Defining Social Value Through an IT Lens

Defining Social Value Through an IT Lens

Defining value is a difficult task within the nonprofit sector because of the double bottom line with which organizations must contend. Nonprofits must concern themselves with both financial performance and mission-related social value. As a result of the varied missions throughout the sector, the desired outcomes of nonprofits do not readily lend themselves to a standard definition of value.

Nonprofits have the same incentive structure as the private sector to operate efficiently in order to lower costs, perhaps even more so given the much more limited resources. Despite such economic incentives that would lend themselves to delivering on cost-saving IT value, the nonprofit sector lags in technology adoption and management relative to corporations and government.

With no access to capital markets and foundation funding directed at programs, little financial or human resources are available to build the technological capacity of organizations. The lack of technological capacity has consequences in terms of organizational efficiency and effectiveness. From a productivity perspective, delays in adoption create significant operating costs as human resources (both staff and volunteer) are wasted performing mundane tasks such as licking envelopes rather than adopting the latest email or web communication technologies to communicate with constituencies. From an effectiveness perspective, resources are often unavailable for technology that would improve the ability to deliver on mission such as outcomes tracking software or web technologies that allow social workers and their clients to conduct case management online.

Defining Social Value

Nonprofits must derive a specific and focused notion of the social benefits created from programs and activities. “Social Value is created when resources, inputs, processes or policies are combined to generate improvements in the lives of individuals or society as a whole. It is in this arena that most nonprofits justify their existence, and unfortunately it is at this level that one has the most difficulty measuring the true value created.”[1] Beyond the variation between programs and organizations, social indicators are problematic because of the lack of precision and inability to develop causal measures (was the program responsible for the change?), or with data that can be compared across different sectors (is improved nutrition program more or less valuable than increased test scores?).  In order to avoid such conundrums, social policy analysis attempts to quantify the changes economically.

While using economic translation to interpret social value may be appropriate and necessary in determining the value of an investment in a nonprofit, the capacity to both conceptualize and develop measurement systems are limited. IT can be a helpful driver in delivering systems that track success, but the ambiguity of donor intent decreases incentives to measurement and thereby investments into such IT. For example, many donors give because of the personal connection with the organization or its clients, rather than quantifiable measures of the best social return on the investment. IT investments are thereby largely non-strategic and haphazard, directed at basic operational needs such as email and internet access.

There are a group of nonprofits however, that utilize IT as a fundamental activity supplying direct benefits to the society at large. The IT value is more readily quantified as an economic benefit derived through the creation of additional value towards building a “new economy.” Manuel Castells identifies three elements of the new economies: “productivity derived from the application of knowledge and the practice of innovation, competitiveness operat[ing] in a global environment, and a new organizational form which is networking.” [2] Many nonprofit organizations are actively engaged in fostering all three elements yielding greater networking amongst sectors, improved competitiveness and increased economic growth to the target population and the society as a whole.

IT-derived value of nonprofits should be considered within each of the roles that develop new economies: the direct development of technological innovation, the dissemination of technology through digital divide programs, and education leading to improved human capital. Because of their connection with information technology usage and clear economic development goals these organizations can more readily use typical private sector measurements for return on IT investments.

These IT leading organizations provide some modeling in determining how best to capture and measure social value from IT as a model for less IT proficient nonprofit organizations. A large majority however, require more organization-specific measures that are tailored to the mission of the nonprofit. In these cases, nonprofits should use the research on corporations to benchmark the value that they are receive from IT. While most nonprofits will never have the IT investment levels of the private sector, the research is pertinent when adapted to the less capital intensive climate of the nonprofit sector.

[1] Emerson, Jed. et.al. “Social Return on Investment (SROI): Exploring Aspects of Value Creation.” Harvard Business Working Knowledge. (http://hbswk.hbs.edu/archive/1957.html#graph) 2001.

[2] Castells, Manuel. “The Information City, The New Economy, and The Network Society.” In Webster, Frank, ed. The Information Society Reader. New York: Routledge, 2004. pp. 151-153.

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