1. Valuing Social Responsibility Projects
Created By XLRI Interns:
Ivy He, Siddharth Jain, Rishabh Jain, Alexandria Martin, Ted Peck, Greg Stevens, Vivienne Zhang

2. Executive Summary
Tata Steel hopes to evaluate the overall economic and social impact of their socialresponsibility initiatives.
This report presents a model used to calculate the overall impact of three projects. The process looks at
the change stakeholders receive from the project and converts that into a monetary value so it can be
evaluated. Using SROI can help in capturing all the ripple effects created by one project, and help Tata
Steel determine the true impact of each initiative.
The projects used to create this evaluation method were related to the areas of agriculture, livelihood,
and skill development. Using information gathered by these projects, combined with secondary research,
the model was developed and recommendations given.
The projects used were: market reorganization to improve agriculture, pond construction for better
livelihood, and the housekeeping training program. Each project has different elements to consider, as
well as a variety of direct and indirect beneficiaries. Through these projects it was decided to evaluate the
impact on three economic levels and one primary level for social impact.
Variables used for economic impact are: primary beneficiary change in income, household change in
income, and secondary beneficiary change in income. These economic value are weighted by the marginal
propensity to consume (MPC) and an overall multiplier. MPC measures how much the average person
spends, versus how much they save in relation to their income. Once MPC is determined, the Multiplier
Theory is then used to measure the effect this increased spending has on the economy. This value is
determined by using the following equation: 1/1-MPC = Multiplier (K). Using the multiplier captures how
greatly each rupee spent or consumed by the beneficiaries actually impacts the economy.
The main focus of valuing social impacts within this model, was derived from the Human Development
Index (HDI). Since Tata Steel CSR is focused on improving and impacting HDI factors, this model is designed
to target the impact on education and health. Through secondary research it was found that people living
in rural areas within Jharkhand, on average spend 1.07% of their income on healthcare and 2.8% on
education. Applying these percentages, the model is able to determine an increase of spending in these
two areas. This portion of the model is thus able to translate added social value in healthcare and
education into monetary values that can be analyzed.
The final model is:
SROI = Economic Value + Social Value (based on HDI)
Economic Value = (∆Ip* MPC* K) + (∆Ih *MPC *K) + (∆Is *MPC*K)
Social Value (Based on HDI) = ∆Ip + [0.0107*∆Ip(Health)] + [0.028*∆Ip(Education)]
The more information collected by Tata the more accurate this model will be. The more information
collected and the more levels of beneficiaries surveyed, then the larger impact effect can be evaluated.
Recommendations in order to utilize this model are to start with a baseline survey, then use follow up
surveys to determine the changes of income for each beneficiary. With proper data collection and
extending out to all villagers, this model will translate economic and social value to a quantified monetary
value.

3. Contents
Introduction..................................................................................................................................................1
What is SROI.................................................................................................................................................1
Agriculture: Market Reorganization............................................................................................................1
Livelihood: Water Infrastructure and Engineering .....................................................................................2
Skill Development: Housekeeping Training ................................................................................................3
Social Return on Investment Model............................................................................................................3
Valuing Economic Impacts .......................................................................................................................3
Valuing Social Impacts..............................................................................................................................4
Calculating the Total Impact....................................................................................................................5
Applying the Model to Projects...............................................................................................................6
Final Recommendations...............................................................................................................................6
Appendix A: Baseline Survey Example ........................................................................................................8
Appendix B: Follow Up Survey Example......................................................................................................9

4. 1
Introduction
This report outlines the three projects used to help create the proposed social return on
investment (SROI) model, the process used to develop the model, a review of the final model, and
recommendations. The Tata Steel Corporate Social Responsibility Department wants to quantify the
overall social impact and ripple effects of three current initiatives. Using an agriculture project focused on
market reorganization, a livelihood project constructing community ponds, and a skill development
project for housekeeping training, a final SROI model was developed. By using the proposed model and
following the recommendations below, Tata Steel will be able to evaluate the overall economic and social
impact of each individual initiative.
What is SROI
When evaluating a project one method used is return on investment. However, ROI simply takes
the investment return and the assumed profits generated into consideration, this method is purely
monetary focused. For corporate responsibility projects the valuation must be slightly altered; therefore,
social return on investment is used. SROI is a way to measure the direct costs and monetary benefits, as
well as including other social factors that are more difficult to quantify. This process looks at the change
stakeholders receive from the project and converts that into a monetary value so it can be analyzed. Using
SROI can help in capturing all the ripple effects created by one project, and help Tata Steel determine the
true societal impact of each initiative.
Agriculture: Market Reorganization
Tata Steel’s CSR policy focuses on social sustainability, healthcare initiatives, environmental
sustainability and inclusive growth. The Tata Steel Rural Development Society (TSRDS) is undertaking
several projects in India to improve the living standards of marginalized families. While significant progress
have been achieved in terms of productivity enhancement of agricultural produce, TSRDS have been
facing challenges to effectively market these produce in some select initiatives. TSRDS now realizes that
since the enhancement in income of the poor is only possible after selling the produce in remunerative
markets, it is imperative to have a sustainable and strong marketing focus for all initiatives to be successful
in the long run.
MART, a leading rural livelihoods and marketing consultancy agency, has been invited by TSRDS
to propose possible solutions for effective marketing of produce/products under various initiatives. One
in particular being, the vegetable market model (VMM). The VMM, which is currently active in Patamda
block, caters to around 50 villages. This model eliminates the local middlemen which exploit the farmers
by giving lower prices for their vegetables; instead it connects the farmers to main traders directly, giving
them the best market price. Farmers receive market prices through SMS on daily basis.
This model was initiated by TSRDS 2 years ago and they have collaborated with MART for
implementation of this model, and train farmers to manage it. Together, TSRDS and Mart, have formed a
farmers cooperative for managing this model which includes around 160 farmers from different villages.
The paper provides a framework to correlate both tangible and intangible values that capture the total
social return on investment within the agricultural project and its beneficiaries.

5. 2
Livelihood: Water Infrastructure and Engineering
Many villages do not have constant access to water and struggle throughout the year. Farmers
are unable to plant year round since they are unable to irrigate the land on the off season. This means
that people were idle for half the year, unable to grow crops, and unable to make money. Tata Steel began
introducing manmade ponds to these areas in 2010. In the first four years 184 ponds were built, and from
2014 to 2015 an additional 368 ponds have been added. This initiative allows land owners to apply for a
pond, then Tata Steel helps to fund the project as well as educate the people on how to make the pond.
After the pond is built the villagers are able to use the pond as a public resource.
These ponds are able to collect water during the monsoon season (June to September) so the
water can be used throughout the rest of the year. The ponds also help in producing more ground water
for the wells to be used year round. Since the farmers and villagers now have water access throughout
the year it allows them to harvest more crops, develop fisheries, water livestock or cattle, plant additional
cash crops, as well as use it for laundry and bathing. Without these ponds these activities were nearly
impossible in the off season. There are currently four different sizes of ponds being made, ranging from
100’ x 8’ x 10’ to 150’ x 150’ x 10’. On average one pond will be used by 10 families, roughly 100 people.
Since the ponds are used by so many people in such different capacities and ways, it can be
difficult to quantify the overall impact. The beneficiaries are abundant including: the landowner, all the
villagers and families, and local markets. The crops and fisheries can provide family value through personal
use, as well as income increases through sales. Through personal use of the crops and fish, the families
are able to reduce family costs for food, also increasing their ability to spend that money in other ways.
Local markets feel the impact of the ponds by having more products sold throughout the year, ultimately
improving the economy of the villages. Further down the line, some children are being benefited by now
being able to attend better schools. Overall the access to year round water improves lives financially and
socially. The overall impact of this project spans far and wide, and touches many people. To gather enough
information to evaluate this program many surveys and conversations would need to take place. For this
model, three land owners were able to be contacted. Recommendations for further research can be found
later in the report.

6. 3
Skill Development: Housekeeping Training
The Housekeeping Training is part of the Skill Development initiative. Tata has partnered with
Indian Hotels and PRATHAM to provide housekeeping training to candidates with an education below the
10th
standard. Currently, the course is changing from a three month duration to only two months. If one
batch is full, candidates are able to take a later course. Candidates are selected through a written
application and interview process, however no candidate had been turned away to this point.
The program has seen a lot of success, having graduated six batches since June 2013. With the
help of the Indian Hotel partnership, this program has had 100% placement with an average salary of over
₹ 6000, plus many receive food and accommodation as well. To support this program Tata Steel takes on
all the program’s financial responsibilities including trainer salaries, teaching material, and food and
lodging for the candidates; per student the company pays an average of ₹ 16,148.
This program has individual benefits, family benefits, as well as economic benefits. Factors such
as increased individual and family income, or savings, can be easily collected and evaluated. Data was
collected on the graduate’s change in income and the changes of their family income. To evaluate the
economic benefit, considerations for how this increased income is being consumed and used must be
determined. Many candidates were found to purchase cell phones with their new income. The intangible
benefits including changes in social status, stress relief, or future benefits are hard to quantify. The social
benefit information still needs to be collected. Many candidates see this program as their only opportunity
for work, and only chance to generate an income. The candidates, their families, the Indian Hotels, and
village economies are all beneficiaries and stakeholders of this project.
Social Return on Investment Model
This model is used to evaluate economic impact to three levels, and social impact on the primary
level. By combining the greater economic impact with the largest social impact, broad social effects can
be captured. The model is done on an individual basis, therefore determining how effective one initiative
from Tata Steel is. The model uses some monetary values, in addition to assigning weights so non-
monetary benefits are captured as well. While the model may seem limited in scope, recommendations
on how to measure additional added value are given later in the report. Furthermore, each project will
have slight differences in the data collected for each variable, but the overall model and variables do
remain consistent. The varying interpretations of the model for each project should be remembered.
Valuing Economic Impacts
At the base, this model measures the economic ripple effect to the third level by utilizing three
tangible variables: primary beneficiary change in income, household change in income, and secondary
beneficiary change in income. Each variable will be interpreted differently depending on the project. It is
extremely important to define who is considered a primary or secondary beneficiary for each project. In
the case of the pond project the primary beneficiary could be considered the farmer’s changed income
due to the increased crop production, or in housekeeping this would be seen as the increased income of
the student upon placement with a hotel. The co-op members are recommended primary beneficiaries
for the agriculture project, while the secondary beneficiary would be considered the traders. Third or

7. 4
fourth degree beneficiaries could be considered if accurate data and information was gathered. Once the
changes in primary, household, and secondary incomes have been determined, they are then multiplied
by two factors in order to measure the impact each one has.
Added economic value is weighted by the marginal propensity to consume (MPC) and an overall
multiplier. MPC measures how much the average person spends, versus how much they save in relation
to their income. The most common value found for MPC is 60%, meaning the average person saves 40%
of their income and spends or consumes the rest. For this specific model .6 is used for both the agriculture
and pond projects. To evaluate the housekeeping project it was found that most students are only
spending 20% of their income, not the average 60%. Every future project this model is used for will need
to collect data to capture the true MPC for those individuals to be most accurate. However, with limited
information, using a coefficient of .6 for all economic variables captures how much of the increased
income will actually be spent and consumed.
Once MPC is determined, the Multiplier Theory is then used to measure the effect this increased
spending has on the economy. This value is determined by using the following equation: 1/1-MPC =
Multiplier (K). For this model, since the MPC for the areas being measured is .6, then the multiplier is 2.5.
Using the multiplier captures how greatly each rupee spent or consumed by the beneficiaries actually
impacts the economy.
Valuing Social Impacts
The main focus of valuing social impacts within this model, was derived from the Human
Development Index (HDI). Since Tata Steel CSR is focused on improving and impacting HDI factors, this
model is designed to target the impact on education and health. Through secondary research it was found
that people living in rural areas within Jharkhand, on average spend 1.07% of their income on healthcare
and 2.8% on education. Applying these percentages, the model is able to determine an increase of
spending in these two areas. This portion of the model is thus able to translate added social value in
healthcare and education into monetary values that can be analyzed.
Therefore, to measure social impact the entire change of the primary beneficiaries income is
multiplied by .0107 and then again by .028. The values obtained are then added to the original change in
income. By adding these factors to the change in income all savings are being taken into consideration.
Overall, the social indicators account for any future savings the family will have, their increased
expenditures on health care and education, ultimately giving a quantified monetary value to the impact
on that individual’s HDI.

8. 5
Calculating the Total Impact
By combing the economic and social variables and indicators the final formula is:
SROI = Economic Value + Social Value (based on HDI)
• Economic Value = (∆Ip* MPC* K) + (∆Ih *MPC *K) + (∆Is *MPC*K)
• Social Value (Based on HDI) = ∆Ip + [0.0107*∆Ip(Health)] + [0.028*∆Ip(Education)]
∆Ip : Change in income for Primary beneficiary
∆Ih : Change in income for Household of primary beneficiary
∆Is : Change in income for Secondary beneficiary
MPC: Marginal Propensity to Consume
K: Multiplier Coefficient = 1/ (1-MPC)
This formula calculates the overall social impact per person per year. To determine the full impact of a
project additional steps must be followed. When using this model the project is first evaluated on an
individual level then adjusted for the expected time duration of project impact and the number of
individuals impacted. To fully utilize this formula the following steps should be followed:
1. Define who the primary and secondary beneficiaries are, and if there are more that can be
included.
2. Establish the change of income for each beneficiary.
3. Determine the MCP for the individuals being directly impacted.
4. Calculate the K or multiplier.
5. Put all the values into the SROI formula.
6. Select the expected time duration of impact. This may be for a set time of project life, or could be
for the rest of the individual’s lifetime. This value will be N.
7. Calculate the Tata Steel investment costs per primary beneficiary for the project.
8. Using the final SROI value per person, N, anticipated discount rates, and initial investment costs
per primary beneficiary, the total SNPV can be calculated.
9. Total SNPV per person can now be multiplied by the anticipated number of primary beneficiaries
to conclude the overall economic and social impact of the entire project.
By using this model, Tata Steel will be able to calculate how much total impact is created by one individual
within a project, as well as how much is created by the entire project for a set amount of time.
Furthermore, the model allows the investment amount to be compared to the ultimate monetary impact.
If this model is applied to all projects, and properly evaluated, it can be determined which projects have
the largest social return and impact. To use this model at full potential a lot of data and information must
be collected. The model is able to be applied on many levels, data permitting.

9. 6
Applying the Model to Projects
When the models were applied the following values were calculated:
For additional information on the calculations please refer to the attached excel workbook.
Final Recommendations
In order to make this model successful it is dependent on what information can be collected. To
measure the true impact of each project, it requires gathering data for each level of impact. While the
primary model presented is designed to evaluate SROI up to three levels economically, it is only currently
evaluating one social impact level. Therefore, collecting more full and complete data is necessary.
Collecting the data can be done by using baseline surveys and follow up surveys for each project, and for
as many people as possible. The more people these surveys are used on, the more accurate the model
will be at capturing the full impact.
A baseline survey should be created and distributed prior to any Tata Steel involvement, before
an initiative is implemented. This survey should be used to collect information in regards to current
individual income and household income, how much they are consuming versus saving, as well as
standard of living. These surveys can then be distributed to all possible beneficiaries, within as many levels
as possible. The same survey can be used for all levels of beneficiaries, however keeping the groups
separate for evaluation is necessary. For example, the survey can be given to land owners and farmers as
primary beneficiaries in the pond project, and villagers using the pond for laundry or fisheries as secondary
beneficiaries. This would help widen the scope for the impact being evaluated. An example of a baseline
survey can be seen in Appendix A.
Once the project is implemented follow up surveys should be conducted on a continuous basis.
Depending on how accurate and up to date the information needs to be will determine how frequently
the surveys need to be done. It is recommended surveys are filled out quarterly for the first three to five
years of a projects impact, then semi-annually in later years. Appendix B represents an example follow up
survey. It is also extremely important for each project to be pre-determined on how long the desired
impact should last or be measured. Selecting the anticipated time duration of impact and the goal number
of primary beneficiaries also important. The surveys can be used as a way to see what changes have taken
place. Without a baseline survey there is nothing to compare follow up surveys to. With this information
a more accurate MPC for each area can also be calculated. Once the changes and MPC information have
SNPV has been calculated for 5 years at 3.5% discount rate

10. 7
been gathered those values can easily be applied to the model. As with any valuation, the more data used
the more accurate the model is.
Recommended people to contact for each project are as follows:
 Agriculture: farming landowners, tenant farmers, households, traders involved both prior to and
after the initiative, and labors working on the farms.
 Livelihood: farming landowners, tenant farmers, households, all villagers using the pond to
identify what it is used for, and laborers working on the farms.
 Skill Development: students, households of the student, and Tata Hotel Group.

11. 8
Appendix A: Baseline Survey Example
1. What is your current annual income?
a. <10,000
b. 10,000-30,000
c. 30,000-70,000
d. 70,000-100,000
2. What is your family’s total income?
a. <10,000
b. 10,000-50,000
c. 50,000-100,000
d. 100,000-150,000
3. How much do you save annually?
a. 0
b. <5000
c. 5,000-7,500
d. 7,500-15000
4. What you do with your savings?
5. What are your monthly expenses?
6. What price do you get for vegetables?
7. Which crops do you grow and during what times of the year?
8. Do you know the market price?
9. In off season what is the mode of income?
10. How many members are there in your family?
11. How much do you spend on healthcare?
12. How much do you spend on education for your family members?
13. What are your future financial plans? (trips, housing, car, any big spending plans)
14. Do you have any other comments you would like to share?
* Please Note: Values given within this example will need to be adjusted for which project it is used to
evaluate. Also, questions should be altered depending on each project and what is trying to be captured.

12. 9
Appendix B: Follow Up Survey Example
1. What is your current annual income?
a. <10,000
b. 10,000-30,000
c. 30,000-70,000
d. 70,000-100,000
2. What is your family’s total income?
a. <10,000
b. 10,000-50,000
c. 50,000-100,000
d. 100,000-150,000
3. How much do you save annually?
a. 0
b. <5000
c. 5,000-7,500
d. 7,500-15000
4. What you do with your savings?
5. What are your monthly expenses?
6. What price do you get for vegetables now?
7. Which crops are you able to grow now?
8. Do you know the market prices?
9. Any reduction / increase in transportation costs?
10. Is there any damage to vegetables during transportation?
11. In off season what is the mode of income?
12. How many members are there in your family?
13. What are some of the items you have been able to purchase since increase in income?
Examples: electronics (phone), bike/car, housing, presents, further education, etc.
14. Has your spending on food changed in any way since your increase in salary?
15. What other opportunities did the program open up to you (more education, promotions, etc.)?
16. How much are you spending on healthcare now?
17. How much do you spend on education for your family members?
18. What are your future financial plans? (trips, housing, car, any big spending plans)
19. Can you think of anything else that might useful for this review? Do you have any other
comments you would like to share?
* Please Note: Values given within this example will need to be adjusted for which project it is used to
evaluate. Also, questions should be altered depending on each project and what is trying to be captured.