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Measuring social impact with Social return on investment (SROI) at Cogite

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With the increasing debate about the social investment vs. philanthropic donations, organizations are under the pressure of reviewing the way they demonstrate the impact of their programs for multiple reasons.

SROI = Social Return on Investment – Methodology implemented is inspired by Social Value International. At its core, SROI is a measurement valuing both financial and non-financial outcomes. SROI quantifies and monetizes social impact in a clear and consistent way, enabling stakeholders to measure the achievement of social impact against three primary performance indicators, being appropriateness, effectiveness and efficiency.

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Measuring social impact with Social return on investment (SROI) at Cogite

  1. 1. 1 Social Impact Measurement (SROI) Presentation Tunis - August 4th, 2015 By Monaem Ben Lellahom Founding Partner Sustainable Square
  2. 2. 2 WHAT’S YOUR EXPECTATION NAME > ORGANIZATION > EXPECTATION
  3. 3. 3 BACKGROUND HOW/WHY DID THE PRACTICE EMERGE The past decade has seen increasing interest in measuring the social impact of projects, programs, organisations, businesses, and policies. • Managers want to know what results have been achieved, with a view to improving future performance. Where did the money go? What’s the outcome generated? • Investors want to know the social value their money is creating. Corporations are increasingly interested in social investment and CSR Departments are requesting bigger budgets. • Governments have a strong imperative to measure the social impact of policies, programs and funded activities in order to increase accountability and reach better outcomes.
  4. 4. 4 The objective also is to drive improvements that increase the value of programs to the people they serve while helping organizations to plan better, implement more effectively, and successfully bring initiatives to scale. BACKGROUND HOW/WHY DID THE PRACTICE EMERGE The objective is to create tools and/or mechanism that help organizations measuring the intangible impact generated and provide an estimation to its value.
  5. 5. 5 Few guidelines and frameworks have been created: BACKGROUND SOCIAL IMPACT MEASUREMENT TOOLS & FRAMEWORKS • Guide to Social Accounting and Audit by the Social Audit Network http://www.socialauditnetwork.org.uk/ • Social Impact Analysis by Social Impact Analysis Association http://www.siaassociation.org/ • Social Return On Investment (SROI) by the UK SROI Network http://www.thesroinetwork.org/ • Measuring and Improving Social Impacts: A Guide for Nonprofits, Companies, and Impact Investors by Marc J. Epstein (Author), Kristi Yuthas (Author) http://goo.gl/CKMuUZ • B Corp (B Impact Assessment) by B Corporation http://www.bcorporation.net • Demonstrating Value (DV) by Vancity Community Foundation www.demonstratingvalue.org • Global Impact Investing Rating System (GIIRS) by B Lab www.giirs.org • Impact Reporting & Investment Standards (IRIS) by Global Impact Investing Network (GIIN) www.iris.thegiin.org • Sustainable Livelihoods (SL) by UK DFID www.eldis.org
  6. 6. 6 Over the last decade, Social Return on Investment (SROI) has emerged as an approach to meet these demands. SROI quantifies and monetizes social impact in a clear and consistent way, enabling stakeholders to measure the achievement of social impact against three primary performance indicators, being appropriateness, effectiveness and efficiency. BACKGROUND SROI – ROLLS-ROYCE Of The SOCIAL IMPACT MEASURMENT
  7. 7. 7 Roberts Enterprise Development Fund (REDF) in California pioneered work on Social Return on Investment (SROI). In its report in 2000, REDF said it had undertaken work on SROI because: “We wanted to answer a series of questions important to practitioners and philanthropists/investors, including: BACKGROUND HISTORY OF THE SROI ●● how can we measure the success of our efforts? ●● how do we know whether we’re accomplishing what we set out to do? ●● how can we make informed decisions about the ongoing use of our resources? ●● how can REDF test and convince others of what we believe to be true: that for each dollar invested in our portfolio agencies’ efforts, there are impressive, quantifiable resulting benefits to individuals and to society?”
  8. 8. 8 This work was picked up by the new economics foundation, and by other agencies in the UK and in Europe, and culminated in the UK Government’s Cabinet office: office for the third Sector launching its Measuring Social Value project in 2008 and the Scottish Government launching the SROI Project to run parallel with this. BACKGROUND HISTORY OF THE SROI In 2002 then in 2006, the Hewlett Foundation's Blended was brought forward by a group of practitioners from the US, Canada, UK and Netherlands who had been implementing SROI analyses together to draft an update to the methodology. This resulted in another formal revision to the method, produced by a consortium led by the SROI Network, published in the 2009 Guide to SROI
  9. 9. 9 SIAA and The SROI Network are coming together to form Social Value International, the largest international social value network in the world For the next few months, both organizations will be undergoing a transitional period in which their activities will be changing towards the merge. BACKGROUND From SROI to SOCIAL VALUE INTERNATIONAL
  10. 10. 10 Sougha – Abu Dhabi – Empowering & Employing Micro- Entrepreneurs Women – SROI 1:4.8 2009-2012 Ahdaaf – Dubai – Engaging under- privileged children – SROI 1:1.98 2013-2014 Conversations – Dubai – Integrating Children with Disabilities – SROI 1:4.45 2012- 2013 #30daysofsharing – Dubai – Training Emirati Chef’s & Economical Activation – SROI 1:2.01 2014 Intajee and Zaree– Oman – Empowering local farmers SROI 1:1.39 2015 Emirates NBD Bank Emirates NBD Bank Khalifa Fund (KFED) Du Telecom Omran Tourism BACKGROUND SROI in the Middle East Palestyle– Dubai – Social Fashion Brand – SROI 1:2.40 2013-2014 Palestyle
  11. 11. 11 MEASURING THE SOCIAL IMPACT IN FINANCIAL TERMS SROI = Social Return On Investment – Methodology implemented is inspired by Social Value International www.socialvalueint.org . At its core, SROI is a measurement valuing both financial and non-financial outcomes • SROI is a form of stakeholder-driven evaluation blended with cost-benefit analysis tailored to social purposes. • It tells the story of how change is being created and places a monetary value on that change and compares it with the costs of inputs required to achieve it. • Practitioners work to the seven principles of SROI outlined in the Guide to Social Return on Investment.
  12. 12. 12 for every $1 spent on the initiative, the program generated $# of social impact and for $20,000 invested in a particular initiative, there was a creation of $500,000 of total social value MEASURING THE SOCIAL IMPACT IN FINANCIAL TERMS
  13. 13. 13 BACKGROUND SROI – FOR INSTANCE • To plan future programs or create KPIs • To assess existing programs • To consider between various focus areas • To create local/country-wide benchmark for social investment strategies • To compare programs and their values • As a mechanism to better engage stakeholders Usage of SROI Framework’
  14. 14. 14 BACKGROUND SROI – FOR INSTANCE There are two types of SROI: • Evaluative, which is conducted retrospectively and based on actual outcomes that have already taken place. • Forecast, which predicts how much social value will be created if the activities meet their intended outcomes.
  15. 15. 15 BACKGROUND WHO CAN USE SROI ? Types of organisation SROI has been used by a range of organisations across the not for profit (or voluntary), public and private sectors, including those that are small, large, new and established. NGOs and Social Enterprises Private Businesses Funders Commissioners Governments Improve performance, inform expenditure and highlight added value. Analysing the value arising from trading activities Assess risks and opportunities arising from the impact of their products on stakeholders. Measure effectiveness of CSR programs and impact generated Help them decide where to invest, and later to assess performance and measure progress over time Application bidding, procurement and monitor the performance of a successful contractor For developing policy for which recognition of social value is important
  16. 16. 16 As with most performance assessment and evaluation frameworks, SROI is based on program logic (or ‘theory of change’ or ‘logic model’). inputs are applied to service activities to produce outputs, from which outcomes are derived, which result in impacts SROI METHODOLOGY & PRINCIPLES
  17. 17. 17 SROI – THE SEVEN PRINCIPLES Involve stakeholders Stakeholders should inform what gets measured and how this is measured and valued Understand what changes Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes as well as those that are intended and unintended Value the things that matter Use financial proxies in order that the value of the outcomes can be recognised Only include what is material Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact Do not over claim Organisations should only claim the value that they are responsible for creating Be transparent Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders Verify the result Verify the result. ensure appropriate independent verification of the account
  18. 18. PRACTICING SROI
  19. 19. 19 SROI – THE SIX STAGES Stage 1: Establishing scope and identifying stakeholders Stage 2: Mapping outcomes Stage 3: Evidencing outcomes and giving them a value Stage 4: Establishing Impact Stage 5: Calculating the SROI Stage 6: Reporting, using and embedding SROI – THE IMPACT MAP
  20. 20. 20 Money Time In-Kind $
  21. 21. 21 Money Time In-Kind # Number of events # Number of workshops # Number of trainings # Number amenities built ….. etc
  22. 22. 22 Money Time In-Kind # Number of events # Number of workshops # Number of trainings # Number amenities built ….. etc SOCIAL CHANGE
  23. 23. 23 SOCIAL CHANGE My entrepreneurs beneficiaries have reported that they are now more knowledgeable on management of start-ups, more aware of the market’s risks and opportunities as well as ways to raise funds. They have reported that are more confident and skillful.
  24. 24. 24 SOCIAL CHANGE My entrepreneurs beneficiaries have reported that they are now more knowledgeable on management of start-ups, more aware of the market’s risks and opportunities as well as ways to raise funds. They have reported that are more confident and skillful.
  25. 25. 25 SOCIAL CHANGE Indicator 1: Entrepreneurs are able to run a business. Indicator 2: Entrepreneurs are better able to raise investment funds Indicator 3: Entrepreneurs are more confident and skilled My entrepreneurs beneficiaries have reported that they are now more knowledgeable on management of start-ups, more aware of the market’s risks and opportunities as well as ways to raise investment funds. They have reported that are more confident and skilled. INDICATORS OF CHANGE
  26. 26. 26 SOCIAL CHANGE Indicator 1: Elderlies are fitter Indicator 2: Elderlies fall less Indicator 3: Elderlies go less to hospitals Created a fitness club for elderlies which offers group activities and exercises sessions INDICATORS OF CHANGE
  27. 27. 27 SOCIAL CHANGE Indicator 1: Increase of new activities beneficiaries are taking part of Indicator 2: Increase in beneficiaries’ number of new friends Indicator 3: Increase of beneficiaries level of social skills acquired Reduced social isolation for disadvantaged people INDICATORS OF CHANGE
  28. 28. 28 Indicator 1: Increase of new activities beneficiaries are taking part of Indicator 2: Increase in beneficiaries’ number of new friends Indicator 3: Increase of beneficiaries level of social skills acquired Reduced social isolation for 30 disadvantaged people: 25 5 30 QUANTITY How many beneficiaries have lived the change ?
  29. 29. 29 Indicator 1: Increase of new activities beneficiaries are taking part of Indicator 2: Increase in beneficiaries’ number of new friends Indicator 3: Increase of beneficiaries level of social skills acquired Reduced social isolation for 30 disadvantaged people: 1 Year 3 Years 5 Years DURATION For how long the change will last? 1 – 5 years
  30. 30. 30 Identify appropriate financial values – these are a way of presenting the relative importance to a stakeholder of the changes their experience What is valuation? This process of valuation is often referred to as monetization because we assign a monetary value to things that do not have a market price In SROI we use financial proxies to estimate the social value of non-traded goods to different stakeholders. As SROI becomes more widespread, monetization will improve and there will be scope for pooling good financial proxies
  31. 31. 31 Stakeholder Outcome Indicator Financial Proxies Disadvantaged people Reduced social isolation Increase of new activities beneficiaries are taking part of The cost of the new memberships in social clubs. Entrepreneurs Better able to run a business Increase in market share The divide of company's total revenue by entire industry's total market sales Person with physical health problem Improved physical health • Number of visits to doctor • Extent of improvements in health (self reported) • How often they exercise • Cost of visiting private doctor clinic • Cost of health insurance • Cost of gym membership Local community Improved perception of the local area Residents report improvements in local area • Change in property prices • Amount spent on home improvements
  32. 32. 32 INDICATOR: Enhanced their social status and networks. This valuation has been created to help social housing providers in the UK place a value on the social outcomes of their community investment work. Reference: http://goo.gl/SktZFX Technique of valuation of wellbeing in a UK context equals to OMR 650 per person per year. Based on the cost of living average comparison between UK and Oman: Reference http://goo.gl/3w1Zpw is (-66.2%). Therefore our valuation of the enhanced of social status and networks is 650 – 66.2% = OMR 219.7 OMR 219.7 The consideration made is the value to an individual of being a member of a social group. This is an average value where the individual is 25-49 years old located in the UK and readjusted to an Omani context. Financial Proxies Omani women got involved into a training on soft skills and handcrafts.
  33. 33. 33 INDICATOR: Gained new skills on how to deal with an early age group of Kids The cost of hiring a child psychiatrist to gain skills in dealing with an early age group of kids AED 1,000 Interview with American Center for Psychiatry in order to gain skills in dealing with an early age group of kids. The cost for one consultation is AED 500 The total for two coach 500*2 = 1,000Drh Football coaches reporting gaining new skills while dealing with early age group of disadvantaged kids Financial Proxies
  34. 34. 34 INDICATOR: Increased reputation and enhanced social positioning A good proxy for the value this change was considered to be the cost of one month campaign for an NGO (AED 2,000) or organizing a community event AED 3,000. The average value of these proxy activities is AED 2,500 – inputted after consultation with a leading marketing agency based in Dubai AED 2,500 The consideration made are either by running a marketing campaign or organizing a community event aiming to realize the same outcome for an NGO. NGOs supported the implementation of a corporate CSR program and coordinated the community events: Financial Proxies
  35. 35. 35 INDICATOR: Feeling happier and proud. Valuation Source: This valuation has been created to help social housing providers in the UK place a value on the social outcomes of their community investment work. Technique of valuation of wellbeing: http://goo.gl/SktZFX Technique of valuation of wellbeing in UK = OMR 7,650 per person per year. Based on the cost of living average comparison between UK and Oman: Reference http://goo.gl/3w1Zpw is (-66.2%) therefor our valuation of pride is OMR 7,650 – 66.2% = OMR 2,585.7 OMR 2,585.7 Using the contingent valuation method, a course that enabled someone to increase their confidence in regards to family and others. This valuation is the value to an adult of having high confidence levels. This is an average value for an individual from UK applied to an Omani context. Women feeling happier and proud of themselves after enrolling to a community development program Financial Proxies
  36. 36. 36 Indicator: 5 Entrepreneurs are better able to run business Actual Impact = 100,000 – [(100,000*15%) + (100,000*5%) + (100,000*20%)] = $60,000 100% = $20,000 * 5 = $100,000Deadweight: They are studying business affairs at the university 15% Displacement: Chance to interact with actual entrepreneurs and read start-ups magazines 5% 20% Attribution: The university organizes start-up weekend and seminars 10% per year Drop-off: They might need to refresh and update their learnings after a year REAL IMPACT CREATED
  37. 37. 37 Actual Impact YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 60,000 60,000 54,000 48,600 43,740 39,366 Applying a drop-off of 10% -10% -10% -10% -10% The drop-off stops after the number of years identified as duration. I.e. If the duration of the impact sustains for 3 years, the above table will be as follow: Actual Impact YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 60,000 60,000 54,000 48,600 0 0 -10% -10% -10% -10%
  38. 38. 38 Formula of the Present Value Year 1 Year 2 Year 3 Year 4 Year 5 Benefits 60,000 54,000 48,600 0 0 Discounted Value 60,000 / 1.03 54,000 / (1.03)² 48,600/ (1.03)³ 0 0 Present Value 100,194.2 Example: Discounted Value 3% + + + +
  39. 39. 39 Calculating SROI You are now in a position to calculate the initial SROI ratio. This is a very simple sum. You divide the discounted value of benefits by the total investment SROI Ratio = Present Value / Value of inputs = 100,194.2 / 45,000 = 2.22 For every $1 invested there is a return on investment of 2.22 Creation of $ 100,194.2 of Social Value
  40. 40. 40 Sensitivity Analysis After calculating the ratio, it is important to assess the extent to which your results would change if you changed some of the assumptions you made in the previous stages. The aim of such an analysis is to test which assumptions have the greatest effect on your model. The standard requirement is to check changes to: • Estimates of deadweight, attribution and drop-off; • Financial proxies; • The quantity of the outcome; • The value of inputs, where you have valued non-financial inputs
  41. 41. 41T H A N K Y O U Sustainable Square Consultancy and Think Tank www.sustainablesquare.com Twitter: @Sustain_square UAE HQ: (971) 555449920 Oman: (968) 99277599 India: (91) 9819979635 info@sustainablesquare.com sallawati@sustainablesquare.com india@sustainablesquare.com B305 City Point, JB Nagar, Andheri Kurla Road, Andheri (East) PO BOX 400 059 Mumbai - India Al Amiri Tower – Office 2306, TECOM. PO BOX 118910, Dubai – United Arab Emirates Office 22, Building 2036, Wadi Al Bahais st, Al Seeb PO BOX 1684, PC 114 Hay Al Mina Muscat, Sultanate of Oman

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