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Measure impact and return on
investment for corporate and
   community investment
         Reana Rossouw
   Next Generation Consultants
Why the pressure to measure?
• The debate on impacts and return on investment
  are playing out in three arenas:

  – In private foundations and corporate CSI/CR divisions
     • Aiming to be more strategic about their philanthropy, grant
       making and social/community investments
  – In nonprofit organisations in response to pressures
    from corporates, foundations and government –
     • To be more accountable for the investment received and
       program outcomes expected
  – Among international development organisations such
    as bilateral government agencies and non
    governmental organisations (NGOs)
     • Seeking to improve development effectiveness and lessen
       dependency on grant/development aid
Variety of purposes
• One can and should use cost and impact data
  to make funding allocation decisions across
  program areas
     • You can compare programs once you get in the sector of global
       health, but you cannot compare global health vs. arts vs.
       education vs. sport.
• One can and should use cost and impact data
  to make funding decisions within program
  areas
     • It is not about building a unifying measurement across
       domains, but to build a conceptual framework of having the
       biggest impact across a Rand value unit. So it is not about
       comparing health to education to sport or the arts, but to
       determine which program yields the highest return for the most
       effective use of resources
Three Primary applications
• Prospective
  – Looking forward to determine whether or not the
    projected costs and benefits indicate a favourable
    investment
• Ongoing
  – Testing assumptions and projections along the way in
    order to aid course correction
• Retrospective
  – Looking back to determine whether or not it was a
    favourable investment given the costs incurred, in order to
    inform future investment decisions
What do we want to achieve?
• To provide evidence
• To demonstrate
  performance
• To prove accountability
• To show program
  effectiveness
• To demonstrate value
• To contribute to a
  community’s self-
  sustainability
• To empower communities
  and funders
• Ultimately - to alleviate
  poverty
Impact Value Chain - Our Formula
Hierarchy      Inputs              Outputs            Outcome             Impacts              Returns
Definition     Resources           Goods and          Expected changes    Ultimate (long-      Direct or indirect
               invested (e.g.      services           in access, usage,   term) effect of      business
               money, skills,      generated by the   behaviour or        the intervention     benefits/ value
               etc.)               use of inputs      performance         on a key             generated by
                                   (short-term)       (medium-term)       dimension of the     activities/
                                                                          development          programs/
                                                                          (e.g. living         interventions
                                                                          standards) (long-
                                                                          term)
Quantitative   Value of            Number of          % change –          Students finding   Number of
Indicators     investment,         schools, number    access to health    employment,        graduates hired
               number of hours,    of volunteer,      services,           people with skills by company, %
               number of books,    number of          education,          finding            change in
               hours               teachers,          government          employment         grievance,
                                   students           infrastructure,                        complaints
                                                      pass rates                             received by
                                                                                             company
Qualitative    Stakeholders        Perceptions of     Beneficiaries      Quality of links to Changes in
indicators     satisfaction with   schools,           reporting benefits local employment community /
               the programme       educators,         and application of opportunities,      customer/
                                   learners,          skills, education  perceptions of      employee
                                                                         improved socio      perceptions
                                                                         economic status     attributable
                                                                         or opportunities    directly/
                                                                                             indirectly to CSI
Impact Assessment – HOW?
Dimensions of Impact – WHAT?




          How do we calculate?
          1.   We count each and every stakeholder group
          2.   We count each and every impact
          3.   We distinguish between community and business impact
          4.   Get to a figure: X:Y
Impact Measurement
Program Logic Model
Fundamental Questions
  What impact and return were we looking for? –
 Internal Rate of Return – i.e. For every one Rand
    spend what are communities or the business
                        getting?
           How would we determine ROI?
Is it financial or social or socio – economic return?


     WHO IS ANSWERING THE QUESTION?
    DONOR or the DEVELOPMENT PARTNER?
Edcon
Transnet
Rand Water
BHP Billiton Meyerton
Typical Scorecard
BHP Billiton Richards Bay - ED
Typical Scorecard – SED - Health
Stakeholder Groups       Qualitative   Qualitative   Total Impacts   Total
                         Impacts       Impacts                       Community
Patients                 10            15            25              Impact =
Doctors                  6             9             15              204
Nurses                   8             6             14
Department of Health     4             3             7               Total
Government               8             7             15              Business
Students, care givers    8             9             17              Impact =
Universities             8             7             15              33
Local Clinics            8             7             15
CBO’s, NGO’s             7             9             16              Final score –
Other Funders            7             6             13
                                                                     204:33
Immediate local          9             9             18
communities
                                                                     Question –
Local Authorities        6             7             13
Communities along rail   13            9             22
                                                                     did the
line (secondary)                                                     program
Transnet                 17            16            33              deliver high
R20 million is invested annually and the program has been            impact and
running for more than 10 years. It reaches 15 million people (pa)    high return?
in rural areas – and provide access to primary health care to
these communities – so what is the impact?
Community
                                              What we measure
                  Qualitative impact and return                        Quantitative impact and return
impact and
Business Return
Societal Value    Higher levels of skills and education                 Level of education
                                                                        Pass rate increases
                                                                        University access
                                                                        Graduation rates
                  Increased availability or accessibility to employment Applicability of skills to other jobs
                                                                        Employment rate
                                                                        Income generation
                  Improved health                                       Reduction of lost work days
                                                                        Cost of treating disease
                                                                        Reduction in medical expenses
                  Greater economic resilience                           Wage growth per individual
                                                                        Household wealth and disposable income
                                                                        Contribution to GDP and tax
                                                                        Distribution of wealth
                                                                        Number of new businesses
                  Enhanced environmental quality                        Changes in health
                                                                        Improved access to natural resources
                                                                        Increased quality in natural resources
Business Value    Increased revenue – new customers, new products,     Market penetration, entry, new markets, price differentiation/
                  extended use of existing services                    premium, innovation, demographic changes
                  Reduced Costs and increased efficiency               Decrease in production costs, operational costs, sales and marketing
                                                                       costs, exposure, access to natural resources
                  Building intangibles – Improved customer             Customer perception, survey, satisfaction – employee satisfaction,
                  perceptions, increased customer satisfaction,        talent recruitment and retention, skills development, availability and
                  enhanced brand value, increased supplier             quality of labour, media value and mentions, increased security of
                  relationships, added value to investors, increased   supplies
                  employee recruitment, retention, satisfaction
                  Managing risk – reduced risk to the business,        BBBEE credentials, licences, physical asset security, raw materials
                  reduced risk to the community – reduced regulatory   security, enhanced stakeholder engagement and dialogue, reduction
                  risk, enhanced licence to operate                    in activism, boycotting, strikes, increased sales and tenders
Rand Water – HIV & ME
   Impact over time
Rand Water – Frances Vorweg - Impact across
 economic, social and environmental aspects
Some stuff we have learnt
• Sponsorship, Donations and infrastructure programs CAN deliver
  high impact and return
• Bursaries do NOT necessarily deliver high impact and return -
• ANY resources CAN be measured – books, wheelchairs, buildings,
  time – cash and non-cash
• Both Socio Economic Development and Enterprise Development
  programs can be measured - equally
• The same project can deliver varied results for different funders –
  HIV & ME, Dreamfields
• 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
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!
• It is possible to determine impact and return
   – And the real value lie in independent, verifiable, assurance of CSI
     expenditure, program results, outcomes and impact
What I now know…
• We all have impact – but it is not necessarily measurable
  and sustainable impact
   – Do we want economic or social impact?
   – By implication social impact help people right now – but may
     not help them in the future – which renders the project/our
     intervention UNSUSTAINABLE
   – Sometimes it is our own (CSI Practitioner’s) fault we don’t have
     higher impact as we decide what, who and how to fund/not to
     fund
   – The most sustainable projects/programs with the highest impact
     have social, socio economic and ECONOMIC impacts i.e. the
     number of jobs created
   – Sometimes there is negative impact – i.e. dependencies are
     created
   – Mostly there is only short term impact – again which makes our
     interventions UNSUSTAINABLE
Above all else:

  Measuring impact is important
Measuring the right things is difficult
   Measuring impact is possible
What next?
             • Impact
               Investment Index:
               III

             • Levels of impact –
               shallow, deep, int
               egrated –
               weighting of
               impact
Towards Best Practice
• The Seven Principles     • The Seven Stages
  – Involve stakeholders     – Establish the scope
  – Understand what            and identify the key
    changes                    stakeholders
  – Value things that        – Map the outcomes –
    matter                     identify the indicators
  – Only include what is     – Look for evidence
    material                 – Establish the impact
  – Do not over claim        – Calculate the impact
  – Be transparent           – Report the outcome
  – Verify the result        – Share the learning
Workshop
• What constitutes     • How will we measure
  current practice?      impact and return?
• What are the         • How will we report on
  challenges to          impact and return?
  measuring impact
  and return           • How will measuring
  currently?             and reporting on
                         impact and return
• What do we need to
  do to change?          impact our work and
                         the industry?
Contact
•   Reana Rossouw
•   Next Generation Consultants
•   Specialists in Corporate Sustainability and Integrated Sustainability as well Socio Economic
    Investment and Development
•   Tel: (011) 258 8616
•   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

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Measuring the impact and return on investment on community/social investment and development

  • 1. Measure impact and return on investment for corporate and community investment Reana Rossouw Next Generation Consultants
  • 2. Why the pressure to measure? • The debate on impacts and return on investment are playing out in three arenas: – In private foundations and corporate CSI/CR divisions • Aiming to be more strategic about their philanthropy, grant making and social/community investments – In nonprofit organisations in response to pressures from corporates, foundations and government – • To be more accountable for the investment received and program outcomes expected – Among international development organisations such as bilateral government agencies and non governmental organisations (NGOs) • Seeking to improve development effectiveness and lessen dependency on grant/development aid
  • 3. Variety of purposes • One can and should use cost and impact data to make funding allocation decisions across program areas • You can compare programs once you get in the sector of global health, but you cannot compare global health vs. arts vs. education vs. sport. • One can and should use cost and impact data to make funding decisions within program areas • It is not about building a unifying measurement across domains, but to build a conceptual framework of having the biggest impact across a Rand value unit. So it is not about comparing health to education to sport or the arts, but to determine which program yields the highest return for the most effective use of resources
  • 4. Three Primary applications • Prospective – Looking forward to determine whether or not the projected costs and benefits indicate a favourable investment • Ongoing – Testing assumptions and projections along the way in order to aid course correction • Retrospective – Looking back to determine whether or not it was a favourable investment given the costs incurred, in order to inform future investment decisions
  • 5. What do we want to achieve? • To provide evidence • To demonstrate performance • To prove accountability • To show program effectiveness • To demonstrate value • To contribute to a community’s self- sustainability • To empower communities and funders • Ultimately - to alleviate poverty
  • 6. Impact Value Chain - Our Formula Hierarchy Inputs Outputs Outcome Impacts Returns Definition Resources Goods and Expected changes Ultimate (long- Direct or indirect invested (e.g. services in access, usage, term) effect of business money, skills, generated by the behaviour or the intervention benefits/ value etc.) use of inputs performance on a key generated by (short-term) (medium-term) dimension of the activities/ development programs/ (e.g. living interventions standards) (long- term) Quantitative Value of Number of % change – Students finding Number of Indicators investment, schools, number access to health employment, graduates hired number of hours, of volunteer, services, people with skills by company, % number of books, number of education, finding change in hours teachers, government employment grievance, students infrastructure, complaints pass rates received by company Qualitative Stakeholders Perceptions of Beneficiaries Quality of links to Changes in indicators satisfaction with schools, reporting benefits local employment community / the programme educators, and application of opportunities, customer/ learners, skills, education perceptions of employee improved socio perceptions economic status attributable or opportunities directly/ indirectly to CSI
  • 8. Dimensions of Impact – WHAT? How do we calculate? 1. We count each and every stakeholder group 2. We count each and every impact 3. We distinguish between community and business impact 4. Get to a figure: X:Y
  • 11. Fundamental Questions What impact and return were we looking for? – Internal Rate of Return – i.e. For every one Rand spend what are communities or the business getting? How would we determine ROI? Is it financial or social or socio – economic return? WHO IS ANSWERING THE QUESTION? DONOR or the DEVELOPMENT PARTNER?
  • 12. Edcon
  • 16. Typical Scorecard BHP Billiton Richards Bay - ED
  • 17. Typical Scorecard – SED - Health Stakeholder Groups Qualitative Qualitative Total Impacts Total Impacts Impacts Community Patients 10 15 25 Impact = Doctors 6 9 15 204 Nurses 8 6 14 Department of Health 4 3 7 Total Government 8 7 15 Business Students, care givers 8 9 17 Impact = Universities 8 7 15 33 Local Clinics 8 7 15 CBO’s, NGO’s 7 9 16 Final score – Other Funders 7 6 13 204:33 Immediate local 9 9 18 communities Question – Local Authorities 6 7 13 Communities along rail 13 9 22 did the line (secondary) program Transnet 17 16 33 deliver high R20 million is invested annually and the program has been impact and running for more than 10 years. It reaches 15 million people (pa) high return? in rural areas – and provide access to primary health care to these communities – so what is the impact?
  • 18. Community What we measure Qualitative impact and return Quantitative impact and return impact and Business Return Societal Value Higher levels of skills and education Level of education Pass rate increases University access Graduation rates Increased availability or accessibility to employment Applicability of skills to other jobs Employment rate Income generation Improved health Reduction of lost work days Cost of treating disease Reduction in medical expenses Greater economic resilience Wage growth per individual Household wealth and disposable income Contribution to GDP and tax Distribution of wealth Number of new businesses Enhanced environmental quality Changes in health Improved access to natural resources Increased quality in natural resources Business Value Increased revenue – new customers, new products, Market penetration, entry, new markets, price differentiation/ extended use of existing services premium, innovation, demographic changes Reduced Costs and increased efficiency Decrease in production costs, operational costs, sales and marketing costs, exposure, access to natural resources Building intangibles – Improved customer Customer perception, survey, satisfaction – employee satisfaction, perceptions, increased customer satisfaction, talent recruitment and retention, skills development, availability and enhanced brand value, increased supplier quality of labour, media value and mentions, increased security of relationships, added value to investors, increased supplies employee recruitment, retention, satisfaction Managing risk – reduced risk to the business, BBBEE credentials, licences, physical asset security, raw materials reduced risk to the community – reduced regulatory security, enhanced stakeholder engagement and dialogue, reduction risk, enhanced licence to operate in activism, boycotting, strikes, increased sales and tenders
  • 19. Rand Water – HIV & ME Impact over time
  • 20. Rand Water – Frances Vorweg - Impact across economic, social and environmental aspects
  • 21. Some stuff we have learnt • Sponsorship, Donations and infrastructure programs CAN deliver high impact and return • Bursaries do NOT necessarily deliver high impact and return - • ANY resources CAN be measured – books, wheelchairs, buildings, time – cash and non-cash • Both Socio Economic Development and Enterprise Development programs can be measured - equally • The same project can deliver varied results for different funders – HIV & ME, Dreamfields • 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
  • 22. 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! • It is possible to determine impact and return – And the real value lie in independent, verifiable, assurance of CSI expenditure, program results, outcomes and impact
  • 23. What I now know… • We all have impact – but it is not necessarily measurable and sustainable impact – Do we want economic or social impact? – By implication social impact help people right now – but may not help them in the future – which renders the project/our intervention UNSUSTAINABLE – Sometimes it is our own (CSI Practitioner’s) fault we don’t have higher impact as we decide what, who and how to fund/not to fund – The most sustainable projects/programs with the highest impact have social, socio economic and ECONOMIC impacts i.e. the number of jobs created – Sometimes there is negative impact – i.e. dependencies are created – Mostly there is only short term impact – again which makes our interventions UNSUSTAINABLE
  • 24. Above all else: Measuring impact is important Measuring the right things is difficult Measuring impact is possible
  • 25. What next? • Impact Investment Index: III • Levels of impact – shallow, deep, int egrated – weighting of impact
  • 26. Towards Best Practice • The Seven Principles • The Seven Stages – Involve stakeholders – Establish the scope – Understand what and identify the key changes stakeholders – Value things that – Map the outcomes – matter identify the indicators – Only include what is – Look for evidence material – Establish the impact – Do not over claim – Calculate the impact – Be transparent – Report the outcome – Verify the result – Share the learning
  • 27. Workshop • What constitutes • How will we measure current practice? impact and return? • What are the • How will we report on challenges to impact and return? measuring impact and return • How will measuring currently? and reporting on impact and return • What do we need to do to change? impact our work and the industry?
  • 28. Contact • Reana Rossouw • Next Generation Consultants • Specialists in Corporate Sustainability and Integrated Sustainability as well Socio Economic Investment and Development • Tel: (011) 258 8616 • 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