How can we best measure social value?

All professional organisations review and measure their activities to assess whether they have been successful or not. For commercial organisations, this is primarily assessed using financial metrics, such as profit margins, level of reserves and return on investment. For values-led organisations, where fulfilling a social mission rather than financial objectives is the main purpose, measuring social value should be an essential requirement.

We need to recognise how time-consuming social value measurement is and that organisations often lack the resources required

Without it, not only are organisations missing an important part of their performance story, but they also cannot properly assess whether they are being successful or not when judged against their social mission. Measuring social value has become an increasingly prominent issue as funders expect recipient organisations to demonstrate how their work makes a difference. Some funders are also embedding social value measurements into their commissioning processes.

The introduction of the Public Services (Social Value) Act in 2013 requires public sector bodies such as local authorities and the NHS to take into account wider social and environmental value when they choose suppliers. This public demand for greater transparency and an increased awareness of social and environmental issues means organisations have to place more emphasis on measuring social value as they manage their brand and marketing messages.

Social value into financial value

The problem is that there’s no agreed measurement framework or methodology for social value reporting – in stark contrast to financial reporting that is underpinned by accounting standards. This lack of consistency and piecemeal approach is making it difficult for the arts sector to demonstrate coherently the social value it is creating, and to promote itself as a sector that generates significant social value.

The dominant approach is to translate social value into financial values, using a framework such as social return on investment. By taking measurable impacts such as jobs created and converting these into financial proxies, a financial return can be calculated.

Notwithstanding the subjectivity of the process, this approach can help organisations to target their resources to areas where the greatest impact is made. But while monetisation represents value in a way that is widely understood, the risk is that it leads to a one-dimensional approach focused on funder-driven values and financial accountability, rather than achieving a broader stakeholder accountability.

Social value does not have the same meaning for everyone – it’s open to individual interpretation. The same activity, output or outcome can be valued differently by different people. Identifying the stakeholders and what they value is a prerequisite step in defining what social value is. Not all value can be monetised, and some methodologies are being developed using non-monetary measures. The limitation of this approach though is that it lacks consistency and can be highly subjective. It can depend on which stakeholders have the loudest voices.

Extrinsic and intrinsic benefits

So how do arts activities create social value?

In the same way that other community-based and community-led projects such as sports programmes or faith-based activities do, arts activities enable participants to learn new skills and gain a sense of achievement.

Participation can improve confidence, self-belief, broaden horizons and create new ways of thinking. Arts activities give participants life-enhancing experiences and improve wellbeing through being active and engaged. They can lead to feelings of empowerment and raise expectations. This can build social cohesion through creating group identity, reducing social isolation and breaking down perceived barriers. Then there are the wider economic benefits that government funders often seek, such as job creation and growing the visitor economy.

But the arts bring another, more personal dimension too: the imprint of the arts experience itself. This is the intrinsic benefit of the arts – inspiring, captivating, empowering, intellectually stimulating and thought-provoking. These intrinsic benefits are less obvious and hard to measure, but without engaging the audience, the other instrumental benefits of the arts often do not follow on.

An objective framework

So what should a social value measurement framework for the arts look like?

First of all, measures need to align with the organisation’s objectives. The mission and values should be translated into planned outcomes and impacts, and then measures can be used to describe and monitor how the organisation is achieving its mission. As such, any framework needs to be developed by the arts sector itself. If frameworks are imposed by funders, organisations will measure what is important to the funders and not their own mission. This may compromise the meaningfulness of the data and/or skew the organisation’s activities away from its mission.

Any framework clearly needs to be objective in its approach and have a robust methodology underpinned by agreed principles that can be scrutinised and tested. But measures of success need to transcend simple volume metrics. Measures such as audience numbers and number of participants are output measures. They describe the reach of the organisation but not necessarily its impact.

But social value is not just created through outcomes. It is created through beliefs, impacts, and intrinsically as well. So any measurement framework needs to assess the intrinsic value of the art, as well as its instrumental value.

There is limited value in trying to use a monetisation framework, because much cultural value simply cannot be measured in money terms. To attempt to do so is to assume that cultural value flows in the same way as financial resources flow. Such an approach would fail to measure the totality of the social value being created by the arts sector, and more significantly, would seem to miss the point of what the arts sector’s primary aspiration is.

A simple tool

Finally, we need to recognise how time-consuming social value measurement is and that organisations often lack the resources required for the training, data collection, analysis and communication to do this effectively. Any framework needs to be simple enough to use so that resource constraints do not limit its take-up and utilisation. Nonetheless it needs to be detailed enough to produce meaningful data. There is opportunity to use ‘big data’ to support this.

As every organisation will have different social purposes, a framework does not necessarily need to create ways to compare organisations. Art works in mysterious ways that can never be fully understood, and the challenge is to find ways to show and evidence the different kinds of value being created, and then to measure and assess its effectiveness. In this way, we can start to better understand how the social benefits of art are created, and demonstrate this more clearly to all who will listen.

Matthew Brown is Finance Director of the Foundation for Art and Creative Technology (FACT).
www.fact.co.uk