ABSTRACT

Economic Value of CAP Sites as Investments in Social Capital

In January, 2002, GPI Atlantic prepared a 45-page report, plus 33 pages of detailed appendices, entitled, Impact of CAP Sites on Volunteerism, based on the results of a survey of British Columbia’s rural CAP sites conducted in October-November, 2001. This paper presents and re-organizes those results with a view to elucidating the economic value of CAP sites. Chapters 2 and 3 present results that are already included in chapter 5 of the January, 2002, report, while chapters 4 and 5 of this paper present references to aspects of economic valuation not included in the January report, and that provide opportunities for further research and investigation.

The January report indicated that the benefits of CAP sites extend far beyond the provision of Internet access and computer skills training. Survey results demonstrated that CAP sites also play an important role in strengthening rural communities, enhancing communication and reducing isolation, facilitating inclusion of youth, seniors, and disadvantaged groups, promoting equity, and providing opportunities for education, employment, and local learning. The purpose of this paper is to point to the economic value of those wider functions.

While the GPI CAP site survey allows the value of CAP volunteer activity to be quantified for the first time, the survey was not designed to quantify other economic values. Those values derive largely from the strengthening of "social capital," in which CAP sites play a vital role. Beyond the quantification of voluntary activity, this paper therefore simply points to other potential economic benefits of CAP sites that are presently not adequately recognized, with reference to the relevant literature on likely economic linkages.

Both the monetary valuations of CAP volunteerism, and the circumstantial evidence on other likely economic benefits, together indicate that CAP sites may provide a return on investment that is much greater than hitherto supposed. Carefully designed studies, preferably using control communities that do not have CAP sites, will be necessary to test these hypotheses.

Key economic values identified in this paper are:

• CAP volunteers contribute an estimated 630,000 hours of voluntary time each year to British Columbia’s rural CAP sites. These volunteer hours are worth $9.5 million annually, and are the equivalent of 330 full-time jobs. This estimate is based on the replacement value of voluntary work assessed at a rate of $15 an hour. Survey evidence indicates that every hour of paid coordinator time leverages an additional 2.5 hours of volunteer time. The results indicate that modest monetary investments in CAP sites and staffing produce a significant return on investment in volunteer hours that is invisible in standard accounting mechanisms.

• CAP sites make an additional indirect contribution to the market economy by providing training in technical, computer and office skills; management and organization; communications; fundraising; and interpersonal skills; as well as work experience and specialized knowledge of particular subject areas. CAP volunteers teach courses in Internet and email use; basic computer skills; word processing; web page design; spreadsheets; database design, and other computer skills. Two-thirds of CAP coordinators reported that their CAP site work had improved their employment prospects; 79% stated that learning new skills was a very important (47%) or important (32%) motivation for them in their work. CAP youth and summer employment programs similarly provide invaluable skills training for the job market.

• CAP sites offer access to employment, education and training opportunities, thereby improving the earnings potential of beneficiaries, and providing significant economic benefits in direct contributions to the economy and the tax base.

• Without CAP sites, there is a real danger that the age of information technology could deepen social exclusion and the social divide between those who have access to IT and all the opportunities it provides, and those who do not. This could undermine social cohesion, increase alienation, and produce significant social costs. The Community Access Program plays an essential role in levelling the playing field, in creating opportunities for disadvantaged groups, and in promoting equity and social inclusion. That role provides significant indirect economic benefits that are invisible in the conventional accounts, but can be substantial.

• By providing access to employment, education, and skills training opportunities for vulnerable and disadvantaged groups, CAP sites potentially provide significant savings in avoided health care, justice, and social welfare costs. Poverty, inequality, poor education, and social exclusion are all highly correlated and statistically associated with higher rates of illness, premature death, crime, and mental distress, all of which are costly to society. This paper provides references to the research literature on these correlations, to point to the indirect economic benefits that may be provided by CAP access to employment, education, training, and income opportunities.

• There is a growing literature correlating equity, access to higher education, and social cohesion with improved economic performance. Although the GPI site survey provided evidence that CAP sites perform these functions, there are as yet no empirical data to confirm the correlation, and it remains a hypothesis waiting to be tested. Assessing the impact of investments in social capital on productivity, competitiveness, and economic growth is the most difficult aspect of economic value to quantify, and a research area that is only in its infancy.

In sum, the GPI survey results demonstrate that CAP sites are a significant investment in education, training, information technology dissemination, job access, and community building. This investment not only provides a direct return to the market economy in volunteer hours, skills training, and access to employment opportunities, but may also produce considerable indirect savings to justice, health, and social service budgets, and more elusive benefits in improved economic performance. Despite these substantial economic benefits, the high return on investment provided by CAP sites, and the leveraging of additional volunteer hours for every paid staff hour, many CAP sites are financially insecure and uncertain of their future.

The survey results provide substantial new evidence on the value and impact of the Community Access Program not only on volunteerism, but on other important components of social capital. It is hoped that these results and the GPI valuation approach will provide a more comprehensive basis for assessing the economic value of the Community Access Program than has existed to date. In addition, the GPI method demonstrated in this study can be used to evaluate investments in future CAP funding from a full-benefit / full-cost accounting perspective, and thus provide a more stable financial basis for a service that has clearly provided remarkable benefits for the Canadian economy and society.