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Social Value

Social value is the wider benefit or harm that organisational activities create for people, communities and the environment beyond their direct financial result. In procurement it can mean measurable outcomes delivered through a contract, such as skills, fair work or environmental improvement.

Definitions and tender requirements differ by jurisdiction.

From the Money Master HQ dictionary, founded by Shihan Sheriff (FCMA, VP of Finance at Nomod, CFO at Esanjo Ventures). How these definitions are written.

What it means

A cleaning contract can deliver more than clean buildings, since it may offer fair jobs, training and lower waste, and those wider outcomes can be described as social value when they are relevant and measurable. The UK government Social Value Model is one formal procurement example, asking in-scope buyers to choose outcomes related to the contract and use proportionate, non-discriminatory criteria, while other jurisdictions use different frameworks.

Start with beneficiaries by asking who gains or loses from the activity, because workers, customers, neighbours and the environment may be affected differently. Define the outcome, since 'Support community' is too vague and the improvement sought should be specific, such as accredited training or less waste.

Separate input from result: money spent on training is an input, while people gaining skills or better jobs are possible outcomes, and both should be measured where useful. Connect the commitment to the contract, because a bidder should propose benefits it can deliver through the work, not unrelated charitable promises designed to earn points.

Set a baseline by knowing what would happen without the initiative, so existing activity is not counted as a new contract benefit without explanation. Use practical metrics such as jobs created, apprenticeships, local supplier spend and emissions reductions, each with a clear definition, and check quality, because ten short courses do not necessarily have the same value as one useful qualification and numbers alone can mislead.

Avoid double counting by setting attribution rules, so two suppliers do not both claim the same job or reduction as entirely their own. Consider unintended harm, since a local sourcing target could exclude capable suppliers unfairly or raise costs without benefit, so design criteria carefully.

Include accessibility, so that benefits reach people who face barriers where that fits the project and local law, and engage communities, because people living with the outcome can identify needs the buyer overlooked and consultation should be meaningful, not ceremonial. Price the commitment too, as training, cleaner equipment or safer work practices cost money and a credible bid accounts for delivery resources.

Assign ownership by naming who will deliver, collect evidence and correct underperformance, because social value cannot live only in a bid writer's paragraph. Put it in the contract, agreeing reporting and remedies that fit the obligation if the tender scores commitments, since otherwise promises are hard to verify, and check the reporting burden because small suppliers may struggle with complex templates and proportionate measures can improve competition.

Choose a time horizon, as some outcomes arise during delivery while others appear later, and do not claim long-term benefit immediately without evidence. Use evidence such as payroll records, training completions and waste tickets, while protecting personal information, and avoid inflated monetisation, since turning every benefit into currency can create false precision unless a credible method supports the estimate.

Compare bids fairly with published, consistently scored criteria, because the cheapest bid is not automatically the best but the highest promise is not automatically credible, and give 'local' a defined boundary and rationale, since the relevant area may be the worksite or affected community. For owners, social value is a way to make wider consequences visible, and it works best when the outcomes are relevant, fairly assessed and delivered, sized to the contract, backed by a budget, reviewed over the contract life against commitments and checked with the people who are meant to benefit, because a polished scorecard is not enough if they see no improvement.

In practice

Real-world examples.

1

Example

A construction contract includes verified apprenticeships tied to the project. The contractor reports starts, completions and the supervision hours provided. The buyer checks the records before accepting that the commitment was met.

2

Example

A supplier measures waste reduction from a new service process. It records waste tickets before and after the change and explains the baseline. The reduction is credited to the contract only because the change was made for it.

3

Example

A buyer considers fair work conditions in a labour-intensive tender. It asks bidders to state pay, hours and training for the staff who will deliver the work. The criteria are published in advance, so every bidder is scored the same way.

Formula

Calculation

Illustrative local spend share = qualifying local supplier spend / total contract supplier spend x 100. At $200,000 of $1,000,000, the share is $200,000 / $1,000,000 x 100 = 20%, but this metric alone does not prove a positive social outcome. A second illustration measures delivery of an apprenticeship commitment. If a supplier funds $90,000 of supervision for 6 apprentices, the cost per apprentice is $90,000 / 6 = $15,000. If 5 of the 6 complete the qualification, the completion rate is 5 / 6 x 100 = 83.3% and the cost per verified completion is $90,000 / 5 = $18,000. The second figure is the more honest one, because it prices the result and not the input.

Case study

Seen in the real world.

Entirely fictional case: River Council invites bids for facilities work and asks for relevant training outcomes. One supplier offers measurable apprenticeships with a funded supervision plan. During the contract, the council verifies completions and reviews quality. It does not accept a broad community pledge without delivery evidence.

The council publishes its scoring in advance, with price carrying 60% of the marks, quality 30% and social value 10%. A second bidder offers a general pledge to support the community and scores lower on social value than the supplier with a costed apprenticeship plan. Midway through the contract, five of six apprentices have completed the qualification. The council records the shortfall, asks the supplier for a plan to support the sixth apprentice and reports the figures to the people the programme was meant to help.

Watch out

Common mistakes.

  • Confusing spending on an activity with a verified outcome.
  • Making unrelated promises solely to win tender points.
  • Claiming the same benefit twice or reporting it without evidence.

Questions

People also ask.

What is social value?

Wider effects on people, communities and the environment beyond direct financial results.

Who asks for it?

Some buyers assess relevant, measurable contract outcomes under local procurement rules.

Is there one universal measure?

No. Definitions and requirements differ across jurisdictions and contracts.

Was this explanation helpful?

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Last updated · October 8, 2026
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The information provided in this finance dictionary is for educational and informational purposes only. It should not be construed as financial, investment, legal, or tax advice. Always consult with a qualified professional before making any financial decisions. Money Master HQ makes no representations or warranties about the accuracy, completeness, or suitability of this information. Use of this content is at your own risk.