Evaluating the Social Value

My venture is a social venture. The way social ventures are evaluated, besides profit, the social ROI. In traditional economy, the value of something is measured in terms of the demand for it. The problem with the social value is that it is not easy to measure mainly because people do not agree about the desired outcome, and estimating timely return prediction is difficult.

The articles for this week presented some ways to measure social value.

- Cost-benefit analysis / Cost-effectiveness analysis: Counting the costs and benefits, and then applying discount rate.

- Stated preferences: Asking people what they are willing

- Revealed preferences: Analyzing what people have actually paid.

- Social Impact assessment / Social ROI Assessment: Estimating the direct cost of an action, the probability of it working, and the likeness to change in the future.

- Public value assessment: Judging how much the public values

- Value added assessment: Assessing how much value is added to the current situation

- Quality-Adjusted Life Years: Taking into consideration the subject experience.

- Life Satisfaction Assessment: Considering the extra income required to achieve same satisfaction.

- Government Accounting Measures: Considering the government spending and its effects.

- Other field-specific assessment: based on each cluster metrics.

I further searched in the internet regarding this topic.

One of the sites (http://www.uniteforsight.org/social-entrepreneurship-course/module7) states that according to Social Economy Scotland, “SROI measures an organisation’s added value by calculating the social, environmental and economic benefits it creates and by attributing a financial value to them. It is based on standard accounting principles and investment appraisal techniques.”

It concludes that it is difficult to do any objective assessment of the social value.

Another site provide a Social ROI calculator (http://www.calvertfoundation.org/invest/how-to-invest/community-investment-note)

Hwere, when given the investment amount, term of investment, geographic area, and impact sector, it computes the social earning; for example “improve 0.4 homes in Middle East.”

Some other sites define goals (success criteria) and compare the social value against the achievement of those goals. Other sites provides ways of comparing different social though “charity ratings” (http://www.quora.com/How-can-you-measure-the-true-impact-of-a-social-venture).

For my venture, there is one sector that gets direct benefit: the senior citizens. By providing working opportunity, we will improve their living quality. Also as derived benefit, the venture will reduce the unemployment ration, and thus shall reduce the government expenditure in health-care.

The government accounting measure could be used by calculating the saving in senior health care cost. Also stated preferences measure could be used through surveys.

Understanding its social ROI is important for any social venture. It is no exception for my venture. I will further research on this topic to elaborate the social value of my venture.