Definitions

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

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

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

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).

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.

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

To be a charity in England and Wales an organisation must satisfy the definition of a charity given in the Charities Act, namely an institution which is established for charitable purposes only and which is subject to the control of the High Court’s charity law jurisdiction.

The Waste & Resources Action Programme (WRAP) defines the circular economy as 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.

The inclusion of community/social benefits in procurement contracts.

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.

Contingent valuation is a questionnaire-based technique which is used to establish the value of non-market goods, such as maintaining air quality. See stated preference.

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.

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 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 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 is a measure of the outcome that would have happened if your activity had not taken place.

Double counting can occur if an impact is attributed to two different activities, resulting in it being counted twice. For example, if social value is claimed through spend with local SMEs, you could not also include this figure in the overall local supply chain spend as you would be effectively counting it twice.

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

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)

Financial proxies are used to assign a monetary figure to social value activities in a way that most people can understand and relate to, enabling the outcomes of different activities to be easily compared.

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.

The hedonic pricing method is an example of revealed preference valuation (see below) and is most commonly applied using data from housing and labour markets. The hedonic pricing method estimates the value of a non-market good by analysing how it affects prices for related market goods. For example, two properties may be identical, but one might be located in an area close to a large park, while the other is in an area with no parks. The differences in the value of these two properties provides an estimate of how much buyers are willing to pay to live in an area with easy access to a park or green space.

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.

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

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.

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.

In its most simple form, an issue can be considered to be material if its omission could influence the decisions made. One of the seven principles of social value, published by Social Value International, is ‘Only include what is material’. In this context it refers to identifying material outcomes, or those outcomes that are important enough to consider when making decisions about allocating resources. You can find out more about the standard and how it is applied here.

Monetisation refers to the placing of monetary values on social value outcomes, and is a fundamental element of the Social Return on Investment (SROI) methodology.

Non-use value is the value that people give to goods, even if they have never and will never use those particular goods. The concept is commonly applied to natural and built resources, for example many people have never visited the Amazon, but get value from knowing it exists or that it might benefit future generations. See also use value.

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)

Outcome indicators enable you to measure whether a desired outcome or change has taken place for a stakeholder group. For example, if you are running a befriending programme, the outcome might be reduced loneliness for the participant, and the outcome indicator might be whether the participant reports increased participation in group activities or social outings.

In the context of social value, outcomes can be described as the changes that result from an activity from the perspective of the stakeholder. For example, the outcome for someone taking part in a work experience programme might be increased confidence or improved employability. Outcomes are sometimes less tangible and harder to quantify than outputs (see below); however, when measuring the success of social value initiatives, it is best to focus on the achievements of outcomes, rather than simply monitoring the outputs delivered.

Outputs are a way of describing the activities undertaken for a particular stakeholder group. Outputs are usually described in quantitative terms, e.g., the number of apprenticeships offered, jobs created or volunteering hours provided.

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

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.

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)

The Public Services (Social Value) Act came into force on 31 January 2013. It requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits.

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.)

Revealed preference is a valuation technique which uses the choices made by individuals to estimate a value for non-traded goods. The two commonly used revealed preference techniques are the hedonic pricing method and travel cost method.

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.

Small and medium-sized enterprises (SMEs) make up over 99% of the UK’s businesses. Generally, a medium-sized business is defined as having fewer than 250 employees and either a turnover of up to £42 million (€50 million) or a balance sheet total of up to £36 million (€43 million). A small business has fewer than 50 employees and either a turnover of up to £8.4 million (€10 million) or a balance sheet total of up to £8.4 million (€10 million). A further category is micro businesses, which are described as having fewer than 10 employees and either a turnover of up to £1.68 million (€2 million) or a balance sheet total of up to £1.68 million (€2 million).

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

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.

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

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

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

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

SROI applies accounting principles using financial proxies to determine a ratio value for the (financial) costs versus the (monetised social) value created by particular interventions.

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

As outlined in the introduction to this glossary there are many definitions of social value. It really does depend on the perspective of the stakeholders but here are some examples:

1. The value attributed (see SROI) to the change to individuals, groups or society. Often stated in £s and expressed as a ratio in comparison to its cost.
2. The UK Cabinet Office (2012) describes it as the positive social, environmental and economic impact of an activity on stakeholders over and above what would have happened anyway, considering the negative impact of an activity.
3. Social Value UK says: ‘Social value is the quantification of the relative importance that people place on the changes they experience in their lives. Some, but not all of this value is captured in market prices. It is important to consider and measure this social value from the perspective of those affected by an organisation’s work.’
4. Enterprise UK define Social Value as ‘the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcome.’ (Cook and Monk 2012)

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. https://www.gov.uk/guidance/social-outcomes-partnerships

Social Value International is a global network focused on social impact and social value, which works with its members, networks and partners to embed core principles for social value measurement and analysis, and to refine and share best practice.

In June 2018 the UK central government announced it would require social value to be explicitly evaluated when awarding most major contracts. To help government departments implement this change the Cabinet Office and DCMS worked with departmental commercial and policy teams and supplier representative bodies to develop the Social Value Model, to streamline and standardise the assessment of social value in the procurement process.

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.

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.

In the context of social value, stakeholders are the individuals, communities, organisations or entities that experience change as a result of the activity being assessed, whether positive or negative, or intended or unintended.

Stated preference valuation (also known as contingent valuation) is a questionnaire-based technique which is used to directly establish the value a person places on something. Two common types of stated preference value are willingness to pay (i.e., how much someone is willing to pay for a particular benefit, and willingness to accept (i.e., what compensation someone will accept for the loss of something, e.g., a decrease in air quality). Compare with revealed preference.

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.

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 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).

The Green Book is guidance issued by HM Treasury on how to appraise policies, programmes and projects, providing guidance on the design and use of monitoring and evaluation before, during and after implementation.

Theory of change is a detailed description of how and why a desired change is expected to happen. Often taking the form of a flow chart, the starting point for a theory of change is the desired outcome, which is followed by identifying what inputs, activities and outputs are required to achieve this outcome.

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.

Travel cost method is an example of revealed preference valuation which estimates the use value of non-market goods, such as sites used for leisure and recreation, by assessing how much it costs individuals to access them. By establishing how much it costs the individual to access these sites e.g., a local football stadium or swimming pool, in terms of travel and time, a proxy for the value of the non-market good can be established.

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).

The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. There are 17 SDGs covering topics from climate, water and food crises, to poverty, conflict and inequality. As well as guiding policy and funding decisions for governments, companies can use the SDGs to inform and shape their corporate strategies and take action to achieve a better and more sustainable future for all.

Use value refers to the value that people derive from directly or indirectly using goods. For example, someone might get direct value from walking in a local park or indirect value in the form of improved air quality in the local area from the park being there. See also non-use value.

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 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)

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

The purpose of the Well-being of Future Generations (Wales) Act is to improve the social, economic, environmental and cultural well-being of Wales. The Act sets out a legally-binding common purpose – encapsulated in seven well-being goals – for national government, local government, local health boards and other specified public bodies, detailing how they must work to improve the well-being of Wales.

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 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.

The term WELLBY stands for Well-being-adjusted Life Year and is used to provide a simple and transparent measure of well-being (a key component in the assessment of costs and benefits to a society). A WELLBY equates to a one-point change in life satisfaction on a 0–10 scale, per person per year, and enables a monetary value to be assigned to the well-being impacts of any social value activities. See also QALY.

Willingness to accept is a valuation technique which is used to establish someone’s willingness to accept compensation in exchange for bearing a particular loss, for example an increase in traffic congestion.

Willingness to pay is a valuation technique which is used to establish someone’s willingness to pay for a particular benefit. Typically, it is a questionnaire-based method whereby the individual is asked to respond to a range of choices thereby determining the maximum they would be willing to pay for something, for example, an improvement in their health.