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Measuring impact and return on
investment for social development
    and community investment
               Reana Rossouw
         Next Generation Consultants
                South Africa
South African Context
• Definition
      – CSR to CR to TBL to ESG to Sustainability
• Issue
      – Giving is mandatory
      – Reporting is mandatory
      – Question is = how to measure impact for beneficiaries and investors
• Legislation - Local
      – BBBEEE - Broad-based Black Economic Empowerment Act, Industry
        Charters, JSE-SRI-Johannesburg Stock Exchange – Socially Responsible
        Investment Index, King III – Corporate Governance, Companies Act –
        Social and Ethics committee
• Legislation – International
      – Industry Codes – ICMM, EITI
• Guidelines & Frameworks
      – GRI, UNGC, IFC, IIRC

2013/04/23                      Next Generation Consultants                    2
African Context
•   Development Aid
•   Multinational Operations
•   Indigenous Operations
•   Foreign Development Agencies
•   Regional Differences
      – Legislation (Nigeria)
      – Size of Development Sector (3rd sector)
• Continental Sameness
      – Dependency created
      – No skills and capacity developed
• Time for African Solution

2013/04/23                 Next Generation Consultants   3
What do we want to achieve?
• To provide evidence
• To demonstrate
  performance
• To prove accountability
• To show program/
  investment effectiveness
• To demonstrate value
• To contribute to
  sustainable development
• To empower
  communities and funders
• Ultimately - to alleviate,
  eliminate and eradicate
  poverty
2013/04/23             Next Generation Consultants   4
Funders and non-profits often use the words
             “evaluation” and “impact” loosely, stretching
              these terms to include any type of report on
               the use of funds or the results they achieve.
                 Many evaluation professionals, however,
              distinguish between measuring performance
               (monitoring inputs, activities, and outputs),
             measuring outcomes (near-term results), and
                evaluating impact (long-term changes that
             can be attributed to grantmakers’ activities) as
             well as return on investment (benefits accrued
              to the donor or investor) as a result of funds
                      and other resources invested.
2013/04/23                  Next Generation Consultants         5
Impact Investment Index
                                    • 3 Years in development
                                    • Aimed at Donors, investors,
                                      development agencies and
                                      implementation partners
                                    • Compared 40 other global
                                      impact assessment
                                      methodologies
                                    • Needed an African solution for
                                      African development issues
                                      and practitioners
                                          –       300 programs
                                          –       15 investment areas
                                          –       12 aspects of impact
                                          –       15 aspects of return
                                          –       200 indicators
                                          –       R1 billion of investment
2013/04/23          Next Generation Consultants                              6
The Impact Investment Index - III

  Inputs                        Outputs/Outcomes                 Impacts
  • How                         • Community Benefits             • Community Impacts
    • Cash, time, in kind,        • Qualitative                  • Business Impacts/Return
      management costs            • Quantitative
  • Why                           • Dimensions of impact (10)    • Shared Value
    • Community Relations,                                       • +200 Indicators
      community investments,    • Business Benefits
      commercial initiatives
                                  • Qualitative
  • Where
                                  • Quantitative
    • Geographic Location
                                  • Dimensions of Impact and
  • Who                             Return (10)
    • Stakeholders Affected,
      Impacted
  • What
    • Focus Areas, Investment
      Portfolios




2013/04/23                         Next Generation Consultants                               7
Impact Assessment – HOW?




2013/04/23           Next Generation Consultants   8
Impact Assessment – WHAT?




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Calculating Impact – The Process




2013/04/23     Next Generation Consultants   10
Identifying Indicators – How?




      Community Impact = 10 Business Impact = 5 Total Impact = 10:5
2013/04/23                     Next Generation Consultants            11
Community Impact




2013/04/23       Next Generation Consultants   12
Business Return




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Ratings and Rankings




2013/04/23         Next Generation Consultants   14
Impact and Return across portfolio’s




2013/04/23   Next Generation Consultants   15
2013/04/23   Next Generation Consultants   ‹#›
Impact and return score cards




2013/04/23        Next Generation Consultants   17
Case Study 1: Transnet




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Case Study 2: Rand Water




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Case Study 3: BHP Billiton Metalloys




2013/04/23    Next Generation Consultants   20
Case Study 4: Enterprise Development




 2013/04/23   Next Generation Consultants   21
Case Study 5: Health
Stakeholder Groups       Qualitative   Qualitative   Total Impacts       Total Community Impact = 204
                         Impacts       Impacts
Patients                 10            15            25                  Total Business Impact = 33
Doctors                  6             9             15
Nurses                   8             6             14                  Final score – 204:33
Department of Health     4             3             7
Government               8             7             15
                                                                         R20 million is invested annually and
Students, care givers    8             9             17
                                                                         the program has been running for
Universities             8             7             15
                                                                         more than 10 years. It reaches 15
Local Clinics            8             7             15
                                                                         million people (pa) in rural areas – and
CBO’s, NGO’s             7             9             16
Other Funders            7             6             13
                                                                         provide access to primary health care
Immediate local          9             9             18                  to these communities – so did it
communities                                                              deliver impact and return?
Local Authorities        6             7             13
Communities along rail   13            9             22
line (secondary)
Transnet                 17            16            33


 2013/04/23                                           Next Generation Consultants                              22
Case Study 6: Impact over time




2013/04/23       Next Generation Consultants   23
Case Study 7: Impact across economic,
  social and environmental aspects




 2013/04/23   Next Generation Consultants   24
Some stuff we have learnt
• ANY resources CAN be measured – books, wheelchairs,
  buildings, time – cash and non-cash
• The same project can deliver varied results for different
  funders
• How and on what you spend the money (inside the program)
  has a direct influence on the impact and return
• The strategy and focus areas has to clearly define the return
  and impact required
• Sustainability has to be clearly defined for exit and
  completion
• Indicators have to be developed, agreed, and documented as
  part of the contractual phase
• Internal monitoring and external evaluation processes has to
  be established and adhered too - Impact Assessment does
  not replace evaluation and monitoring
• Impact can be measured over time as well as the triple
  bottom line
2013/04/23              Next Generation Consultants           25
Other important stuff…
• The type of service provider (NGO) and the level of service
  provider (sophistication) does have an impact on the
  outcome of the assessment
• You have to consider the impact of the impact assessment on
  so many levels
      – As a result of our work we can now categorically state that most
        programs:
             • Have only short term impact
             • Those that have medium term impact are not necessarily sustainable
             • The long term impact is mostly social or socio economic only as
               opposed to economic impact which really contributes to
          poverty alleviation and eradication!
• It is possible to determine impact and return
      – The real value lies in independent, verifiable, assurance of social
        investment expenditure, program results, outcomes and impact
2013/04/23                        Next Generation Consultants                   26
In closing
•   Involve stakeholders
      – Establish the scope and identify the key
        stakeholders impacted
•   Understand what changes
      – Map the outcomes – identify the
        indicators to measure impact                    Community
                                                          Impact
•   Value things that matter
                                                                     If you can count
      – Look for evidence, don’t forget baseline
        and impact studies                                               and define
•   Only include what is material                                     indicators you
      – Focus on agreed outcomes first then                           can determine
        incidental impact                                               impact and
•   Do not over claim                                                      return
      – Calculate the impact based on evidence           Business
                                                          Return
•   Be transparent
      – Report the outcome – the good and
        BAD news
•   Verify the result
      – Share the learning


2013/04/23                             Next Generation Consultants                      27
Above all else:

               Measuring impact is important
             Measuring the right things is difficult
                Measuring impact is possible

2013/04/23                Next Generation Consultants   28
Contact
•   Reana Rossouw
•   Next Generation Consultants
•   Specialists in Development
•   Tel: + 27 (011) 275 0315
•   E-mail: rrossouw@nextgeneration.co.za
•   Web: www.nextgeneration.co.za


•   PLEASE NOTE: THIS PRESENTATION IS PART OF A LARGER BODY OF
    RESEARCH!
•   THIS INFORMATION IS COPYWRITED AND THE INTELLECTUAL PROPERTY
    OF NEXT GENERATION CONSULTANTS




2013/04/23                      Next Generation Consultants        29

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Impact investment index© - evidence of impact

  • 1. Measuring impact and return on investment for social development and community investment Reana Rossouw Next Generation Consultants South Africa
  • 2. South African Context • Definition – CSR to CR to TBL to ESG to Sustainability • Issue – Giving is mandatory – Reporting is mandatory – Question is = how to measure impact for beneficiaries and investors • Legislation - Local – BBBEEE - Broad-based Black Economic Empowerment Act, Industry Charters, JSE-SRI-Johannesburg Stock Exchange – Socially Responsible Investment Index, King III – Corporate Governance, Companies Act – Social and Ethics committee • Legislation – International – Industry Codes – ICMM, EITI • Guidelines & Frameworks – GRI, UNGC, IFC, IIRC 2013/04/23 Next Generation Consultants 2
  • 3. African Context • Development Aid • Multinational Operations • Indigenous Operations • Foreign Development Agencies • Regional Differences – Legislation (Nigeria) – Size of Development Sector (3rd sector) • Continental Sameness – Dependency created – No skills and capacity developed • Time for African Solution 2013/04/23 Next Generation Consultants 3
  • 4. What do we want to achieve? • To provide evidence • To demonstrate performance • To prove accountability • To show program/ investment effectiveness • To demonstrate value • To contribute to sustainable development • To empower communities and funders • Ultimately - to alleviate, eliminate and eradicate poverty 2013/04/23 Next Generation Consultants 4
  • 5. Funders and non-profits often use the words “evaluation” and “impact” loosely, stretching these terms to include any type of report on the use of funds or the results they achieve. Many evaluation professionals, however, distinguish between measuring performance (monitoring inputs, activities, and outputs), measuring outcomes (near-term results), and evaluating impact (long-term changes that can be attributed to grantmakers’ activities) as well as return on investment (benefits accrued to the donor or investor) as a result of funds and other resources invested. 2013/04/23 Next Generation Consultants 5
  • 6. Impact Investment Index • 3 Years in development • Aimed at Donors, investors, development agencies and implementation partners • Compared 40 other global impact assessment methodologies • Needed an African solution for African development issues and practitioners – 300 programs – 15 investment areas – 12 aspects of impact – 15 aspects of return – 200 indicators – R1 billion of investment 2013/04/23 Next Generation Consultants 6
  • 7. The Impact Investment Index - III Inputs Outputs/Outcomes Impacts • How • Community Benefits • Community Impacts • Cash, time, in kind, • Qualitative • Business Impacts/Return management costs • Quantitative • Why • Dimensions of impact (10) • Shared Value • Community Relations, • +200 Indicators community investments, • Business Benefits commercial initiatives • Qualitative • Where • Quantitative • Geographic Location • Dimensions of Impact and • Who Return (10) • Stakeholders Affected, Impacted • What • Focus Areas, Investment Portfolios 2013/04/23 Next Generation Consultants 7
  • 8. Impact Assessment – HOW? 2013/04/23 Next Generation Consultants 8
  • 9. Impact Assessment – WHAT? 2013/04/23 Next Generation Consultants 9
  • 10. Calculating Impact – The Process 2013/04/23 Next Generation Consultants 10
  • 11. Identifying Indicators – How? Community Impact = 10 Business Impact = 5 Total Impact = 10:5 2013/04/23 Next Generation Consultants 11
  • 12. Community Impact 2013/04/23 Next Generation Consultants 12
  • 13. Business Return 2013/04/23 Next Generation Consultants 13
  • 14. Ratings and Rankings 2013/04/23 Next Generation Consultants 14
  • 15. Impact and Return across portfolio’s 2013/04/23 Next Generation Consultants 15
  • 16. 2013/04/23 Next Generation Consultants ‹#›
  • 17. Impact and return score cards 2013/04/23 Next Generation Consultants 17
  • 18. Case Study 1: Transnet 2013/04/23 Next Generation Consultants 18
  • 19. Case Study 2: Rand Water 2013/04/23 Next Generation Consultants 19
  • 20. Case Study 3: BHP Billiton Metalloys 2013/04/23 Next Generation Consultants 20
  • 21. Case Study 4: Enterprise Development 2013/04/23 Next Generation Consultants 21
  • 22. Case Study 5: Health Stakeholder Groups Qualitative Qualitative Total Impacts Total Community Impact = 204 Impacts Impacts Patients 10 15 25 Total Business Impact = 33 Doctors 6 9 15 Nurses 8 6 14 Final score – 204:33 Department of Health 4 3 7 Government 8 7 15 R20 million is invested annually and Students, care givers 8 9 17 the program has been running for Universities 8 7 15 more than 10 years. It reaches 15 Local Clinics 8 7 15 million people (pa) in rural areas – and CBO’s, NGO’s 7 9 16 Other Funders 7 6 13 provide access to primary health care Immediate local 9 9 18 to these communities – so did it communities deliver impact and return? Local Authorities 6 7 13 Communities along rail 13 9 22 line (secondary) Transnet 17 16 33 2013/04/23 Next Generation Consultants 22
  • 23. Case Study 6: Impact over time 2013/04/23 Next Generation Consultants 23
  • 24. Case Study 7: Impact across economic, social and environmental aspects 2013/04/23 Next Generation Consultants 24
  • 25. Some stuff we have learnt • ANY resources CAN be measured – books, wheelchairs, buildings, time – cash and non-cash • The same project can deliver varied results for different funders • How and on what you spend the money (inside the program) has a direct influence on the impact and return • The strategy and focus areas has to clearly define the return and impact required • Sustainability has to be clearly defined for exit and completion • Indicators have to be developed, agreed, and documented as part of the contractual phase • Internal monitoring and external evaluation processes has to be established and adhered too - Impact Assessment does not replace evaluation and monitoring • Impact can be measured over time as well as the triple bottom line 2013/04/23 Next Generation Consultants 25
  • 26. Other important stuff… • The type of service provider (NGO) and the level of service provider (sophistication) does have an impact on the outcome of the assessment • You have to consider the impact of the impact assessment on so many levels – As a result of our work we can now categorically state that most programs: • Have only short term impact • Those that have medium term impact are not necessarily sustainable • The long term impact is mostly social or socio economic only as opposed to economic impact which really contributes to poverty alleviation and eradication! • It is possible to determine impact and return – The real value lies in independent, verifiable, assurance of social investment expenditure, program results, outcomes and impact 2013/04/23 Next Generation Consultants 26
  • 27. In closing • Involve stakeholders – Establish the scope and identify the key stakeholders impacted • Understand what changes – Map the outcomes – identify the indicators to measure impact Community Impact • Value things that matter If you can count – Look for evidence, don’t forget baseline and impact studies and define • Only include what is material indicators you – Focus on agreed outcomes first then can determine incidental impact impact and • Do not over claim return – Calculate the impact based on evidence Business Return • Be transparent – Report the outcome – the good and BAD news • Verify the result – Share the learning 2013/04/23 Next Generation Consultants 27
  • 28. Above all else: Measuring impact is important Measuring the right things is difficult Measuring impact is possible 2013/04/23 Next Generation Consultants 28
  • 29. Contact • Reana Rossouw • Next Generation Consultants • Specialists in Development • Tel: + 27 (011) 275 0315 • E-mail: rrossouw@nextgeneration.co.za • Web: www.nextgeneration.co.za • PLEASE NOTE: THIS PRESENTATION IS PART OF A LARGER BODY OF RESEARCH! • THIS INFORMATION IS COPYWRITED AND THE INTELLECTUAL PROPERTY OF NEXT GENERATION CONSULTANTS 2013/04/23 Next Generation Consultants 29