In 2016, a calculator was developed to estimate how successfully engaging individuals who are marginalized in employment could influence poverty-related outcomes and associated societal costs. It draws on empirical research about the links between employment and health, wellness and other societal outcomes and relates this to data that most social enterprises are tracking. While the data used in this calculator specifically related to Vancouver, Canada, the method may be possible to replicate in other regions. We have made the Method paper and a Powerpoint presentation available to learn about this tool, which was part of a larger project that you can learn about here. A calculator was developed in Flash which you may be able to see here. However, the format is out of date and is often not visible on devices. This calculator in turn wasbased on an Excel spreadheet that is quite complex, and which we have chosen not to post on the website. However, if you are interested in this, please contact Demonstrating Value directly.
An exerpt of the Method paper is shown below. Please download the full version on the side bar.
Social enterprises engage individuals in employment and other economic activities who are not welcome elsewhere. They offer opportunities where none existed in ways that can fill different needs for individuals, from casual work for people who may still be ‘street involved’, to short-term training positions, to long-term permanent positions for people who are further in their recovery. While there are a few specific case studies of the impact of individual social enterprises in Vancouver, and some research into the size and composition of the social enterprise sector in B.C., there is little analysis that connects social enterprises to the substantial research that exists about the impacts of meaningful work and community inclusion, and their role in reducing the societal costs of poverty.
To respond to this need, Vancity Community Foundation has developed a societal cost impact calculator. This calculator provides social enterprises with a straight forward means to make estimates of their impact based on data that they could reasonably gather, and which draws on empirically-supported research. The results of the calculator may be useful to government and others in showing how social enterprises are connected to important social and economic policy objectives, and the general direction and magnitude of their impact. This calculator is part of the project, Measuring the Collective Impact of Social Enterprises in Vancouver that Provide Targeted Employment and Training. This project has been made possible with funding support from Central City Foundation, Vancity Savings Credit Union, and Vancouver Foundation.
Developing a Cost Calculator
The societal costs of poverty in British Columbia are estimated to be $8.1 to 9.2 billion a year, based on higher health care costs, crime costs, reduced economic productivity and the cost of poverty to future generations (Ivanova, 2011). This estimate is just one example of a sizeable body of research that has sought to identify and model the societal costs of poverty as well as the specific factors that influence the incidence of poverty. This research is the basis for developing the calculator, along with establishing the pathway in which the activities of social enterprises contribute to reducing social inequity and poverty.
Recent experience in social impact measurement internationally has shown that impact measurement is challenging to do, particularly in measuring mid and long term outcomes. Small, grass root organizations have limited resources and technical expertise to measure and monetize impact. The proposed calculator could provide a useful tool to social enterprises, and those that support social enterprise development, to illustrate social impact and to put it in context of other efforts to address poverty and community inclusion. By developing this calculator, social enterprises can focus on measuring what is most useful to them at an operational and planning decision-making level: how they can most effectively engage the people who are marginalized in the social enterprise and to how to develop a successful business.
Developing a cost calculator is not new in the field of social impact measurement, but does not appear to have been applied to work-integration social enterprises (WISE). For instance, the Capital for Health Families and Communities (2014) developed a Social Impact Calculator for its Low Income Investment Fund’s program areas: affordable housing, early learning, education, health, and equitable transit oriented development. They leverage academic research to estimate impact and monetized value based on ‘impact pathways’ so that estimates of impact can be made based on data that can be collected fairly easily. In our case we leverage a wide range of research and modelling, such as recidivism models and economic input-output models, to develop a calculator that can be used by WISE social enterprises in Vancouver, and which could potentially be adapted to other contexts.
The outputs of this calculator can be integrated into methods which develop investment and decision-making ratios such as Social Return on Investment (SROI) and Cost-Benefit Analysis (CBA). For more information about these methods see Box 1. While SROI practitioners describe health, crime rate and other outcome indicators in impact models, social enterprises often do not have adequate outcome data to support the analysis, and many assumptions are needed to be able to ultimately calculate a ratio. Our societal cost calculator makes it easier to estimate impact by using existing empirical research to establish impact relationships. In this way, we can more reasonably estimate impact based on data that a social enterprise is likely to actually collect.
2. Method Overview
The calculator is set up as a predictive model based on base year data, currently set for 2015. Outcomes are estimated for a five year period.
Costs are discounted to the base year using a discount rate of 3%, which is consistent with the social discount rate recommended by the Treasury Board of Canada (2007). All costs are in 2015 dollars (Cdn) unless otherwise noted. Where necessary, cost data sources are converted to 2015 dollars using the Consumer Price Index.
All costs are calculated based on the number of individuals engaged by the social enterprise that ‘show a strong level of engagement’, which is a subset of the total number that are engaged.
Costs are described as:
• Public: fiscal implications in terms of public expenditures.
• Private: implications for the individuals who are marginalized and/or to other individuals. These can be both tangible (as measured in the market place), or intangible (not measured in the market place).
Definition of Social Enterprise
The calculator is designed to be relevant to social enterprises that use different work integration models to engage individuals who are marginalized. The user is asked to specify which model best characterizes them. The calculator will adjust calculations and parameters based on this setting.
Work integration social enterprises have different approaches for engaging individuals who are marginalized.Some enterprises provide formal on-going employment, others short-term training opportunities, others legitimize informal economic activity, and others provide a mix of these approaches. All approaches involve the provision of a service and/or product, and all ultimately have a common objective to improve the stability, health and well-being of individuals who are marginalized. They also typically provide one-on-one support to enable individuals to succeed that is appropriate to an individual’s need.
The calculator estimates impact and associated costs for the areas described in the table below. Where possible, these are specific to Vancouver, B.C. Canada.
Key costs not included
Reduction in use of health care services for individuals living with mental illness
Reduction in health inequities (i.e. Differences in Health outcomes based on socio-economic status)
Reduction in recidivism for individuals recently involved with the justice system
Changes in income assistance and other support payments (optional)
Local Economic Impact
The model’s coverage reflect the current availability of empirical research. For instance, recidivism is included because recidivism models and statistically estimated parameters are well established. In contrast, it is more challenging to include the potential for work to prevent new criminal behaviour, so this cost was not included. Ideally the coverage of the model will improve over time as more research is conducted.
FOR A DETAILED DESCRIPTION OF THE COSTING METHOD, PLEASE DOWNLOAD THE PAPER ON THE SIDE BAR.