How social enterprises can help you meet the requirements of the Social Value Act

29 August 2014

A guide to buying social and how you can add extra social value to your procurement decisions.

Value for money is still the overriding factor for procurement decisions in the public sector. But the Social Value Act has changed how that value for money is calculated.  Now, as well as things like cost, quality and risk, public sector organisations and social landlords now also have to consider environmental, economic and social value.

How can social enterprises help?

Social enterprises offer the same level of quality in their services/goods as any other business so there’s no issue with standards of delivery or production.  They also have to be competitive in price – after all, they’re up against private sector competitors and know that it often comes down just to price.  So there may not be any real difference in how the services or goods are delivered.  It’s what happens afterwards that makes the difference.

Instead of the profits going into the owner’s or shareholders’ bank accounts, they are instead used to fund a social mission. So, at Newground, we gift aid all our profits at year end to our Group’s charity, Newground Together.  The charity then distributes them in the form of grants to charities and community groups that are delivering projects that match our social mission.

Et voila! Added social value with no additional effort needed from the client.  Just by selecting a social enterprise as a supplier, additional social value has been created.

Things you can do now

  • Adapt tender documents.  There may already be a place for suppliers to record their environmental credentials but is there a place for applicants to specify what additional social, environmental and economic value they can add?  Weighting for each of these specifications will also need to be developed for comparison.
  • Have a look at existing suppliers.  Are there any services or products that you currently buy that can be bought from a social enterprise instead?  Many social enterprises operate as a commercial business and offer the same service or product as their private sector competitors.  So you can even buy your tea and coffee supplies from a social enterprise.  By switching, you can ensure there is added social value to the procurement decision.
  • Consider SROI.  One way of evidencing the social value gained from a project is to calculate its Social Return on Investment (SROI).  This method places financial proxies on outputs achieved in order to work out a monetary equivalent for the social value created by the project.  There’s lots of information on the web about SROI but if you want to see how it works in a nutshell, here's a quick runthrough.
    • Decide what outputs you want from the project (e.g. number of apprentices used in contract)
    • Record these outputs (number of days the apprentice worked on the contract e.g. 8 weeks)
    • Find the financial proxy using resources such as (£170 per week – figure from Global Value Exchange)
    • Multiply these together (£1,360 for the above example) and add to the other outputs. 
    • Compare this against the cost of the contract (e.g. £10,000 spent and £12,000 of social value created in total)
    • Calculate your SROI value.  For the example above, you have created £1.20 of social value for every £1 spent.

Don't forget to link with existing strategies. Many public sector organisations and social landlords now have a sustainable commissioning and procurement strategy that they can link up to their activities with social enterprises. There may also be social objectives in the corporate plan and sustainable communities strategy.

How to find a social enterprise.

There are several directories of social enterprises in the UK, which are all categorised by type of service or product, so they’re pretty easy to use.

If you can’t find what you’re looking for there, you can also send a tweet to @SocialEnt_UK and include the hashtag #buysocial.  The Social Enterprise UK team will help you find the supplier you want.

Further information.

If you want to know more about social enterprises and how to get involved, here’s a really great video from Social Enterprise UK.

Social Enterprise UK have also developed a guide for public bodies on the Social Value Act.


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