Social Value Economics

On a macro level, sales taxes, corporate taxes, property taxes, and payroll taxes, etc. are not enough to adequately fund governmental efforts to combat our profound challenges, including climate change and its repercussions, poverty, and lacks and inequities in education, healthcare, and mental health services. And at the bottom of the economic “funnel,” there’s not enough money left over after this subtractive process to meet the ever-growing need.

The lens of scarcity also prevails in the business sector, where accepted doctrine dictates that social impact is, by definition, a cost center. As a result, Sustainability, Foundation, and CSR budgets are created at the bottom of the corporate “funnel,” from the limited profits left over after business expenses and taxes are deducted. The result is that commitments to Net Zero, for example, are delayed for decades—decades too long.

ScaleWith has developed a suite of software solutions to fulfill the fundamentals and promise of this new economic construct, so corporations can operationalize, productize and automate its principles at scale.

Social Value Economics leverages the most fundamental activity of commerce—the transfer of goods and services for value—into an engine for positive social change.

Critically, this goal is accomplished without corporations needing to spend any new money. In fact, Social Value Economics actually transforms social impact into a revenue generator for both sellers and buyers in every business-to-business and business-to-government transaction.

Social Value Economics moves up in the economic and corporate structures the place from which social impact is funded. Instead of looking to the limited resources at the bottom of the economic and corporate funnels, places of scarcity, Social Value Economics targets the approximately $100 trillion at the “top”—in the business-to-consumer, business-to-business, and business-to-government transactions that are conducted globally every year. Social Value Economics creates access to this abundant and self-sustaining pool of resources by creating more business value for both sellers and buyers. In common business parlance, Social Value Economics is an efficiency play:

The Fortune 500 spends approximately 70-90 cents of every dollar brought in, on cost of goods sold. An estimated 10-30 cents of every dollar is spent on Selling, General, and Administrative expenses (SG&A) alone. In other words, corporations spend roughly 10-30% of every revenue dollar trying to make a dollar. It’s impossible to pin down these figures precisely, because inefficiency and waste are endemic in traditional approaches to sales and sourcing and procurement. Therefore, it’s also impossible to know the exact ROI and the most effective and profitable allocation of those 10-30 cents.

By contrast, organizations that pivot from tired, old-school sales tools (marketing events, volume discounts, rebates, extended warranties, and free shipping) to apply social impact as a sales incentive and differentiator have quantifiably higher win rates, shorter sales cycles, and better client relationships and retention. By using social impact as a sales incentive, their existing client acquisition dollars work harder and better in the 21st century economy, producing an improved ROI from every already-budgeted dollar.

Importantly, Social Value Economics is not charity or philanthropy. It’s a proven business model that creates an entirely new funding stream for social impact, completely and entirely separate from corporations’ CSR, Sustainability, Philanthropic, and Foundation activities.

The day is coming when Social Value Economics—applying social impact to transactions as a way to improve business outcomes—will simply be the way business is done.  Ubiquitous. Expected. Not because of regulatory or consumer pressure, but because through Social Value Economics, sellers and buyers derive more business value.

That day cannot come soon enough.