How do we value a social venture?

As we begin to think about a new economy with blurred sector delineations, we also need to consider how those new ventures will be valued. Since social ventures have an element of profitability it is clear that that measure will be one of many in its evaluation. The other measures, those of social benefit are the ones that are much harder to parse out.

When you begin to try to value a social benefit you inevitably run up against the question of personal value versus communal value. Money necessarily removes all differences in personal value of a company by assign a dollar amount to each person’s personal value, this can be compiled to show the demand in the market. How do we develop a similar system for social benefits as opposed to personal benefits?

When try to create a hierarchy of social ails it becomes clear that they are intimately connected. To alleviate hunger you need to grow food, to grow food you need to use water, to use water you need to deplete a natural source, when you deplete that natural source you are denying the allocation of some of water away from simply being consumed. When you try to alleviate one social problem you could easily create another. There has to be some parameter for evaluation which puts a higher value on a social venture which is a closed system, one that does not create externalities which will eventually need to be solved by some other social venture.

Also, once you start a hierarchy of social needs, it becomes clear that there are at least two major categories: physiological and societal. Physiological needs include shelter, food, water, and healthcare. By covering these basic needs we enable people to simply survive and sustain that survival. These basic needs are required to help a person with the societal needs which include safety, education, community, job readiness, and the opportunity to create work for onself. Once these needs are addressed people can begin to provide physiological needs for themselves. Clearly, they are connected. But one does precede the other.

These represent the beginnings of valuing a social venture. At the very least we need to include it’s profitabilty, it’s impact on a greater network of needs, and whether it serves to alleviate an immediate physiological need or a societal need. Where should we go from there? What else is needed to understand the value of a social venture in its context?