The SROI Network UK

(lack of) consistency in measuring social value

The biggest problem that is faced by all of us interested in social value, impact, returns  - whatever language you prefer –is the lack of consistency. And yet I still keep hearing ‘we can’t support one approach’ or ‘organisations should be able to choose methods that are most appropriate to them’ or ‘small and start up organisations should be able to do something simple’. This general difficulty to go for consistency and standardisation is costing us dearly, not just in organisations that aim to create social value but in all businesses, since all businesses have wider effects than those reflected in their financial accounts. Of course many would not think a choice is required, that standardisation is not necessary. And of course if we had consistency and standardisation there would be some organisations that would not create as much value as they had previously argued, and some activities that do create value that would lose out. 

But this is costing us all far more than we would lose. To imagine how much, think about a world in which these arguments - ‘we can’t support one approach’ etc etc - had won out for financial accounting. All organisations could use whatever approach, whatever basic principles, whatever frameworks, they wanted in reporting on financial value. Not only in how they accounted for transactions but in how they then presented the account. Comparison between organisation’s performance would become impossible, our ability to judge whether we should invest in, sell to, or become employed by any organisation would be hugely reduced. Investment would collapse. It would result in a global financial crisis that would make the last one seem irrelevant.

‘But it is easier to measure things for financial reporting than for social value’.  Does this mean we shouldn’t start? Financial reporting would like to measure and value more things than it can – particularly around for example intangibles – but this doesn’t mean it shuts down the whole machinery until it can.

We should start and in order to start with something that is not a debate about which tool should we use and so that we start with something which we can build on, we should start with principles. A set of principles that would help us answer the question..how much of a difference are we making?