Social Values

The search for measures to determine the success of failure of social programs is ongoing, and this article from the Stanford Social Innovation Review, is an excellent overview of the issue.

An excerpt.

“Over the last few decades, many people have attempted to measure what is sometimes called social, public, or civic value—that is, the value that nongovernmental organizations (NGOs), social enterprises, social ventures, and social programs create.1 The demand for these metrics has come from all sectors: Foundations want to direct their grants to the most effective programs; public officials, policymakers, and government budget offices have to account for their spending decisions; investors want hard data analogous to measures of profit; and nonprofits need to demonstrate their impact to funders, partners, and beneficiaries. Metrics to meet these needs have proliferated over the last 40 years, resulting in hundreds of competing methods for calculating social value.2

“Despite the enthusiasm for metrics, few people actually use them to guide decisions. In the nonprofit sector, good managers are very rigorous about tracking costs and income. But few use sophisticated metrics to help allocate resources. Meanwhile, in the public sector, political judgment counts more than cost-benefit assessments. In the rare cases when decision makers do use metrics of social value, it’s far from clear that they should.

“I’ve dealt with social value metrics in a variety of roles: as director of policy and strategy under United Kingdom Prime Minister Tony Blair; as director of the Young Foundation, an NGO that has created dozens of ventures, some for-profit, some social enterprises, and some public; and as an advisor to many other governments. In these positions, I’ve seen not only why social value metrics are ignored, but also how to make them more useful.

“One recent project that proved particularly informative was a collaboration between the United Kingdom’s National Health Service (NHS) and the Young Foundation. The NHS commissioned the Young Foundation to develop a practical tool for assessing service innovations and guiding investment decisions. The NHS is a vast organization with a budget of around $150 billion, a workforce of some 1.2 million employees, and contracts with more than 30,000 social enterprises. It needed a set of tools that would be both robust and flexible, and that could be used for decision making as well as evaluation.

“We started by scanning existing social value metrics, such as the ones described in the table “10 Ways to Measure Social Value” on page 41. We found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. In addition to discovering this segmentation, our survey suggested two more reasons why so few metrics guide real decisions. First, most metrics assume that value is objective, and therefore discoverable through analysis. Yet as most modern economists now agree, value is not an objective fact. Instead, value emerges from the interaction of supply and demand, and ultimately reflects what people or organizations are willing to pay. Because so few of the tools reflect this, they are inevitably misaligned with an organization’s strategic and operational priorities.

“The second reason that current measures of social value fail to influence decision makers is that they conflate three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. In the business sector, decision makers use different tools for each of these tasks. An airplane manufacturer, for instance, would use one set of metrics, mandated by laws and regulations, to explain to external stakeholders how it spends its money. The company would then use a second set of metrics to allocate resources in the building of airplanes. (It is a brave manager who would let investors see these internal accounts.) The company would then use entirely different kinds of measures to explain how its activities affect larger economic indicators such as gross domestic product.

“Yet in the social and public sectors, some proponents of new social value measures claim that their metric can play all three roles. Not surprisingly, and despite courageous efforts, these attempts to do three things at once have resulted in the failure to do any one of them well.

“Here, I describe a better way to think about social value: the product of the dynamic interaction between supply and demand in the evolution of markets for social value. I then show how decision makers in the nonprofit and public sectors can use these insights to measure what can be measured without pretending to measure what can’t be. Finally I recommend better ways to make social value metrics. My main advice is that nonprofits and foundations should resist the current trend of developing assessment tools entirely separately from public policy and academic social science, and instead should collaborate across sectors.

“ELUSIVE QUARRY

“The failure of the social and public sectors to measure the value they create does not stem from a paucity of intelligence or good intention. Rather, it reflects four unavoidable complexities that bedevil the measurement of social value. First among these is the lack of hard-and-fast laws and regularities in the social field. Many people would love the social field to be more like natural science, so that they could definitely predict the effects of, say, a $10 million investment in a crime prevention program.

“But unlike molecules, which follow the rules of physics rather obediently, human beings have minds of their own, and are subject to many social, psychological, and environmental forces. Several decades of involvement in evidence-based policymaking has shown me that although evidence should inform all action, very few domains allow precise predictions about what causes will lead to what effects. The social sciences (including business) simply do not have laws in the way that physics has. Even seemingly solid economic principles, such as the rule that demand falls when prices rise, have many exceptions.

“A second reason that measuring social value is hard is that, in many of the most important fields of social action—such as crime prevention, childcare, and schooling—people do not agree about what the desired outcome should be. In other words, the public argues not only about social value, but also about social values. For example, many people want to imprison criminals to punish them, even when incarceration costs more and confers fewer benefits than do alternatives to prison. Psychologists call this willingness to sacrifice a lot to penalize others altruistic punishment.”