In today’s world, measuring social value is not just crucial for organisations aiming to make a positive impact on society, it will become mandatory for those companies competing for Public Sector contracts from the 28th October 2024 under the Procurement Act 2023.
There are three prominent methods for assessing social value are Social Return on Investment (SROI), Cost-Benefit Analysis (CBA), and Themes, Outcomes, and Measures (TOM). While they share a common goal, their approaches and focuses differ significantly:
Social Return on Investment (SROI)
SROI is a framework that evaluates the value of benefits relative to the costs of achieving them. It is a derivative of Cost-Benefit Analysis (CBA) but places a strong emphasis on stakeholder involvement. By engaging stakeholders, SROI aims to capture a comprehensive picture of the social, economic, and environmental impacts of an organisation’s activities.
Key Features of SROI:
- Stakeholder Involvement: SROI actively involves stakeholders to understand their perspectives and values.
- Value Creation: It helps identify how effectively a company uses its resources to create value for the community.
- Challenges: SROI can be susceptible to false precision and imprecise estimates, making it essential to approach the results with caution.
Cost-Benefit Analysis (CBA)
CBA is one of the oldest and most widely endorsed methodologies for measuring social value. It compares the projected costs and benefits of a decision to determine its feasibility. CBA is often used in public policy and project evaluation to ensure that the benefits of an initiative outweigh its costs.
Key Features of CBA:
- Feasibility Assessment: CBA helps in determining whether a project or decision is economically viable.
- Quantitative Focus: It relies heavily on quantitative data to compare costs and benefits.
- Broad Application: CBA is versatile and can be applied to various sectors, including healthcare, education, and infrastructure.
Themes, Outcomes, and Measures (TOM)
TOM is a market-leading measurement framework that aligns with the United Nations’ 17 Sustainable Development Goals (SDGs). The National TOMs Framework provides a minimum reporting standard for measuring social value, ensuring consistency and comparability across different organizations and projects.
Key Features of TOM:
- Alignment with SDGs: TOM aligns with global sustainability goals, making it relevant for organizations committed to sustainable development.
- Standardisation: It offers a standardised approach to measuring social value, facilitating benchmarking and comparison.
- Holistic Measurement: TOM considers a wide range of themes, outcomes, and measures to capture the full spectrum of social value.
Conclusion
While SROI, CBA, and TOM all aim to measure social value, they differ in their approaches and goals. SROI focuses on stakeholder involvement and value creation, CBA emphasises economic feasibility through quantitative analysis, and TOM aligns with global sustainability goals and provides a standardised measurement framework.
Understanding these differences can help organisations choose the most appropriate method for their specific needs and objectives.
Watch for more articles on each of the individual measurement methods.
At transformacy, we specialise in Social Value Strategy, Implementation and Measurement. If you would like to find out more about measuring the impact of Social Value initiatives/ projects please do not hesitate in getting in touch.
