- By reducing costs - for example Neighbourhood Watch can reduce policing costs;
- increasing production - such as a person starting a business relying on networks and contacts to establish a clientele and supply chains;
- increased efficiency - individuals or companies sharing inputs or marketing co-operatively;
- transfer of information and knowledge - better decisions from greater sharing of information and innovation; and,
- external benefits - heath benefits of people being involved in their community.
The Productivity Commission in 2003 described a range of economic and social outcomes of social capital including in education and child welfare, government efficacy, health, crime reduction and economic performance. A previous Productivity Commission report outlined benefits such as increased productivity of firms, more effective production units and access to employment and regional innovation. However, macro-economic benefits from social capital were less clear.
A word of caution is needed here. Social capital is a component of a broad process of change in communities and will not, of itself, overcome fundamental disadvantages in communities. A much broader realignment of power, opportunity and social change is required. Moreover, evidence shows that effects are localised. It may be inappropriate to expect investment in social capital to have wide societal benefits.
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Social capital requires a broader holistic understanding of community dynamics rather than a deficit-needs approach. Traditionally, service delivery has been based on a needs or deficit model. Applying a similar model to social capital may lead to inappropriate benchmarks for social capital and a focus on intervention to “improve” low social capital.
This raises two apparent risks. First, there is a risk that conclusions can be based on an overall measure of social capital for a community, which can mask a great deal of variation and community dynamics. A second risk is assuming that deficits in social capital should be improved almost independently of community goals and ownership. Networks and relationships in different communities and groups may well be at different points with little ownership or motivation for improving social capital.
Social capital requires different assumptions and approaches beyond service delivery. This involves a cultural change where government, business and communities see social capital as “core work”, and where a community strengthening agenda is more fully “owned”. At present, the conceptual understanding of social capital outstrips the practical consideration of it in government, business and communities. Because social capital is difficult to measure (and understand) it is often seen as less important than “bricks and mortar” Many agencies also continue to address social capital using the assumptions of service delivery and struggle to see its relevance to core business.
This cultural change will require “champions” in the rank and file of government, business and communities; repeated affirmation by key leaders and “real world” demonstrations of social capital and its benefits.
Social capital involves value judgements, rather than absolute truths. For example, anecdotally there is some evidence of people relocating to relatively prosperous coastal areas and not engaging in the local community. A major reason appears to be personal motivation and active disengagement from communities. Can this individual choice be described as poor or undesirable? Is it weak social capital, or is it simply the values and goals of a sector of the community? Cleary community engagement and social networks are desirable values in communities. However, to suggest that people should be involved in their community, and should build networks and participate, is nonetheless a value judgement.
Social capital requires a different approach from traditional measures of performance. Yet many of the principles of traditional evaluation still apply. Many frameworks for the measurement of social capital and community well-being have been developed, following the generic logic of evaluation and involving the extent of community networks, using indicators and measuring variables and using appropriate methods for gaining information about variables.
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But there is a risk of having comprehensive measurement but not having the assumptions and processes to interpret and act on the information. How do policy makers and practitioners respond to social capital issues identified by measurement? Do governments and communities have the policy, service delivery or community building responses, or ways to develop them?
A service delivery culture has largely driven a high level of interest in evaluation and performance measurement. Yet, it brings with it assumptions that do not necessarily suit the measurement of social capital.
The evaluation of service delivery is largely based on measuring clear inputs and outputs, has a focus on quantitative information, has quite specific performance indicators, and measures change over a relatively short time period (often based on funding cycles). In contrast, the measurement of community change and social capital attempts to assess relatively ill-defined outcomes based on flexible processes. It relies on largely qualitative information with differences seen over long periods of time
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