TPR-2017-12-The Economics of Community Asset Transfers.pdf

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 1/68 - The Economics of Community Asset Transfe…

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 2/68 - Contents

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 3/68 - the world of community businesses and co…

the world of community businesses and community asset transfers; to Andrea Lee from the Department for Work and Pensions and Thomas Holvey from Cabinet Office for their constructive challenge and support; to Sara Blake and Richard Hall from Suffolk County Council and Karen Cheney from Birmingham City Council for their insights on local authorities role in community asset transfers; and to Joseph Lowe and Joe Flanagan from HM Treasury for the training they offered to the authors.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 4/68 - Power to Change

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 5/68 - Foreword by Sir Alan Budd

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 6/68 - Executive Summary

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 7/68 - � Outline the scope of the project, thin…

� Outline the scope of the project, think about desired outcomes, necessary actions to meet objectives and targets to measure success. These targets should be SMART and consider constraints and dependencies.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 8/68 - We recommend a flexible and balanced app…

We recommend a flexible and balanced approach to appraising CATs. Evidence should be used at both an operational and decision-making level. Organisations should be clear and transparent in recognising what this evidence is telling them and what it is not, and should have the intellectual courage to acknowledge these limitations and address them using intuition and creativity.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 9/68 - INTRODUCTION

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 10/68 - The Community Business Sector

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 11/68 - research has identified a strong growth …

research has identified a strong growth potential in sectors such as housing, health and social care (Power to Change 2016).

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 12/68 - FIGURE 1: SPECTRUM OF ASSET TYPES SUITAB…

FIGURE 1: SPECTRUM OF ASSET TYPES SUITABLE FOR CAT DEPENDING ON LEASE LENGTH AND TENURE TYPES

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 13/68 - Recommendation: Identifying benefits del…

Recommendation: Identifying benefits delivered by the CAT

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 14/68 - The boxes below list the most frequently…

The boxes below list the most frequently cited benefits in relation to the community and the economy respectively. These benefits are directly attributable to CATs and need to be considered in relation to the services that are provided in the asset.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 15/68 - In contrast, the economic benefits liste…

In contrast, the economic benefits listed in the box above are relatively less complex to define and measure and public authorities are typically better equipped to account for these factors when making both strategic and operational decisions.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 16/68 - has emerged already, it seems too early …

has emerged already, it seems too early to assess with a reasonable amount of certainty whether these benefits have actually been generated by the CAT process.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 17/68 - Given the lack of robust evidence, we be…

Given the lack of robust evidence, we believe that an increased focus on monitoring, feedback and robust evaluation will be crucial to the success of future community businesses and CATs. We recommend community businesses further strengthen their efforts in collecting data and in evaluating and measuring the commercial and social value they deliver to local communities and to society as a whole.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 18/68 - 1. AN ECONOMIC FRAMEWORK FOR CATs

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 19/68 - organisations in the case study, it appe…

organisations in the case study, it appears obvious that co-operation is crucial to success.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 20/68 - These rationales for intervention are no…

These rationales for intervention are not mutually exclusive: a CAT could be considered for two or three different reasons. When this is the case, public authorities and community businesses need to be clear and transparent about what part of the CAT is underpinned by what rationale.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 21/68 - � Where we are now: The market has been …

� Where we are now: The market has been in decline for several years with a decreasing number of trading businesses. The area is no longer attractive, the signage is bad, and it suffers from a bad layout with a lack of a central identity or sense of space. Despite that, crafts and small businesses are thriving in Ameliaville. Demand for workspace and prime retail locations is high.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 22/68 - aims to achieve. For social value to be …

aims to achieve. For social value to be realised its important that both sides in the transfer, as well as all stakeholders involved, understand the outputs through which the CAT is expected to deliver social value.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 23/68 - � Outcome: to assist retail and other bu…

� Outcome: to assist retail and other businesses generate sustainable profits in an area that improves community cohesion;

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 24/68 - 1.3 Creating Options

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 25/68 - Best Practice Case Study: Creating Optio…

Best Practice Case Study: Creating Options in Ameliaville.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 26/68 - Building/location

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 27/68 - Owner of the asset

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 28/68 - Estimating the life of the project is es…

Estimating the life of the project is essential. It will depend on the type and the nature of the asset, the CAT and the community business involved. As a rule of thumb, the expected duration of a conventional building is around 60 years, but this could vary significantly depending on the type of asset and the type of activities conducted within it.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 29/68 - Estimating benefits was a little trickie…

Estimating benefits was a little trickier. They came up with a list that included: � Revenue from stalls, workshops and residential units � Employment benefits � Community events � Economic benefits from construction � Improving community cohesion

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 30/68 - Improving community cohesion option 3

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 31/68 - 1.5 Implementing and Monitoring Options

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 32/68 - � Costs are closely monitored and manage…

� Costs are closely monitored and managed; and � Forecast costs and benefits are frequently reviewed.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 33/68 - Staffing costs ...

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 34/68 - Best Practice Case Study: Implementing I…

Best Practice Case Study: Implementing Ideas in Ameliaville.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 35/68 - 2. DEFINING SOCIAL VALUE

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 36/68 - Summary: The Social Value Act and its im…

Summary: The Social Value Act and its impacts Social Value Act in Practice (Social Value Hub, 2012)

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 37/68 - achieve this, and the model may require …

achieve this, and the model may require an asset transfer from the LA to the community library. In this case, the CAT is conducted in order to procure a service, and therefore legally social value must be considered in the tender process.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 38/68 - �

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 39/68 - `The additional benefit to the community…

`The additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes (Social Enterprise UK, 2014) `Social value is the quantification of the relative importance that people place on the changes they experience in their lives (Social Value UK, 2017) � Academic institutions. Because academic debate may inform future definitions of social value, LAs should be aware of the ongoing debate on social value in academic institutions. This is rooted in the economics of value itself and includes ideas about whether value is subjective or comes from the exchange of a good. More practical approaches have thought about value from a development perspective providing capability for local communities (Sen, 1999). We advise against these definitions being used in this context, because its useful for a definition to be in line with current legislation. Hence the definition provided is consistent with the Social Value Act. LAs may want to choose their own definition of social value, in order to focus on outcomes that best fit within their strategies and community needs. A bespoke definition should fit the following criteria: � Measurable; � Achievable; � Outcome focused; and � Compatible with legislation.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 40/68 - 3. MEASURING SOCIAL VALUE

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 41/68 - � Social return on investment (SROI) (So…

� Social return on investment (SROI) (Social Value UK), � Measuring added value (a derivative of SRoI developed to help social enterprises in

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 42/68 - measure non-monetary outcomes that could…

measure non-monetary outcomes that could be very helpful when assessing the value delivered by a CAT (see Annex A for more details).

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 43/68 - 3.2 Social Return on Investment (SROI)

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 44/68 - Resources

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 45/68 - are used to calculate the impact of a sp…

are used to calculate the impact of a specific amount of money on quality of life. Third the improvement in quality of life associated with a specific outcome (e.g. feeling an active part of your neighbourhood) in the first stage is matched with the amount of money needed to generate the same improvement in quality of life in stage 2.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 46/68 - How to use it Resources

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 47/68 - The empirical foundation of this methodo…

The empirical foundation of this methodology is the meta-analysis conducted in 2008 by the Young Foundation on the relationship between community empowerment and well-being (Hothy, 2008). This meta-analysis found that three key features characterising community engagement have a positive impact on well-being:

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 48/68 - Resources

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 49/68 - � Conventional cost benefit analysis is …

� Conventional cost benefit analysis is not able to capture soft social outcomes expected from a CAT, LAs and commissioners should either: a. Be clear and transparent about the reasons why these effects are not captured and indicate in qualitative terms the types of impacts that might be generated; or, b. Consider using the three stage well-being valuation tool developed by HACT to estimate the monetary value of the soft outcomes that conventional cost benefit analysis tools have not been able to capture.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 50/68 - Recommendations

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 51/68 - � When conventional cost benefit analysi…

� When conventional cost benefit analysis tools are not able to capture some of the social outcomes expected from a CAT, LAs and commissioners should be clear and transparent about the reasons why CBA tools are not fit for purpose. Commissioners can use the three stages well-being valuation tool developed by HACT to estimate the monetary value of the soft outcomes that conventional cost benefit analysis tools have not been able to capture.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 52/68 - Annex A � Non-Market Values

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 53/68 - Apprenticeship Level 3 Qualification Gra…

Apprenticeship Level 3 Qualification Graduate Level 4+ Qualification

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 54/68 - Counselling services in primary medical

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 55/68 - Annex B � Discounting, Risk and Optimism

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 56/68 - A second option is to tailor the range t…

A second option is to tailor the range to different costs and benefits based on risk and the NPVs sensitivity to changes in these factors. A sensitivity analysis can show the switching value � the value at which an option becomes less attractive than a different option. This can be done by using the Goal Seek function on Excel, picking each cost and benefit and changing it until the preferred option is no longer the best. Risk can be assessed by first identifying where they lie using the PESTLE approach to think about risks in different areas:

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 57/68 - When identifying risks its important to …

When identifying risks its important to avoid risks that are:

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 58/68 - Discounted costs option 3 �140,614 �76,0…

Discounted costs option 3 �140,614 �76,006 �73,433 �70,949

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 59/68 - Annex C � Community asset transfer frame…

Annex C � Community asset transfer frameworks

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 60/68 - Annex D - Monetary Values from 3SWBV

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 61/68 - Financial comfort Access to internet …

Financial comfort Access to internet Able to insure home contents Go to youth clubs Relief from depression/anxiety (youth) Improvements in confidence (youth) Married parents (youth) Never arrested Member of social group Active in tenants group Football Keep fit Walking Yoga or pilates Dance Frequent moderate exercise Frequent mild exercise Gardening Hobbies Rough sleeping to secure housing (average) Rough sleeping to secure housing (no dependent children) Rough sleeping to secure housing (with dependent chidlren) Temporary accommodation to secure housing (average) Temporary accommodation to secure housing (no dependent children) Temporary accommodation to secure housing (with dependent chidlren) Rough sleeping to temporary accommodation (average) Rough sleeping to temporary accommodation (no dependent children) Rough sleeping to temporary accommodation (with dependent children) Tenancy Service for people in rough sleeping (average) Tenancy Service for people in rough sleeping (no dependent children) Tenancy Service for people in rough sleeping (with dependent chidlren) Emergency relief services for people in rough sleeping (average) Emergency relief services for people in rough sleeping (no dependent children) Emergency relief services for people in rough sleeping (with dependent chidlren) Housing service for people in temporary accommodation (average) Housing service for people in temporary accommodation (no dependent children) Housing service for people in temporary accommodation (with dependent chidlren) Tenancy service for people in temporary accomodation (average) Tenancy service for people in temporary accommodation (no dependent children) Tenancy service for people in temporary accommodation (with dependent children)

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 62/68 - Annex E - Valuing Worth and Success Fact…

Annex E - Valuing Worth and Success Factors Tool

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 63/68 - 413 is the number to understand in order…

413 is the number to understand in order to help people remember the key elements of the social value tool. Indeed, it is composed of 4 sections (finance, strategy, neighbourhood and activity) and 13 sub-sections. BCCs website on CATs provides detailed guidance on how this methodology can be used and applied, with a very simple and accessible guide, a blank social value tool to be completed, background information on how to complete the tool and a series of case studies as an example of how the tool can be completed. The paragraphs below provide a brief summary of what is included in these documents.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 64/68 - H. Community participation: this section…

H. Community participation: this section aims to estimate the `social value of participation by the community in activities at the building. It uses the hourly minimum wage rate to estimate the social value of an hour of community participation per participant and the average regional wage to estimate the value of community volunteering. Data on minimum wage rates can be found on ONS website as well as data on average regional wages.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 65/68 - matters for the community. Misunderstand…

matters for the community. Misunderstanding of the financial aspects of the project poses a high risk to the project success even when there seems to be a sufficient demand for the service as well as a community buy-in to support it.

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 66/68 - D. Succession planning: Does the busines…

D. Succession planning: Does the business have a contingency in case board members or key team members need to be replaced?

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 67/68 - Annex F � Other approaches to measuring …

Annex F � Other approaches to measuring social value

TPR-2017-12-The Economics of Community Asset Transfers.pdf - page 68/68 - William and Flora Hewlett Foundation (He…

William and Flora Hewlett Foundation (Hewlett) Expected Return Hewlett developed its Expected Return (ER) methodology in 2007 to evaluate potential charitable investments through a systematic, consistent, quantitative process (Tuan, 2008). The Expected Return calculation has four components: benefit in a perfect world, likelihood of success, the philanthropic contribution, and cost. The result is a systematic estimate of the return on each potential investment and the ability to compare disparate projects (Hewlett Foundation, 2008). The methodology attempts to answer five questions: