Social value is the value that people place on the changes they experience in their lives. Some, but not all of this value is captured in market prices.
The Principles of Social Value provide the basic building blocks for anyone who wants to make decisions that take this wider definition of value into account, in order to increase equality, improve wellbeing and increase environmental sustainability. They are generally accepted social accounting principles and are important for accountability and maximising social value.
The Principles are not individually remarkable; they have been drawn from principles underlying social accounting and audit, sustainability reporting, cost benefit analysis, financial accounting, and evaluation practice. There are other guides available on the process of measuring and reporting social value and impact that also refer to principles, such as the Social Investment Taskforce Guidelines for Good Impact Practice. However, the Principles of Social Value can be distinguished by their focus on what underpins an account of social value, and on the questions that need to be addressed so that the information can be used to better inform decisions.
An account of social value is a story about the changes experienced by people. It includes qualitative, quantitative and comparative information, and also includes environmental changes in relation to how they affect people’s lives.
By applying the Principles, it is possible to create a consistent and credible account for the value that is being created or destroyed. The outcomes, and the measures and values of outcomes, can remain specific to the context, activity, and the stakeholders involved.
When applied, the Principles also create an account that recognises that the level of rigour required depends on the needs of the audience and the decisions that will be taken.
The application of the Principles will require judgements. Therefore the information produced using the Principles needs an appropriate level of independent verification or assurance. As a result, the requirement for verification is also a principle. More guidance on making judgements can be found in A Guide to Social Return on Investment.
Adopting the Principles will sometimes be challenging as they are designed to make invisible value visible. Value is often invisible because it relates to outcomes experienced by people who have little or no power in decision-making. Applying the Principles will help organisations become more accountable for what happens as a result of their work, and means being accountable for more than whether the organisation has achieved its objectives.
The Principles of Social Value:
(1) Involve stakeholders – Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders.
(2) Understand what changes – Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes as well as those that are intended and unintended.
(3) Value the things that matter – Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders’ preferences.
(4) Only include what is material – Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact.
(5) Do not over-claim – Only claim the value that activities are responsible for creating.
(6) Be transparent – Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders.
(7) Verify the result – Ensure appropriate independent assurance.