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Re: [npEnterprise Forum] Segmenting business and social costs

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  • Kevin Jones
    really interesting ideas, Esther.i like the way you compute social cost. it is the same way we look at it at good capital. but i think there has not been an
    Message 1 of 4 , Feb 24, 2008
      really interesting ideas, Esther.i like the way you compute social
      cost. it is the same way we look at it at good capital. but i think
      there has not been an effort to benchmark social cost because social
      measurement has for the most part been an added transaction cost
      without additive value; it doesn't bring in more money and it does not
      eliminate barriers to investment, in the way it has typically been

      i could be wrong, but i know investors are not willing to
      pay for it, though they'd like it. if you ask them, they say the want
      it. if you ask them to put a value on the measurement, to pay for it,
      most don't. making something that has philanthropic motivations
      conform to a purely investment framework is by its nature
      commodifiying something that has the emotional characteristics of a
      luxury good; it's not done on a cost benefit analysis basis, but
      people do it because it feeds their passion, their need for impact.
      turning giving into a clone of portfolio thinking, detracts from
      perceived investor/donor value.

      what's needed is to create a playing
      field where you blend the values, the left and right brain each
      holding their place and cause new conceptual frameworks to arise. of
      course that makes people's head hurt. and that's good. that's what
      should be happening as we break out of traditional cultural boxes and
      create an effective response to the demands and needs of the world as
      they are emerging before our eyes.

      people are waking up and thinking differently and acting differently.
      so the way you measure things has to change to fit the new frame, the
      new way they are perceiving value, what's important and what's not.

      On Feb 8, 2008, at 2:35 PM, Esther Kim wrote:

      > If you haven't already seen it, check out my recent article on social
      > costs for the Community Wealth Vanguard e-newsletter:
      > <http://www.communitywealth.com/Newsletter/August%202007/Identifying%20the%20Cost%20of%20Doing%20Good.html
      > >
      > REDF's website <http://www.redf.org> also has some older articles on
      > social cost allocation (search for "social costs"). If you happen to
      > be in the Bay Area April 1-2, there will be a session on social
      > costs at the Transitional Jobs Network annual conference (http://transitionaljobs.net/Events/Conference08.html
      > ).
      > Our basic rule of thumb is that:
      > * it's a social cost if it's incurred to accomplish a social mission;
      > * it's a business cost if it's incurred by a similar for-profit
      > business
      > in the same industry;
      > * if all social costs are taken out, the remaining cost structure
      > should
      > be comparable to a for-profit business in the same industry.
      > I agree that many social enterprises approach this differently, making
      > benchmarking difficult. The third point above is especially helpful in
      > this case - because if you've allocated your social costs correctly,
      > you
      > actually DO have a place to benchmark: that is, a comparable for-
      > profit
      > business. Many for-profit businesses publish benchmarks of costs and
      > cost drivers across specific industries/functions (worker efficiency,
      > $/sq ft, etc). Even if they aren't published per se, consulting an
      > industry expert is a great way to get ballpark estimates.
      > Having said that, you bring up two great points:
      > 1) I'm not sure there's been a concerted effort to benchmark social
      > costs across SEs. I would love to hear from the list if that's been
      > the
      > case, or if there's wider interest in doing so.
      > 2) Social cost allocation should NOT be used as a way to make an SE
      > look
      > "more profitable" than it is. Instead, it should help answer the
      > questions: WHY am I profitable or not - business costs, or social, or
      > both - and WHAT do I do about it - fundraise, or improve my
      > efficiency,
      > or increase sales? That is the concept behind "double bottom line"
      > accounting.
      > I commend you for at least making the effort to separate your business
      > and social costs. Best of luck to you!
      > Esther
      > Portfolio Manager
      > REDF (formerly The Roberts Enterprise Development Fund)
      > ________________________________
      > From: npEnterprise@yahoogroups.com [mailto:npEnterprise@yahoogroups.com
      > ]
      > On Behalf Of Jodi Rosenbaum
      > Sent: Friday, February 01, 2008 7:37 AM
      > To: npenterprise@yahoogroups.com
      > Subject: [npEnterprise Forum] Segmenting business and social costs
      > I am hoping to be pointed in the right direction re research,
      > articles,
      > or standards of practice related to how social enterprise training
      > programs have attempted to separate social from business costs.
      > It appears many SEs do this in different ways making it difficult to
      > have a clear benchmark. Some SEs are seemingly break-even or
      > profitable
      > because they have segmented expenses but would not be if they kept the
      > social costs in the calculations.
      > We have tried a few different ways to develop some cost allocation
      > guidelines but inevitably the mission and business are so intertwined.
      > Thanks for any suggestions or feedback re how the field is addressing
      > this
      > topic.
      > Sincerely,
      > Jodi
      > Jodi Rosenbaum Tillinger
      > More Than Words
      > Empowering youth to take charge of their lives by taking charge of a
      > business.
      > 781-788-0035
      > www.teenleep.org
      > www.morethanwordsbooks.com
      > http://stores.ebay.com/More-than-Words-Bookstore
      > <http://stores.ebay.com/More-than-Words-Bookstore>
      > jodi@... <mailto:jodi%40mtwyouth.org>
      > 376 Moody St
      > Waltham, MA 02453
      > M closed
      > T-Th 11:30-10
      > Fr & Sat 11:30-11
      > Sun 11:30-8
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