Musings of an impact practitioner: What is the difference between economic value and social value when monetizing your impact?

I have a certain level of academic research and market research experience. I am trained as a Social Return on Investment (SROI) practitioner by Social Value UK (2015). I am actively practicing social value evaluation methodologies in the context of a global non-formal education and learning (NFEL) programme. I wouldn’t say I’m an expert, but I would like to share my learning and observations in impact measurement and evaluation with the hope that they provide useful insights to those who are gearing up to measure the impact of their product, service or projects and considering to adopt social value analysis as a way of measuring their social impact.

In this inaugural article of my ‘Musings of an impact practitioner’ series, I would like to talk about one of the questions that I get asked frequently: what is the difference between the economic value versus the social value of an ‘output’ or ‘outcome’? And to illustrate this difference, I will elaborate on the economic value versus social value of volunteering in the context of our work with The Duke of Edinburgh’s International Award – Australia as a case study.

What is social value?

Before we go any further, let’s clarify what we mean by ‘social value’. Social value is the value of the changes that beneficiaries and stakeholders experience as a result of using a product or service; or taking part in a project or programme. So, in my context, we deliver a programme for young people through adult mentors and we define our social value as ‘the value of the changes that young people, adult mentors and the wider society experience as a result of coming into contact with our programme’. Using SROI principles and welfare economics, these changes are represented in monetary terms. The monetary value of the impact created is a way of understanding the contribution that your product, service, project or programme makes to society and economy. Simply put, it is the economic value of your social impact.

Economic value of volunteering hours

Volunteering is one of the elements of our programme through which a remarkable volume of economic and social value is generated. Young people who take part in a regular volunteering activity within the programme and their adult mentors who support them at voluntary capacity donate millions of hours of service globally every year. Consider the ‘number of volunteering hours’ as an ‘output’. In 2017, the minimum number of volunteering hours completed by young people who completed the programme in Australia was 242,684. According to 2018 Australian Bureau of Statistics (ABS) figures, the value of volunteer hours in Australia in 2017 was 41.72 AUD/hour. When we adjust this value for age and multiply it with the total number of hours, it sums up to an economic value of 5.1 million Australian Dollars. In other words, young people who completed our programme in Australia in 2017, donated an equivalent of AUD 5.1 million in volunteering hours to their community. Impressive, isn’t it?

But… is it the true value of the impact of our programme? How much of these volunteering hours can we claim as a direct output of our programme? How do we know whether their volunteering activity was due to their participation in our programme? Would they have done it anyway? Did they do more volunteering than before while taking part in our programme? If they did, how much of the increase in their volunteering is due to our programme? Did the time they put in volunteering prevent them from experiencing positive impacts elsewhere? Or did they prevent others from experiencing positive impacts? So many ways we can challenge how much of that economic value we can claim.

 Social value of volunteering hours

All the questions above sum up one of the key principles of SROI approach: do not overclaim. We do this by establishing impact and subsequently evaluating this impact by accounting for attributiondeadweight and displacement. Here is a helpful visual from Collective Value Creation that explains these concepts:

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When these discount factors are considered, we find the social value of young people’s volunteering due to their involvement in the Award in 2017 is AUD 2.1 million. Where do we get these discount factors from? We ask young people themselves through a survey– 2 other key principles of SROI: involve stakeholders andunderstand what changes.

Social value also considers the intention to continue volunteering and the value of volunteering hours of young people over their lifetime. When calculating this future value, ‘drop-off’ factor is taken into consideration to account for the decrease in volunteering activity. The future value of volunteering hours for young people who completed their Award in Australia in 2017 is estimated as AUD 9.5 million. So, our combined social value of the present and the future value of volunteering hours in Australia in 2017 is AUD 11.9 million.

Understanding the value of output versus outcomes

When it comes to finding out about the difference that our programme makes in young people’s volunteering and its social value, there is more to it. ‘Output’ answers the question of ‘what’. As a measure of social impact, social value does not stop at ‘what’; it goes on to explore the value of ‘so what’. So what happens when young people do a minimum of 242,684 hours of volunteering? Now we are talking about ‘outcomes’. For instance, we know from anecdotal evidence and secondary research that increased volunteering leads to improved mental health and well-being. So in our social value evaluation we also look into the social value of well-being due to increased volunteering. I will say more about how social value helps to quantify the value of outcomes in another article.

I am a big advocate of understanding, measuring and communicating impact. Outputs are the low hanging fruit in the entire impact journey. They are the ones that we are most familiar with; we see them in annual reports and key promotional materials. They provide a good starting point for understanding your impact. If you don’t know your outputs start from there; how many beneficiaries, how many hours, how many events, how many touch points, how many ‘likes’? Then find a way to evaluate them to make it meaningful, tangible and relevant in your context. As discussed in this article, economic value is a great way of showing the value of volunteering hours in a community in a tangible way. As you progress further in your impact journey, social value approach may help you identify multiple ways to look at and evaluate your outputs and their outcomes and bring you closer to understanding the value of the difference you make. 

Melek De-Wint is an impact practitioner and supports organisations across the world to understand, measure and communicate their impact.

3 thoughts on “Musings of an impact practitioner: What is the difference between economic value and social value when monetizing your impact?

  1. I realy appreciate this article and indeed give me lot of ideas. I was always asking my self To establish a social values of what we are doing. But nos i have learn from you. So thank for you output impact on me and others.

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    1. Thank you very much for your feedback Ahmed. I am very pleased to hear that you found this article useful in answering some of your questions about social value.

      Like

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