15 March, 2014

Measuring the Social Impact of Community Investment: Methodology Paper

This paper sets out the methodology and analytical approach underlying the work on community investment and social value. The broad aim of the project is to:

The methodology follows HM Treasury Green Book and Magenta Book guidelines on policy evaluation. The Green Book sets out the theoretical approach of policy evaluation in the context of cost-benefit analysis and the Magenta Book provides technical guidelines on the statistical techniques to be used for inferring the impacts of policy interventions. They form the basis of all public sector policy and programme evaluation frameworks in the UK and are consistent with policy evaluation methodology in all other OECD countries and international organisations like the World Bank and United Nations.

Housing providers work in a number of areas when it comes to community investment. This includes initiatives aimed at crime reduction, local regeneration projects, employment assistance, mental health interventions and community projects. These interventions are intended to impact positively on people’s lives and hence create social value. This programme of work has developed metrics that apply monetary values to the broad range of outcomes associated with community investment.

The methodology draws heavily on the Green Book and its supplementary guidance on valuation methodology developed in 2011 (Fujiwara and Campbell, 20113). The value metrics are derived using a consistent methodology that makes them fully comparable across different community investment domains. The values are fully consistent with the strict economic theory and principles underlying cost-benefit analysis (and SROI) and use statistical methods at the forefront of valuation methodology and so in this respect they provide a level of rigour to allow the analyst to use the values with confidence in cost- benefit analysis or social return on investment (SROI) analyses. This project derives values for community investment outcomes that are unparalleled in terms of their robustness and hence represent the best source of information on the social value associated with community investments. A discussion of the role of wellbeing valuation in social impact measurement can be found in Annex B.

The values produced through this process have been developed using the optimal techniques and data available to us today. But they inevitably come with limitations (some of which we already know about and acknowledge where relevant), and any knowledge of this sort is subject to revision and updating as time goes on. However, at the time of publication we are confident that the set of values have been developed using techniques that make them both robust and internally consistent.

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Measuring the Social Impact of Community Investment: Methodology Paper

PUBLISHED: March 2014

AUTHORS: Daniel Fujiwara

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