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Glossary for Making sense of Social Value (2019)

The definitions for social value and its related terms are fluid and change depending on who you ask and when.

An agreed definition of social value does not exist and rather like beauty, social value is in the eye of the beholder. So, rather than providing a static dogmatic definition of social value and its associated terms, I have tried to define, measure and capture the language of social value by collecting definitions from the perspective of various others. These ‘others’ could be individuals, groups, or organisations in cities, towns and villages across the UK or the world and so definitions will naturally differ depending on context. I make no claim to these definitions. I agree with some but not with all but they are either generally agreed by most of the people most of the time, or come from a particular perspective.

The definitions are not intended to be comprehensive but should give you enough information so that you can undertake your own research and come to your own conclusions.

As the field of social value is dynamic and evolving, I will periodically add to and/or update the list. If you have any you would like to have added, or indeed if you think you have a clearer definition, feel free to email me and I will review and make the necessary changes. Remember though, these definitions are deliberately broad and are used as a general rule of thumb by most of the people most of the time mostly. Specific sectors, organisations and individuals will have their own versions of many of these explanations and if this ambiguity causes you concern, you are in for some sleepless nights. Embrace the vague, cuddle the imprecise and take the ambiguous out for a drink and a film.

Neil Capstick January 2020

Activities icon-chat

Activities are defined as how we use the inputs to achieve the outcomes.

Additionality icon-chat

Additionality is the extent to which something happens as a result of an intervention that would not have occurred without that intervention.

Attribution icon-chat

Attribution is how much of the actual outcome was caused by us and not by other factors.

Blended value icon-chat

Blended value includes all values an organisation creates, and takes the view that value is generated from the combination and interaction between the components part of economic, social and environmental activities/performance. (Emerson 2003).

CBA-Social Cost Benefit Analysis icon-chat

Cost benefit analysis is where the expected costs and benefits of an intervention are estimated and the trade-off between costs and benefits is considered. Social CBA requires all impacts – social, economic, environmental, financial etc. – to be assessed relative to continuing with what would have taken place in the absence of intervention, referred to in the Green Book as Business As Usual.

CEA – Social Cost Effectiveness Analysis icon-chat

Cost effectiveness analysis compares the costs of alternative ways of producing the same or similar outputs.

Circular economy icon-chat

I have chosen the definition given by WRAP: A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.

Community Benefit Clauses (CBC’s) icon-chat

The inclusion of community/social benefits in procurement contracts.

Community Benefits icon-chat

Defined in the Procurement Reform (Scotland) Act 2014 as a contractual requirement, community benefits relate to training, recruitment and the availability of sub-contracting opportunities.

Corporate Social Responsibility (CSR) icon-chat

Corporate social responsibility includes things like business ethics, sustainability and corporate citizenship; organisations that attempt to maximise environmental and social value by their activities. It is sometimes criticised for being a cynical attempt by business to promote a positive brand/image by doing very little.

Cost-benefit analysis icon-chat

A cost-benefit analysis compares the monetary values of costs and benefits to establish what the net cost or benefit of an intervention might be. To support this, an increasing stock of unit cost data is emerging.

The Treasury Green Book explains how to conduct a social cost-benefit analysis as a way to appraise a project and includes some information on estimating costs/benefits that do not have a market value.

Deadweight icon-chat

Deadweight is a measure of the amount of outcome that would have happened even if the activity had not taken place. It is calculated as a percentage.

Discounting icon-chat

Discounting is used to compare costs and benefits occurring over different periods of time – it converts costs and benefits into present values. It is based on the concept of time preference: that generally people prefer to receive goods and services now rather than later. If Projects A and B have identical costs and benefits but Project A delivers benefits a year earlier, time preference means Project A is valued more highly. (The Green Book)

Displacement icon-chat

Displacement is an assessment of how much of the outcome displaced other outcomes.

Dropoff icon-chat

In future years, the amount of outcome is likely to be less or, if the same, will be more likely to be influenced by other factors, so attribution to your organisation is lower. Drop-off is used to account for this and is only calculated for outcomes that last more than one year.

Econometrics icon-chat

Econometrics are metrics linked to traditional economic measures, for example, financial, GDP etc.

ESG (environmental, social and corporate governance) icon-chat

Environmental, social and corporate governance is to do with measuring the sustainability and ethics of an investment using these three categories to determine if the investment is a responsible one. (See SRI)

HACT icon-chat

The Housing Associations’ Charitable Trust. Their website says ‘HACT is a solutions agency committed to promoting ideas and innovation across the housing sector.’ I have no idea what this means in practice but they have developed the social value calculator for the industry.

Horizontal policies (also known as secondary objectives) icon-chat

Horizontal enforcement of policies occurs when a given policy or group of policies are enforced through horizontally integrated governance processes.(Halloran 2017) For the purposes of social value, this applies to the 2014 procurement directives, the Social Value Act 2012 and the Procurement Reform (Scotland) Act 2014.

However, there is a wide range of government policies which could fall into this category, for example, the Equality Act 2010.

Impact value statement icon-chat

An impact value statement is a report declaring the social impact of your social value activities.

Inputs icon-chat

Inputs are all the resources used/needed to accomplish social impact or social value. Social impact and social value are often used interchangeably, but a distinction should be drawn because when evaluating the impact, assumptions are made as to the value at a societal level. Some would argue this is merely semantics, but it is an important distinction, especially considering the subjective nature of social value generally. At the time of writing there is still no commonly agreed definition of social value.

Local Multiplier 3 (LM3) icon-chat

Created in 2002 by the New Economic Forum, LM3 maps a business’s source of income and how this is spent and then re-spent in the local economy to generate benefits.

Optimism Bias icon-chat

Optimism bias is the proven tendency for appraisers to be too optimistic about key project parameters, including capital costs, operating costs, project duration and benefits delivery. (The Green Book)

Outcomes icon-chat

Outcomes are less tangible (and so harder to quantify) than outputs, for example, increasing confidence, increasing employability or reducing reliance on X.

Outputs icon-chat

Usually the benefits or changes for the intended stakeholder group, outputs are often stated as numbers: for example, the number of jobs created or the number of users of a service.

Procurement Reform (Scotland) Act 2014 icon-chat

The Act imposes duties for Scottish public bodies, including sustainability requirements and a lower regulated threshold of £50,000.

Public Sector Organisations icon-chat

The public sector is made up of organisations funded by the population and owned by the government delivering free or subsidised services to the population of the country.

Public Service Mutual icon-chat

Organisations that have left the public sector but continue delivering public services and have a significant degree of employee ownership, influence or control are known as public service mutual. (Department for Digital, Culture, Media and Sport, Office for Civil Society, July 2019)

Quality Adjusted Life Year (QALY) icon-chat

A QALY is a measure of the state of health of a person or group in which the benefits, in terms of length of life, are adjusted to reflect the quality of life. One QALY is equal to 1 year of life in perfect health.

QALYs are calculated by estimating the years of life remaining for a patient following a particular treatment or intervention and weighting each year with a quality-of-life score (on a 0 to 1 scale). It is often measured in terms of the person’s ability to carry out the activities of daily life, with freedom from pain and mental disturbance. (National Institute for Health and Care Excellence.)

Shadow Prices icon-chat

The financial values assigned to social value outcomes.

Silva Clause icon-chat

The Selwood Housing Group included the Silva Social Enterprise (it is now dissolved), which aimed to support the development of enterprises that could reinvest funds in their communities. The Silva Social Enterprise Clause emphasised the importance of social value and enabled contractors to increase their score by including components that contributed towards community benefit.

Social Clause icon-chat

A social clause is a legal requirement within a procurement contract which stipulates that the contract must provide added social value. (Halloran 2017)

Social Enterprise UK icon-chat

SEUK is a large network of social enterprises in the UK. SEUK’s vision is of a more equal society believing that social enterprise offers the best chance of creating a fairer world and protecting the planet.

Social Entrepreneur icon-chat

A social entrepreneur runs a business for the greater good and to solve social problems rather than for personal profit.

Social Impact Analysis icon-chat

Social impact analysis is any method of attempting to assess/quantify/report social impact.

Social Justice icon-chat

Generally, social justice is to do with equality, freedom, reducing poverty and the common good.

Social Responsibility icon-chat

Social responsibility is the responsibility of organisations for their impact on society and the environment, as evidenced through transparent and ethical behaviour that:

  • Contributes to sustainable development, including the health and welfare of society
  • Takes into account the expectations of stakeholders
  • Is in compliance with applicable law and consistent with international norms of behaviour
  • Is integrated throughout the organisation and practised in all its relationships

Extracted from ISO 26000:2010

Social Time Preference icon-chat

In government appraisal, costs and benefits are discounted using the social time preference rate of 3.5%.

Social Value Bonds icon-chat

Social impact bonds (SIBs) are a commissioning tool that can enable organisations to deliver outcomes contracts and make funding for services conditional on achieving results. Social Investors pay for the project at the start, and then receive payments based on the results achieved by the project.

Social Value Taskforce icon-chat

The National Social Value Task Force was founded in February 2016 in order to establish a good practice framework for the integration of the Public Services (Social Value Act) 2012 (‘Act’) into our public sector and business.

Socially Responsible Investment (SRI) (sometimes known as Social Investment) icon-chat

Also described as green investing, sustainable investing, ethical investment. These are investments in organisations, projects or initiatives that are considered to be socially responsible due to the nature of the activities, products or services the organisation undertakes.

Statistical Life Years (SLYs) icon-chat

The value of a SLY is derived from the social value of a small change in the probability (the risk) of losing or gaining a year of life expectancy.

Sustainable development icon-chat

The UN defines sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’

Targeted recruitment and training icon-chat

Targeted recruitment and training is a type of social clause whereby the buyer specifies the types/categories from which employees are drawn, for example, the long term unemployed or NEETs (Not in Employment, Education or Training).

TOMs (themes, outcomes and measures) icon-chat

The aim of the National TOMs Framework is to provide a minimum reporting standard for measuring social value and is designed around five key issues, 18 outcomes and 35 measures.

Triple Bottom Line icon-chat

The ‘triple bottom line’ is used as a framework for simultaneously measuring and reporting organisational performance against economic, social and environmental parameters (profit, people and planet).

Utility icon-chat

In economics, utility refers to the usefulness or enjoyment a consumer can get from a service or good. This is an over-simplification and its usage and application vary significantly depending on the context.

Value of a Prevented Fatality icon-chat

Value of a prevented fatality measures the social value of changes in risk to life. It is used to value small changes in fatality risks, where levels of human safety vary between options. This is not the value of a life: it is the value of a small change in the risk or probability of losing a statistical life. Not to value this in appraisal would effectively value human safety at zero. (The Green Book, pg. 51)

Voluntary Community and Social Enterprises (VCSE) icon-chat

Social enterprises make a profit but reinvest or donate profits to target social problems. Community enterprises are community owned, led and controlled and use their profits to tackle environmental and social problems in their area so yes, they are social enterprises too.

The widely accepted definition of a social enterprise is:

“businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners”

Welfare Economics icon-chat

Welfare economics attempts to evaluate economic policies with regard to the effect on the welfare/wellbeing of the community. (The Encyclopaedia Britannica)

Wellbeing Assessment Tool icon-chat

There are now a wide variety of wellbeing tools around, but all share the same common aim – to assess an individual’s wellbeing. The Warwick-Edinburgh Mental Wellbeing Scale (WEMWBS) is one such tool but there are many more in use, some complex and others less so.

Wellbeing Valuations icon-chat

Wellbeing valuations measure the success of a social value intervention or initiative by how much it increases the self-reported wellbeing of the target group, and then transposes this into a financial value.