Assessing Social Value

Measuring social value is difficult, as people disagree with what values and goals are important to measure and there are several angles to look at the impact in terms of internal control and external effect. It is also complicated by time, as many social programs and ventures take effect in years. For my venture, there is one more complexity that the source of demand is different from the source of supply of fund. Thus social value to these two groups varies. This week’s readings put forward both qualitative and quantitative guidance on how to measure social value, which is helpful for assessing the social value of my venture.

It is a relatively structured approach to look at social value from the perspectives of external shareholders, internal operations and societal impact. I will measure social value of my venture by following the following metrics.

External Donors/Partners:
Tax savings for donors
Increased number of targets served
Cost savings for services delivered at Quality Health for ALL
Estimated value of marketing for partners
Annual Survey

Internal Operations:
Program Expense Ratio
Growth rate of service target
Return on Assets
Capacity Building Log

Societal Impact:
Medical cost savings for the uninsured
Change in the amount of health care received for service target
Change in annual salaries for service target
Change in unemployment rate in service region
Value of pro bono work
Customer satisfaction on Annual Survey

Calculated Impact
The impact of my venture contains several aspects, on service target, on donors and on partners. However, since the uninsured is what the venture is established for, I will calculate impact on service target. I will use the formula proposed in Calculated Impact. To do that, I need to make some assumptions first.
Incremental costs per Capita if the uninsured gain coverage: $1,595 , which will be covered by the venture;

Increased amount of health care received by the uninsured per Capita if insured: $2777;
Service number is 1,960 people, or 624 families;
Probability of outcome is assumed to be 1;
Insurance premium per family is $300 per month;

Given these assumptions, the value of providing insurance for the uninsured is estimated to be $8,569,120 for 1,960 service target. It is assumed that such service will be delivered effectively, thus probability of outcome is estimated to be 1. Since my venture is the sole agent of change, the philanthropic contribution is 1. With these assumptions, it is estimated that there is $8,569,120 worth of benefits.
Cost of insurance is estimated to be $2,247,102, and administrative and fund raising costs to deliver this service is estimated to be $150,775 and $123,407. Thus total costs are $3,182,591.

Expected social return is $2.7 for my venture. $2.7 worth of social return will be generated for each $1 of investment.

My question is: Is there a benchmark for measuring the level of expected social return on investment? Obviously, less than $1 of return for each $1 of investment would be regarded as not worthwhile, but is there a high benchmark for the evaluation?

An extension to the topic: Harvard Business School has an article on How Organizations Create Social Value. It provides several suggestions on how NPOs and corporations can improve their social value. http://hbswk.hbs.edu/item/4969.html.