Soket weekly night seminar impact evaluation methods

soket weekly night seminar

May 26th, 2011
soket academy

© 2011 soket All rights reserved.

Agenda

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2

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Input Output Outcome
GNP 0.7% MDGs

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BHN Inclusive
GNI/c Development (?)

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• Input Impact •
3ie)
• Outcome, Impact
• CDI

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or
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Source: 4

BSC

Acumen GIRS SROI
UK

SROI Input/Output
BSC
or


SROI

CSR

3.5

Soket Academy

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• REDF
• Acumen
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• SROI

• CSR


Agenda

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1

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-‐ ODA
BOP

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-‐ ODA BOP
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-‐ Kopernik Kiva
-‐ Poverty Action Lab BOP
-‐ JICA ODA
-‐ Soket


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-‐ Gold Standard Propensity Score
Matching

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12

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13

Agenda

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14

2

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-‐ Input

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-‐ Input ODA BOP

-‐ SROI
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-‐ REDF SROI

-‐ McKinsey TRASI
-‐
-‐


REDF- SROI-

• RED Roberts Enterprise Development Fund
-‐ 1990

SROI(social return on investment)

-‐ URL
http://www.redf.org/publications-sroi.htm
http://www.neweconomics.org/gen/news_SROI.aspx
http://www.redf.org/system/files/%281%29+REDFs+Current+Approach+to+SROI.pdf 16

REDF- SROI-

• SROI ( ocial Return on investment)
-‐ REDF
2000

-‐ Fund HP UCRA,HBS
-‐ Socio-economicvalue
Economic Socio-Economic Social

Value

-‐ TCAA*(True cost accounting analysis),NPV,DCF
-‐ *
⇔
http://www.redf.org/system/files/%284%29+SROI+Methodology+Paper+-+Chap+1+-+Investment+Philanthropy.pdf
http://www.redf.org/system/files/%285%29+SROI+Methodology+Paper+-+Chap+2+-+REDF%27s+SROI+Approach.pdf
17

REDF- SROI-

• SROI ( ocial Return on
investment)
-‐

“blended value

-‐ Social value

18

GIIRS – Rockefeller Foundation’s promotion ( for Impact
Investing)
GIIRS, a project of the independent non-profit B Lab, will assess the social and environmental impact (but not
the financial performance) of companies and funds using a ratings approach analogous to Morningstar
investment rankings or S&P credit risk ratings. GIIRS will include the following features:
Company Ratings and Fund Ratings;
Ratings in developed and emerging markets globally;
Aggregate ratings, as well as ratings within numerous impact areas and industry sectors;
Social and environmental performance metrics and key performance indicators specific to different industries,
impact areas, and investor preferences; and
Benchmarking and analytics for longitudinal comparability.
What is a GIIRS Rating?
GIIRS will provide both company and fund impact ratings, each with current and historical analyses of impact
performance for comparative use.
Company Impact Ratings — a rating of the social and environmental impact of an individual company, including
an overall rating, ratings in 15 sub-categories, and key performance indicators (KPI's) relevant to the company's
industry, geography, size, and social mission.
Fund Impact Ratings — a rating of a fund's impact based on the aggregated and weighted impact ratings of its
underlying portfolio companies, including the aggregated Company sub-category ratings and relevant KPI's for
the fund, and an assessment of fund manager practices. GIIRS will also offer a Fund Target Rating product to
assist fund managers in their fundraising process and a Track Record Report at the end of their fund cycle to
assist in raising a follow-on fund.
19

GIIRS – Rockefeller Foundation’s promotion
Key Features
Driven by IRIS, an industry-recognized taxonomy and reporting standard co-developed by B Lab;
Powered by the B Impact Ratings System;
Ratings methodology developed and governed by an independent Standards Board;
Ratings subject to the GIIRS validation process, executed with the support of a third-party documentation
review.
GIIRS provides value to numerous stakeholders in the impact investing community:
Fund managers and companies can raise capital from mission-aligned investors based on the social and
environmental impact of their underlying businesses or portfolio companies;
Institutional and high net worth investors can conduct better due diligence, make better investment decisions,
track and improve social and environmental performance throughout the investment lifecycle, and analyze
absolute and relative impact;
Consultants, investment bankers, and other investment advisors can use data and analytical tools to improve
their own proprietary products or value-added services.

20

Acumen Fund BACO Capabilities Assessment Matrix

Acumen Fund Metrics:
Acume Fund
BACO (Best Available Charitable Option)
• enchmark investment by answering the question:
B
- elivering affordable, critical goods and services – like
D
-‐ For each dollar invested, how much social health, water, housing and energy – through innovative,
output will this generate over the life of the market-oriented approaches
investment relative to the best available
charitable option? Acumen

• o investment occurred in a vacuum, Acumen would
N (BACO)
have to defend its choices relation to other options in
Acumen Due Diligence Team
the same space, particularly non profit charities. Team BACO Capability Assessment Matrix
Calculation sought to help philanthropic investors Team
decide how their funds could be used most effectively Investment Committee
by comparing plausible alternatives. This approach
compared the investment to a relative benchmark
rather than an absolute ones
Capabilities Assessment Matrix
• Acumen
• or due diligence of investment decision,
F
Capabilities Assessment Matrix is also created •

21


Example Bednet Case
The BACO calculation is essentially driven by three factors:
• inancial leverage: since Acumen Fund seeks a return of capital through loans and equity, our
F
investments’ net costs are typically lower relative to grants. If Acumen makes a loan of $325,000 at a 6
percent annual interest rate, repaid over five years, we expect a return of $422,500, while grants are a
sunk cost. (See Table 1.)
• nterprise efficiencies: because many of the BACOs are public sector or nonprofit delivery models, it is
E
our belief that private sector cost structures and incentives will enable Acumen’s investees to show 50 to
100 percent cost recovery in the implementation of a social project. For instance, a number of Acumen’s
investees use a business-minded franchising strategy to impact low-income populations on a greater
scale. In the example below, the bednet factory was able to reach economies of scale and keep costs low
for higher outputs. (See Table 2 .)
• echnology leverage: in many cases the invention of a new product or business system can
T
fundamentally transform the output per unit. For example, the anti-malarial LLITNs in this investment are
proven to last five times longer than regular insecticide-treated nets (ITNs) that dominate the charitable
marketplace in Sub-Saharan Africa. New product innovation can typically show higher social output for
each dollar invested and, therefore, a higher BACO ratio, even assuming the same cost structure.
• ACO ratio: The BACO calculation ultimately conveys the net cost per unit of social impact. The figures
B
in Table 3 are taken from Tables 1 and 2. Upon making the investment in A to Z, we could estimate that it
would cost Acumen Fund less than $0.02 to protect one individual from malaria for one year, compared to
$0.84 through the BACO. In other words, Acumen Fund’s investment in this scenario is 52 times more
cost-effective than the best available charitable option.
22


23

Cost Benefit Analysis

What Robin Hood Metrics Are
NY

• standard for ranking grants, comparing the impact
A
of similar and dissimilar programs.
• means of communicating to grantees how Robin
A
Hood evaluates them.
Benefit
• he basis for a common vocabulary within Robin
T Cost (
Hood, to our donors and in the nonprofit community. Benefit-Cost Ratio

• tool for achieving transparency. Robin Hood
A
welcomes independent voices to examine, criticize
and help improve our metrics.
• diagnostic tool. What do our highest-scoring
A
grantees have in common? Our lowest?
• method for assessing Robin Hood. We measure
A
our own impact by the same metrics system used to
evaluate grantees: how much poverty-fighting good •
we do with each dollar we spend.

•

24

Cost Benefit Analysis

Measuring Example
JOB Training Program Case:

Job-training groups admit trainees into their program. A fraction of the enrolling trainees graduate and a fraction of the graduates
are placed in jobs. A fraction of those placed in jobs have kept their jobs at various benchmarks: 90 days, one year and two years

Measuring: Raw placements in which the graduate keeps his or her job for one year (over time, we plan to increase our time
horizon to two years).

• he workers’ higher earnings accrue over their careers, stretching over decades. We calculate the present discounted value
T
(P.D.V) of the higher earnings to take account of timing.
• obin Hood Benefits =[Actual Job Placements] * [Robin Hood Factor] *[Avg. Earnings Boost] * [P.D.V.* $1/Year for 30 Years]
R

• hus, take a program that trains and places 200 trainees, all of whom are single, childless adults, 20 percent of whom would lose
T
their training slots if Robin Hood withdrew its grant (Robin Hood factor). The program is estimated to boost earnings of trainees
placed in jobs by an average of $2,500 per graduate, per year, and trainees are expected to work 30 years before they retire.
Robin Hood benefits of this program would total $1.8 million:

Robin Hood Benefits =[Actual Job Placements] * [Robin Hood Factor] *[Avg. Earnings Boost] * [P.D.V.* $1/Year for 30
Years]

= 200 * 1/5 * $2,500 * 18* = $1.8 million

If the Robin Hood grant is for $200,000, then the benefit-cost ratio is:

Benefit-Cost = $1.8 million / $200,000 = 9 : 1

25

Expected Return - Methodology

William and Flora Hewlett Foundation What’s the goal? Target defines the topical and
proposed “Expected Return” that changes the geographic scope of all potential investments
way program officers approach grant evaluation and the metric used to measure them.
by reducing biases, making assumptions explicit,
and creating consistency across program areas, How much good can it do? Benefits in a
by quantifying the goals, benefits, risks, and perfect world measures an investment‘s
costs of potential investments.
potential results under ideal conditions.

Is it a good bet? Likelihood of success takes
risk into account.

How much difference will we make? The
philanthropy’s contribution describes the
philanthropy‘s share of impact within a potential
investment that includes other sources of
funding.

What’s the price tag? The cost expresses the
size of a philanthropy‘s financial investment.
William and Flora Hewlett Foundation, “Making Every Dollar Count” (2008)
26

Expected Return – Case & technical enhances

Case : Nigerian governance Technical Enhances

Modeling interdependencies between
investments - To make more accurate
tradeoffs between investments, the
interdependent relationships between specific
strategies should be reflected within Expected
Return modeling.
Optimizing investment portfolios based on
costs to foundations - Funding and staffing
constraints and necessary conditions for
investment establish boundaries for investment
decisions, which were only taken into account
• $50 billion oil revenue & $1 billion aid / yr
informally in the current analysis.
• 92% of population is poor Discounting future benefits - Financial theory
Expected Benefit : 200,000 poor people double incoms tells us that a dollar today is more valuable
• Benefit in perfect world : 8 million poor people than one received ten years from now.
double incomes However, selecting an appropriate discount
• Likelihood of success: 25% rate for social investments is extremely difficult,
• Hewlett Contribution : financial 5%, =>10% and the choice of a rate can have a large
• Cost : $30 million during 8 yrs
impact on the relative value of long-term
William and Flora Hewlett Foundation, “Making Every Dollar Count” (2008)
investments. 27

Cost and Benefit Analysis - Outlook

The purpose of CBA is twofold:
1) o help decide whether a program or intervention is of value to the decision-maker
t
2) o compare the program to alternatives and choose the one with the greatest measure of merit.
t
The output from cost-benefit analysis can be measures of net benefits (benefits – costs) also known
as the net present value (NPV); the ratio of benefits to cost (benefit-cost ratios); or the internal rate
of return (IRR)—which is the rate of growth a project is expected to generate.
CBA is widely used across the public, private, and increasingly the nonprofit sector to help decision-
makers prioritize or decide among various uses of funds for programs and projects.

Bill & Melinda Gates Foundation, “Impact Planning and Improvement Measuring and/or Estimating Social Value Creation ” (2008)
28

Cost and Benefit Analysis – Technical issues and limitation

The report identified a number of technical issues that cut across many of the approaches. These
issues include the use of:

Assumptions
• xpert research
E
• cenario Analysis
S
Discount rates
• %-5% drug, criminal justice, children
4
• thers 10%
O
Timeframes
• EDF : 10%
R
• obin Hood : 5yrs-30yers
R
Shadow prices
• hadow prices‘ or dollar values to attach to each of the short- and long-term outcomes that
S
a social program may affect
Interdependencies
• nterdependencies refers to the idea that the outcomes of one or a series of interventions
I
are dependent on other interventions.
Value judgments
• eciding whether x outcome is really a benefit to person y
d

Bill & Melinda Gates Foundation, “Impact Planning and Improvement Measuring and/or Estimating Social Value Creation ” (2008)
29

1/4

BOP

BOP

BOP BOP … BOP BOP …
… …

Market Market
$ $ $ $
$ $ $ $
BOP BOP
Company Company
CORE CORE
30

2/4

■
BOP (50Wp)
CORE
■ … (100 ×100
)
■ …2010~2030
■
Step1.
Step2. →
Step3.

↑
↑

↑
…
+
31

3/4
■

R

■

■

■

32

4/4
■

TFP( ) K( )
NPV GRP

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Agenda

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3

• 3
-‐ etc

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-‐ BOP

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-‐ CGD End of ODA
-‐ Porter
-‐ CSR


CSR 3

Internal External

KPI CSR
(key performance indicator) CANPAN CSR+
By

Asian Sustainability Rating
By CSR Asia

Dow Jones Sustainability Indexes
(DJSI)

FTSE4Good

36

CSR

CANPAN CSR+

Source: https://canpan.info/csr_info_view.do?u=canon61

Agenda

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38

soket academy

Soket / Soket Academy

• Input Impact •

• Outcome, Impact

• •

•

• •

• •
Open Platform


May 26th, 2011

This presentation was prepared by:

Soket
Academy
Team

Mail : motoyuki.arai@soket.me
URL : http://www.soket.me

Global x Social Intrapreneurship Laboratory

[ Disclaimer ]
This document is protected under the copyright and any applicable laws in Japan as an unpublished work. This document
contains information that is proprietary and confidential to soket or its technical alliance partners, which shall not be disclosed
outside or duplicated, used, or disclosed in whole or in part for any purpose other than to evaluate soket. Any use or disclosure
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Soket weekly night seminar impact evaluation methods

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