The price of milk: The value of bringing your cows to the supermarket!

Farmers have been protesting this week over the price of milk, arguing that supermarkets are no longer paying them enough to cover their costs of production. As a self-confessed teuchter with a toddler that drinks about a pint a day it’s a subject close to my heart. While some have argued that farmers should ‘industrialise themselves into superfarms’, to reduce the costs of production, for others there is an argument for sustaining farms and farmland because of their value beyond the dictates of market forces. Farmers have literally brought their cows to the supermarket, in order to make a vivid demonstration of the value attached to milk beyond the barcode. 

Image taken from mirror.co.uk
Image taken from mirror.co.uk

These recent events are comparable to a perennial debate in social enterprise: how do you show the social value of an organisations work beyond the financial bottom line?

The need to prove your worth has become ever more important in a culture driven by contracts and outcomes. However, social enterprise practitioners have been grappling with variations on this problem since they started out in the late 1970s and 1980s establishing community enterprises and businesses. They hoped that their ability to obtain funding and contracts would be greatly enhanced if they could find a way of articulating the social benefits of their work, and attempted to show its value beyond purely financial terms. One of the methods they developed was Social Audit and Accounting. As a key practitioner in developing Social Audit and Accounting, the collection of papers and grey literature donated by John Pearce to the GCU archive contains rich material on this subject.

Analysing this material I get a sense of John Pearce as an intensely practical person. Finding a way for organisations to evaluate a double bottom line (a measure of social as well as financial output -sometimes a triple bottom line adds environmental impact too) attempts to solve a complex problem –to render an intangible quality tangible. Pearce and his colleagues developed tool kits to encourage organisations to develop questionnaires and interviews with stakeholders to reflect on and evidence the social benefit of the work they were doing. At their best social accounts can allow organisations to see themselves in a new light, show how they are making an impact on the lives of stakeholders in ways that they did not previously realise.

At times, concerns have been raised that social accounting allows private businesses to generate data on their social impact while ignoring the harmful elements of their practices; that in essence it can be used as a marketing tool by big business. Meanwhile, for many social enterprise practitioners continue to feel that their social value is still not recognised in the procurement process -even through they do articulate it, it doesn’t mean those in charge of the purse strings listen.

From a historical perspective, there’s another important element to consider here. It appears that communities scale down campaigning efforts as the co-ops, community businesses and social enterprises they create begin to feel established. They then invest their time in procurement, social accounting and proving their value within ‘the system’. This refocusing of their energies frequently means that they face problems further down the line in engaging a new generation of community participants. Potentially the means to sustainable social enterprises is to maintain the campaigning element often important in the foundation of these organisations.

Do social enterprises need to take a lesson from the direct action of farmers and continue to bring their cows to the supermarket?!

The social value of Social Value

company-accountants

From very early on in this research it was clear that a central role must be given to social enterprises themselves. There was no point in only considering theory or speaking to ‘high heid-yins’, the voices of social enterprise leaders were needed to reflect the actual work of social enterprises.

But how?

The process needed to be able to gather detailed data on what the organisation does, what it produces and for what people, while also not being so time-consuming to prevent a broad cross-section of voices being gathered. The answer lay in evaluative reports: Social Accounts/Audit (SAA), and Social Return on Investment (SROI).

For those who have never encountered one of these reports, I recommend you do. Conceived as a repost to traditional financial accounting which detail the income and outgoings of businesses in terms of financial value, Social Accounts concern themselves with the social value created by the organisation. SROI involves an almost identical process, only with the addition of a financial representation of the social value produced, using the market prices of alternative methods of achieving the same social outcomes.

The reports are written with meticulous detail, regarding the organisation’s work and the impacts it has on people and the environment. Many are more than 100 pages long, are backed-up with qualitative and quantitative research and externally ‘audited’ by certified individuals. Some organisations compile such accounts every few years, using them alongside tenders and grant applications, justifying their work to the community, and self-reflecting on the work they do and what it achieves.

Despite these benefits and potential applications, a number of respondents have warned of the dangers of engaging in this form of evaluation, sometimes described as a ‘non-core’ activity. While recognising the long-term benefits of engaging in the process, it was claimed that the time it could take to compile them could have detrimental short-term impacts in terms of both the social mission of the organisation, and its sustainability.

And then there is the issue of the financial proxies. An SROI ratio denotes the number of £s of social value produced for each £ invested in the organisation. In this way, social enterprises may be favoured by the tendering process as they claim to achieve many different targets simultaneously. One worry, however, is the validity of the proxies used to calculate the financial price of social value. For example: ‘volunteers valuing their ability to give back by contributing to society’ is represented by ‘cost to individual who volunteers in Uganda for 12 months’. This proxy may have been chosen for the purpose of maximising the financial representation of the social value produced, rather than the accuracy in reflecting the price of recreating the social value. This may be beneficial to the organisation in the short term but might have the effect of gradually reducing trust in SROIs over time.

My brief analysis of the pros and cons of these reports does not do justice to the arguments surrounding them. However, what I can say is that they have proved invaluable to me in gathering data on the work and outcomes of social enterprises in Scotland. So whatever else in the writing, reading or interpretation of them could be criticised, the social value to me and my work is substantial.

For more information on Social Accounting and Social Return on Investment, visit the following websites:

Social Audit Network- www.socialauditnetwork.org.uk

Social Value UK- www.socialvalueuk.org