareness and embedding practice” was simply “not fast enough” to bring about the wider transformation it envisions. As a measure of its ambitions, the aim is that in 10 year’s time:
Social value should be influencing [not just the public sector but also the spending of the UK’s 7,700 large businesses, which spend a total of £114bn on procurement every year. Taking public and private sectors together, this means that social value would be influencing around 20% of UK GDP – a fifth of the UK economy.
A key challenge in this context though is that measuring social value outcomes in a consistent, standardized way is currently not easy - whether we are talking about the public sector, the private sector or voluntary, community and social enterprises (VCSEs).
Lorraine Briffitt is Chief Executive of Connect Reading, a not-for-profit “brokerage” that was set up in 2003 to bring businesses, public authorities and VCSEs together in order to generate positive social change. She says:
Charities want to show how their activities have added value, and corporates want to measure their impact, but sometimes one entity will measure it one way and another will do it another way. So there’s no consistency and that’s one of the hardest things. Accountability is long overdue.
Measuring social value based on outcomes
One organization that is trying to do something about the situation, however, is whatimpact. The marketplace, which was set up in 2017 to hook up VCSEs with donor companies of all sizes, currently has about 700 members. Its Founder and Chief Executive Tiia Sammallahti, explains its aims:
The idea is to connect people based on just-in-time, shared values, goals and geographical locations to provide a positive user journey on both sides. So we used AI technology to help charities navigate the process and give them equal opportunities to apply for resources from any organisation.
The problem with the current partnership market is that a few ‘big and beautiful’ ones get everything, but that doesn’t necessarily mean they’re the most impactful – it’s just that people don’t know about the smaller ones.
As time went on though, Sammallahti also recognized just how important it was that both beneficiaries and donors - who pay an annual subscription to make the business model sustainable - could measure the overall social impact of their activities based on outcomes. Sammallahti says:
There are lots of monetization tools around for social value so you can calculate it in money terms. But they’re very tricky numbers because it depends on your starting point. For example, if you give kids from an advantaged background free access to art clubs, the social impact is zero. But if you give vulnerable children access to them after school, it could change their lives for ever.
As a result, Sammallahti got together with NCVO Charities Evaluation Services to create a social impact reporting template. Based on global reporting models, the UK government’s Procurement Policy Note 06/20 and the United Nation’s Sustainable Development Goals, the template is targeted at whatimpact’s VCSE members rather than their corporate partners. Sammallahti explains:
I believe it should be the people and organizations doing the beneficiary work on the ground that report on outcomes. If a company gives them £10,000 or lots of volunteers, how do they know if they’ve made a difference as they’re not the experts?
Using AI to assess impacts
The idea is that the VCSE in question creates a profile, which includes information on the project for which they are seeking support. Once a donor company match is made, its contribution is recorded and due diligence templates are created to show how the money or other forms of support will be used.
Once the project is complete, AI software then uses qualitative data to assess the impact and what work was most important in creating that impact, before a report is generated. As Sammallahti says:
Donors can see transparently what difference they make. They don’t have to guess or collect irrelevant data, which companies do a lot these days and which just increases admin costs. But because the user journey is semi-automated, it saves a lot of time and money, which can go to helping society instead.
One organization that started rolling out the whatimpact platform and social impact tool to its 153 members at the end of August is Connect Reading. While relevant data was traditionally recorded manually in spreadsheets and social impact assessments based on the estimates of one or more individuals, the process has now become much more “transparent”. Moreover, Briffitt believes that measuring social impact:
Is not only really important for our ESG [environmental, social and governance] aims and vision but also in terms of the nuts and bolts activities of our member organizations. We need to measure impact for everyone and tech makes it doable. Many companies have their own internal platforms, but a key question is how accountable they are and how feasible it is to ask charity members to sign up to lots of different ones due to the extra admin involved.
Connect Reading is also in talks with public authorities about including certain parameters in their procurement contracts to ensure social impact measures “align with local needs” rather than simply hit targets. The aim, says Briffitt, is to create:
A circular economy of information. The more data there is, the more informed businesses and public authorities can be on the impact of their activities, which is one of the key levers for change…It’s about measuring social value and strategic impact, so public authorities have access to data to drive their decision-making, and businesses can ensure their ESG goals match with the needs of the people that live and work locally.
The idea is that social impact isn‘t just a word but has real value to local people by making a better Reading for everyone and by having a positive impact on the local economy, local community and local environment.
The idea of measuring the social value outcomes of products, services and projects will undoubtedly continue to grow in importance, not least among commercial organizations keen to demonstrate they are hitting ESG goals. But finding ways to measure positive impact in real world scenarios rather than simply reducing everything to monetary gain has to be of particular merit.