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I am working on my last phase of my MBA and I have asked myself the question "How to valuate a social enterprise"?

  • Should that only be the financial value?
  • Or does social/environmental value creation also have a value? And if so, how to put an US$ amount on it?
  • And how that this come back in the total value of the enterprise?

This question is more from a small/medium sized social enterprise perspective than an investor’s point of view (but investors seem to have given this a bit more thought already).

I am familiar with Social Return on Investment (SROI), Social Audit, Development Index and they might put $€₤ on social value but how is that translating to the total value of the social enterprise?

In an earlier discussion with John Mulkerrin he turned my question around in: 'what values would an investor find agreeable?'

I am aware that there are different investors (angel and impact) and I have been told that they don’t mix. Impact investors are aware of the importance of the triple bottom-line but often still want high commercial returns.

Does any of you have knowledge or opinions to share?

Regards,

Angelique Smit

angelique@ideas-at-work.org

 

 

Views: 253

Replies to This Discussion

Hi Angelique

Value in a wider sense is subjective, as is investor. For example, an individual may decide to put a cash injection into your SE or decide to invest time in helping you agree your goals. I know this sounds a little pedantic but its important to open the space for innovation.

Generally you should have good information for your stakeholder, 

  • Should that only be the financial value? No, even traditional companies include a wide range of information in their company reports
  • Or does social/environmental value creation also have a value? And if so, how to put an US$ amount on it? Using standard metrics that are acceptable, you might not price everything but if your assumptions are conservative they should be acceptable to most.  'Not everything that is counted counts, and not everything that counts is counted'......of course social and environmental outcomes have a value, but that could be a question of traditional business truly reflecting their cost to society and the environment better, for example many companies dont pay for the environmental impact they create. As usual these questions cannot be answered in isolation, and im want to wander :-)
  • And how that this come back in the total value of the enterprise? Dare I say it, in the normal ways..someone may like to invest in you based on your financials, someone may choose to use you as a customer because they have an empathy with your brand and values, a foundation may want to provide you a grant to further their common aims with you, a company may want to sponsor you to improve their company profile by association, a local authority may be impressed with your monitoring and evaluation of difficult issues to metric and procure you into their service delivery. Good information creates good outcomes.

Its no longer in the in the best interests of the shareholder to maximise profits at the expense of any other consideration, but then I would say that!

John

 

I know a guy doing a PHD on this in the UK. He was looking at the profit-value created, the societal value created plus also the value of the brand the entity has, and how these three interact.

 

Apple selling a new laptop would be very different to BMW selling laptops.

Apple selling apple juice is very different to Tropicana selling apple juice.

Apple selling coffee beans is entirely different to Cafe Direct selling coffee beans.

Hello Alastair,

would it be possible to get the contact details of this person? He could be a valuable person for me to talk to.

Thanks,

Angelique

Jim Clifford of Baker Tilly accountants here in the UK

 

http://www.bakertilly.co.uk/contact/people/pages/jim-clifford.aspx

thanks!

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