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SROI presentation PPT

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SROI presentation PPT

  1. 1. SOCIAL RETURN ONINVESTMENT(SROI)Helen CaseyCynthia MulengaFrancisca Reutter
  2. 2. SROI - Just another attempt toturn social programs intocommercial transactions?
  3. 3. “Dear Mr Ghandi,We regret we cannotfund your projectbecause the linkbetween spinningcloth and the fall ofthe British empirewas not clear to us”
  4. 4. Capturing Cost
  5. 5. • versusversus
  6. 6. “Measure what ismeasureable, and makemeasurable what is not so”GalileoGalileo – godfather ofSROI?
  7. 7. Stakeholders
  8. 8. • George Segal, the Tightrope walker, Carnegie Art Museum
  9. 9. If no market value exists...
  10. 10. Presentation outline1. What is SROI?2. Contexts3. How is SROI Implemented• Stages4. Uses (inappropriate)5. Weaknesses6. Strengths
  11. 11. 1. What is SROI?• Approach to program, project and policy evaluation thataims to account for non-financial outcomes using monetaryvalues to represent them.• A way of reporting on value creation measuringsocial, environmental and economic results.• Includes a consistent approach with standard steps.• Strong emphasis on involving stakeholders.(Nicholls, Lawlor, Neitzert, & Goodspeed, 2012)
  12. 12. SROI measures the value of social benefits created byan organisation, in relation to the relative cost ofachieving those benefits, expressed in a SROI ratio:SROI ratio = present valuevalue of inputs(Rotheroe & Richards, 2007)
  13. 13. Two types of SROIEvaluative• Conductedretrospectively• Based on outcomes thathave already takenplace.• Preferred use in ongoingevaluation and not as afinal outcome measure.Forecast• Conducted before hand.• Predicts how much socialvalue will be created if theactivities meet theirintended outcomes(Nicholls, Lawlor, Neitzert, & Goodspeed, 2012)
  14. 14. Brief history and context• In 1997, REDF (Roberts Enterprise Development Fund, USA) launched aninitiative to asses impact of non for profits. In 2000 SROI was firstdocumented.• A Network of practitioners was formed in 2006: SROI Network (UK and USA).• New Economics Foundation in the UK edited a DIY Guide to Social Return oninvestment in 2007.• Office for the Third Sector (UK) developed a Measuring Social Value projectin 2008, aiming to develop SROI.(Flockhart, 2005)(Lingane & Olsen, 2004)(Arvidson, Lyon, Mc Kay & Moro, 2010)
  15. 15. PurposeIts fundamental purpose is to provide a model for allocatingmonetary expression of the value of outcomes for which noagreed market value exists.It can de used for a range of evaluation purposes:• Assess projects. (Forecast)• Demonstrate achievements (Evaluative).• Help improve organisational operations.(Nicholls, Lawlor, Neitzert, & Goodspeed, 2012)
  16. 16. 7 Principles of SROIInvolve stakeholders.Understand what changes.Value the things that matter.Only include what is material.Do not over-claim.Be transparent.Verify the result.
  17. 17. Involve Stakeholders
  18. 18. Understand what changes
  19. 19. Value the things that matter$ 2 $ 8
  20. 20. Only include what is material
  21. 21. Do not over claim
  22. 22. Be transparent
  23. 23. Verify the result
  24. 24. How is it different to Cost Benefit Analysis?SROI• Used by managers to inform thepractical decision-makingoptimizing their social andenvironmental impacts.• Strong explicit emphasis onstakeholders and the types ofinvolvement they can have.• Comparison is not recommended,unless certain precautions aretaken.CBA• Used by funders outside anorganization to determine whethertheir investment or grant iseconomically efficient.• Does not necessarily includestakeholders.• Aimed at comparison.• (Arvidson, Lyon, Mc Kay & Moro, 2010)
  25. 25. 2. Context• Designed originally to be used among NGOs and not for profits(“Third Sector”).• Growing interest in social value measures in the contexts ofincreased outsourcing of the delivery of public services, and theincreased need of funders to secure real value for money.(Wood & Leighton. 2010)• Can be used by:• Private businesses.• Non for profit and social organizations.• Government departments (Public Service Commissioners)• Funders.(Nicholls, Lawlor, Neitzert, & Goodspeed, 2012)
  26. 26. 3. How is SROI ImplementedReporting, using and embeddingCalculating the SROIEstablishing impactEvidencing outcomes and giving them a valueMapping outcomesEstablishing scope and identifying key stakeholders
  27. 27. 4. Inappropriate usesIt is NOT appropriate to compare the socialreturn on investment ratios alone.Also NOT appropriate when:• A strategic planning process has already been undertaken and is alreadybeing implemented and there is no chance of modifying;• Stakeholders are not interested in the results;• It is being undertaken only to prove the value of a service and there is noopportunity for changing the way things are done as a result of theanalysis;• Resources are scarce.
  28. 28. 5. Weaknesses• Social Impact can be a personal or political measurement. (Lingane & Olsen.2004)• Needs considerable resources to be implemented. (Flockhart, 2005)• SROI “readiness” mainly involves being able to identify and measureorganisational outcomes adequately in a quantitative way. (Wood &Leighton, 2010)• Can easily be misused focusing solely on SROI Ratio (Arvidson, Lyon, Mc Kay& Moro, 2010)• The “if it can not be measured it can not be managed” trap.(Arvidson, Lyon, Mc Kay & Moro, 2010)• Quantifying inputs can be very tricky. (Arvidson, Lyon, Mc Kay & Moro, 2010)
  29. 29. “ An SROI analysis is only as good as the data thatis put in. In addition to properly resourcingorganisations to collect outcomes data, SROIanalyses can be strengthened by shared researchon outcomes, proxies, and indicators”(New Economics foundation, 2008. in Wood, Leighton. 2010. p 28)
  30. 30. 6. Strengths• Fosters a commitment towards transparency and accountability (Rotheroe &Richards, 2007)• Promotes better communication and engagement between different stakeholders• Expected to foster improvement of quality data• Evaluative process promoted by SROI includes making organisations aware oftheir own values(Arvidson, Lyon, Mc Kay & Moro, 2010)• SROI principles have widespread approval, provide a benchmark fororganizations to set their goals and review their activities. ( Wood &Leighton, 2010)• Method includes specific guidelines that refer both to technical aspects as socialinteraction / political aspects, allowing relatively consistent procedures.
  31. 31. A case study ofSROIonKalomo FMNRproject
  32. 32. 6 steps to implement SROIReporting, using and embeddingCalculating the SROIEstablishing impactEvidencing outcomes and giving them a valueMapping outcomesEstablishing scope and identifying key stakeholders
  33. 33. • Funded by WVA• Project implementedin 9 villages• Project implementedover 3 yearsProjectObjectives
  34. 34. Project Objectives• Project goal: To improve the livelihoods of the people ofKalomo area.• Project Outcomes: Farmers adopt sound naturalresource management practices
  35. 35. Project interventions1. Community mobilisation around FMNR2. Intensively training of community memberson FMNR practices3. Promotion of complementary naturalresource management (NRM) techniques4. Strengthening of community structures
  36. 36. Rationale• 1. To find out whatproject outcomesimpacted on keystakeholders
  37. 37. 2. what theseimpacts areworth to thekeyStakeholders
  38. 38. All as a way ofinterpreting theproject‟s value as aresult of theinvestment made
  39. 39. Data collection methods•Focus Group discussions of primarystakeholders•Key Informant interviews of selected•Household survey stakeholders•Visual data of geographical area•Shadow pricing
  40. 40. SROI stage 1: Scope and stakeholder•Measurement over the 3 yrimplementation period•Primary stakeholders – Leadfarmers•Neighbouring farmer households•Comparison group
  41. 41. • Stakeholders validated and identified the followingoutcomes1. Increased household and communal assets inthe form of trees and livestock2. Increased household consumables sourced from naturalresources3. Increased household income4. Improved health5. Psychological Benefits – increased hope, aesthetics6. Economic assets7. Environmental BenefitsSROI stage 2: Map Outcomes
  42. 42. SROI stage 3:Evidencing and Valuing Outcomes• Step 1: Develop outcome indicators:• Remember outcome: Increased household and communalassets in the form of trees and livestock. Indicator is• Nº of Households reported increased availability ofand accessibility to the resources (rafters forre/construction, firewood for cooking, thatch forroofing, and herbal medicines for basic treatment)• Amount of trees in the area
  43. 43. • Step 2: Collect outcomes data• How many experienced this change? 52 Households• How many trees in the area had regenerated? 1 000 000• Step 3: Establish how long the outcomes last• 6 years (2 years of project + 4 years post-project)• Step 4: Put a value on the outcome.• Market value of rafters, firewood, thatch, and herbal medicines (notfor trade)• Communities thought about how they used to collect it before and therisks involved• They valued this particular outcome at $100,000
  44. 44. 2009FMNR intervention2012e-intervention
  45. 45. • Impact is only what is a result of theintervention• DeadweightWhat would have happened anyway?• 9% of those not accessing FMNR said access to more wildresources had increased• Displacement• 0% displacementSROI stage 4: Establishing Impact
  46. 46. • AttributionHow much of the outcome is because of otherorganisations or interventions.10% - One community was already partly organisedaround tree protection• Drop off0% drop off - Community commitment unlikely to drop inthe short period of analysis due to the extent ofbenefits, therefore trees will continue to be there oreven increase in number
  47. 47. To calculate the impact of this outcome:= (Financial proxy x qty of outcome) minus dead weightminus attribution(100,000 x 52) - 9%5,200,000 – 468,0004,732,000 - 10%4,732,000 - 473,200= $4,258,800 in that year
  48. 48. • Five steps involved:1. Projecting into the future – drop off rate.2. Calculating the net present value – discount rate (timevalue of money)3. Calculating the SROI ratio = Present value/value ofinputs4. Sensitivity analysis – Which assumptions have thegreatest effect on your model?5. Payback period- At what point does return value >investment.SROI stage 5: Calculating the SROI
  49. 49. • Communicate meaningfully• Short Report• Transparent and concise• ConsistentSROI stage 6:Reporting Using and Embedding
  50. 50. Challenges• SROI methodology is silent on whether to define „value‟ interms of money funds‟ origins or the recipient community. E.g. a benefit in Choolwe, worth $500, is the equivalent of 50% ofthe average per capita income in Australia.Should it be expressed like that? Or should it be expressed as theequivalent in the financier economy?• SROI literature is weak on providing guidance on how tofacilitate stakeholder identification of meaningful valuesfor non-marketable benefits.
  51. 51. Challenges (continued)• Evaluators found it difficult and time-consuming to explainto stakeholders groups the notion of proxy financial valuesfor social, environmental and cultural returns.• Interviews and focus groups took a lot longer or coveredfewer topics in the allotted time due to the culturaldisconnect of trying to elicit proxy market/financial valuesfrom people who have an almost entirely non-economicculture, livelihood and value system.
  52. 52. References• Arvidon, M., Lyon, F., McKay, S., & Moro, D. (2010). The ambitions and challenges of SROI . UK: Third Sector Research Centre, University of Birmingham.Retrieved from http://www.tsrc.ac.uk/LinkClick.aspx?fileticket=QwHhaC%2br88Y%3d&tabid=500• Davidson, J. (2005) Evaluation Methodology Basics – The nuts and bolts of sound evaluation Thousand Oaks California: Sage Publications• Flockhart, A. (2005). Raising the profile of social enterprises: The use of social return on investment (SROI) and investment ready tools (IRT) to bridge thefinancial credibility gap. Social Enterprise Journal, 1(1), 29.• Lingane, A., & Olsen, S. (2004). Guidelines for social return on investment. California Management Review, 46(3), 116-135.• London Business School, New Economics Foundation and Small Business Foundation (2004). Measuring social impact: the foundation of social return oninvestment (SROI). Retrieved from http://sroi.london.edu/Measuring-Social-Impact.pdf• New Economics Foundation (2008) Investing for Social Value: Measuring social return on investment for the Adventure Capital Fund. London, UK: NEF.•• Nicholls, J., Lawlor, E., Neitzert, E., & Goodspeed, T. (2012). A guide to social return on investment (2nd ed.). UK: The SROI Network. Retrieved fromhttp://www.thesroinetwork.org/publications/doc_details/241-a-guide-to-social-return-on-investment-2012• Rotheroe, N., & Richards, A. (2007). Social return on investment and social enterprise: Transparent accountability for sustainable development. SocialEnterprise Journal, 3(1), 31.• SROI Network. (2011). The seven principles of SROI The SROI Network. Retrieved from http://www.thesroinetwork.org/publications/doc_details/140-the-seven-principles-of-sroi• Shergold, P., (2012) The Social Return on Universities Retrieved from http://www.onlineopinion.com.au/view.asp?article=13605• Wood, C., & Leighton, D. (2010). Measuring social value. London, UK: Demos• World Vision Australia. (2012). Social Return on Investment. unpublished manuscript• Zappala, G. (2011). CSI Briefing Paper no. 5. Solving social problems & demonstrating impact. A tale of two typologies. Centre for Social Impact, Universityof New South Wales, Sydney, Australia. Retrieved on 20/04/13 from http://www.csi.edu.au/assets/assetdoc/145e2b8d68c4a0b6/CSI_Briefing_5_Paper_-_Solving_Social_Problems_and_Demonstrating_Impact_2011.pdf

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