A group of professionals from different backgrounds huddle up like a team to illustrate prosocial co-operation.

Added value: Measuring social value can create a virtuous cycle that helps co-operatives to increase both impact and profits.

Shareholder equity is the dominant means of valuing businesses. However, this leaves profit-driven organisations that don’t have shareholders, such as mutual funds and co-operatives, at a disadvantage when compared directly with those that do.

Over the last 40 years, this has resulted in organisations with no shareholders being potentially undervalued when sold to corporate buyers.

Being able to measure their true value is critical when co-ops and mutuals have competing shareholder-owned businesses attempting to acquire them.

It’s easy for these companies and the banks backing them to underplay a co-operative or mutual’s worth. Much of the value is in brand recognition and loyalty, higher staff or member benefits, and other factors that are difficult to measure and not represented by equity or assessed by a market.

Turning co-operative principles into value

To help better quantify this value, my colleagues and I have come up with a method to measure the value created by co-ops, mutuals and other member-owned firms beyond the financial bottom line.

We call it the Mutual Value Measurement Framework (MVM), and it has become the world's first accredited framework for measuring the total value created by co-ops and mutuals - both for members and wider society.

The MVM Framework helps these organisations measure their total value creation (mutual value) through a set of common dimensions and shared language.

Co-ops and mutuals of different sizes, industries, and capabilities can use the MVM Framework. It covers benefits both within and outside the organisation, across the community, suppliers and customers - quantifying and monetising the beneficial experience, which effectively expands the field of accounting.

Why are co-ops and public sector organisations undervalued?

Without MVM, the accounts of co-ops and mutuals are partial at best, and this also applies to well-run state-owned enterprises. Because we are so dependent on a set of rules built for shareholder-based organisations all others suffer as those rules are the basis for all comparison.

Our work on the MVM Framework began with an invitation from Australia’s Business Council of Co-operatives and Mutuals (BCCM), who were looking for a new way of measuring the positive impact of co-ops on their members, customers, community and economy.

BCCM firms were finding it difficult to illustrate the value of their social efforts, and show they had effective ‘equity’ in their organisations. Although there was considerable value in generating and sharing profits among members, without dividends and shareholders it was difficult to reflect this and demonstrate an organisation’s true worth.

The MVM Framework has now been field-tested and applied by co-ops and mutuals of different sizes across different industries in Australia, the UK and the US.

Incorporating MVM into impact measurement, strategy and KPIs, helps a co-op or mutual identify the total mutual value created, which can also help track performance over time. It is generic and adaptable, a tested and proven framework, and has a structured process for adoption and use.

The MVM Framework uses six dimensions to cover the unique areas of value that co-operatives and mutuals generate:

1 Mutual mindset

How does your co-operative do the right thing? This refers to acting ethically, sustainably, and consistently with mutual and co-operative values.

For example, how you deliver your business purpose, ethical standards and what your positive impacts on society and the environment are.

2 Commerciality

What does your co-operative do to create economic value for current and future members through business operations?

For example, the total economic value of services provided, including service quality, value of discounts or dividends, and other tangible advantages to members and customers.

3 Shaping markets

What is the value of your co-op or mutual’s existence in creating, maintaining or shaping sustainable and competitive markets for goods and services?

For instance, what would the market look like without your existence, and what is your impact on competition? Also include details of any product innovations or niches served and behaviour that affects the market.

4 Member relationships

How does the co-op or mutual treat members? This includes building and maintaining meaningful and sustainable relationships with members, and assessing the non-economic benefits of membership.

It also refers to the value of communications with members, support for member activities and member engagement in governance.

5 Community relationships

What do you do to create value for the broader community and society?

This focuses on building and maintaining strong and sustainable relationships with the broader community, including engagement with community organisations, charitable relationships and support, and relationships with NGOs.

6 Ecosystem and reciprocity

How do you work with others to create value? This refers to the co-operative or mutual thriving alongside other stakeholders as part of a mutually beneficial and sustainable ecosystem.

For example, how you operate as a corporate citizen, membership of industry bodies, bilateral relationships and engagement with local or national government.


A firm begins by identifying its purpose, ambition, and its relevant stakeholders, then creates a strategy for delivering those goals over a set timeframe.

The next step is to identify the mutual value the firm creates under each of the six dimensions and produce a series of ‘value statements’ that describe how that value is created.

At this stage, the firm should examine the overall balance of the value it creates across those different dimensions and identify any gaps that need to be addressed.

Each of those value statements must be measurable using Mutual Performance Indicators (MPIs), which are either quantifiable data or qualitative narrative.

As well as a providing a better representation of value, organisations can use the MVM Framework as a tool to improve performance management and strategic planning with new KPIs, while improving engagement with customers, employees and other stakeholders.

It can also be used as a tool to communicate their economic and social impact, enabling them to better articulate their co-operative or mutual difference and enhance their ESG narrative.

How profit can drive greater social impact

In a recent research paper that attempts to reconcile social and profit-focused behaviour, we show that mutual performance often turns out to be a virtuous circle. 

Most of the research literature tends to pit profit and purpose against each other, but we found this not to be true. Member and community activity drives the core business and creates long-term relations, enabling commercial success.

For example, a farmers’ co-op downplayed profitability to the organisation by emphasising benefits to the individual members. It also stressed the overall, member-oriented prosocial commitment of the organisation.

This helped to generate value and indeed, enhanced profitability, which was distributed through larger pay-outs to member farmers.

Those co-ops or mutuals that are able to make money out of their social purpose are more effective, which in turn reinforces the prosocial purpose.

Our framework will help organisations to ensure that is properly valued in future.

Further reading

Three steps to devising social value measures for investors

Why measuring social impact is good for businesses

Why investors love state-owned enterprises

Measuring mutual value: A field study of co-operatives and mutual enterprises in Australia


Yuval Millo is Professor of Accounting and teaches Financial Reporting & Financial Statement Analysis on the MSc Accounting & Finance and Qualitative Data Analysis on the MPhil and PhD Business and Management. He also teaches Financial Markets: Organisations on the Undergraduate programme.

Follow Yuval Millon on Twitter @yuvalmillo.

Learn more about creating value for your organisation on the four-day Executive Education course Creating Strategic Advantage at WBS London at The Shard.

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