What is the economic value of community capacity? This is a question that warrants attention for a number of reasons, including: recent government initiatives to promote community capacity, such as the Big Society; a trend toward commissioning based on outcomes; as well as a paucity of evidence with which to answer this question.

Community capacity is taken to mean the networks and relationships, and the consequent shared norms, trust, habits, and values that enable people to act collectively. This conception of community capacity implies no necessary relationship between community and geography, and is taken to be synonymous with associated phenomena, such as social capital.


This review argues that many of the benefits associated with community capacity are compatible with the notion of economic value, and that further research should be undertaken to estimate the economic value of these benefits.

The literature identifies a number of benefits associated with community capacity. These include outcomes for individuals such as: improved health and child development; a better functioning economy through the promotion of trust and the dissemination of information; and the promotion of norms that facilitate collective actions that help allocate public goods.

The economics literature has to date paid relatively little attention to the benefits of community capacity. Studies that have focused on the economic value of community capacity have adopted a number of approaches, including:

  • estimating the impact of community capacity on economic output;
  • valuing the time of volunteers;
  • estimating the public sector cost savings associated with community capacity;
  • estimating the willingness to pay for health and other outcomes generated by community capacity.

This research provides valuable insight into the economic value generated by community capacity. The economic notion of value is, however, broader than these approaches would suggest.

The existing literature on the economic value of community capacity is, thus, still relatively small and focused on a relatively narrow part of benefits relevant to economic value. It leaves a number of lines of inquiry for future research.

Before the economic value of interventions to build community capacity can be estimated, it is important that high-quality research is undertaken to determine the impact of these interventions. This research should involve experimental research designs and quantitative measures of community capacity and related benefits.

It is important that more evidence is generated on the economic value of community capacity. This should include further work on the impact of community capacity on the costs of public services. It should also include studies on the relationship between community capacity and broader notions of economic value, such as subjective well-being, as well as the impact of community capacity on the private sector.

Further research is required to consider the role that alternative currencies to money can play in the quantification of the economic value of community capacity.

The economic value of community capacity building
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