Demonstrating the value of the voluntary and community sectors: the challenges of economic evaluation

Organisations in the voluntary and community sectors (VCSE) are frequently asked by funders to demonstrate the economic value of their work using limited evaluation budgets or from their own data and resource.

As a research organisation, the Mental Health Foundation has undertaken a number of economic evaluations and we wanted to contribute to this wider debate on demonstrating the value of VCSE organisations. We recognise that even where VCSE organisations are not asked to formally evaluate, they still want to understand what impact they make, what 'added-value' they bring and that can help in design and delivery.

The Foundation has published Demonstrating the value to support voluntary and community sector organisations who are faced with the challenge of calculating and communicating the economic value of their work alongside other types of contribution. The paper outlines the reasons for conducting an economic evaluation in mental health, provides an overview of the most commonly used approaches and considers the challenges associated with these.

Drawing on case studies of mental health and criminal justice initiatives with a particular focus on black and minority ethnic communities, Josefien Breedvelt and I present the existing data collected by VCSE organisations that could be included within economic evaluations. These case studies illustrated how the VCSE’s mental health and criminal justice work contributes economically through:

reducing criminal activity by reducing re-offending, 
reducing service use within the criminal justice, health and social care systems, and 
enhancing economic activity through training and education, engagement in employment including self-employment, and volunteering. 

VSCE organisations identified the following issues in meeting funders' requests for economic evaluations: 

  • Lack of clarity as to what type of economic analysis the funder is seeking.
  • Limitations in their own knowledge and skills to undertake economic evaluation.
  • Inadequate funding to deliver an economic evaluation as well as other forms of evaluation.
  • Scope of evaluation is disproportionate to the value of the grant and the cost of tools to carry it out.
  • Methodological requirements of economic evaluations that do not match with innovative, person-centred and highly varied interventions with diverse and changing populations who have complex needs.
  • Lack of data to fulfil the methodological requirements of particular approaches such as return on investment. 

Strengthening voluntary and community organisations’ engagement with economic evaluation will involve building their capacity, capability and confidence. The confidence needs to involve negotiating the scope of what such organisations can realistically achieve. Taking a co-production approach to developing evaluations means that they are grounded in what service users, clients and staff identify as the value of interventions and their impacts. 

In the current context of contracting resources and increasing calls to evidence impact for voluntary and community organisations’ important work, Demonstrating the value is a useful resource for them to respond confidently to  funders’ expectations. 

Demonstrating the value developed from the Strategic Partnership funded Mental Health, Criminal Justice and BAME Communities Working Group (2015-2016), whose members were Nacro (Chair), Mental Health Providers Forum, Mental Health Foundation, Centre for Mental Health, Clinks, the Men’s Health Forum and the Race Equality Foundation.

Download the paper