Introducing a framework for Community Development Financial Institutions to discover and calculate Social Return on Investment (SROI). Connect program outcomes to societal contributions and savings.

1. Outcomes, Impact & How to
Track Them
By
Lawson F. Knight,
iiCredit
Wind River Development Fund

2. Goals
• Introductions
• Background of Social Return on
Investment (SROI)
• Linking SROI and Program
Evaluation
• Model CDFI SROI
• Developing SROI for your CDFI
• Getting to a defensible result
• Your next steps

3. About Us
Wind
River
Development
Fund
is
a
private,
nonprofit
community
development
corpora4on
and
federally
cer4fied
Community
Development
Financial
Ins4tu4on
that
seeks
to
s4mulate
economic
development
on
and
near
the
Wind
River
Indian
Reserva4on.
iiCredit
is
a
cloud-­‐based
CDFI
opera4ng
system
built
on
the
force.com
platorm.
Built
as
an
earned-­‐income
strategy
of
Wind
River
Development
Fund
(WRDF).
WRDF
is
iiCredit's
first
user.
The
applica4on
was
built
with
the
prac4cal
goal
of
moving
the
en4re
Enterprise
Stack,
from
data-­‐storage
to
e-­‐mail,
to
the
cloud.

4. CDFI Service Delivery Model
Par4cipant
Recruitment
&
Intake
Life
&
Financial
Skills
Development
• One-­‐on-­‐One
Assistance
• Workshops
&
Training
Capital
Access
• Lending
Capital
• Asset
Building
(Matching
Funds)
Stability,
Reten4on
&
Community
and
personal
growth
• Less
Poverty
• More
Prosperity

5. ROI
• Return on Investment. What does that mean?
• How much do I get back for what I spent?
• For Instance:
– My CDFI lends $10,000 for 60 months to a local business at 8%
• Financial benefit?
• Investment?
– For every $100 invested in this business, my CDFI receives
nearly a $22 return.
Financial Benefit
Cost of Investment
ROI =

6. • Why ROI is insufficient for CDFIs
• What are CDFI topline outcomes?
Social Return on Investment
Topline
Outcome
Client
Changes
Societal
Changes
Improved
Financial
Capabili4es
Capital
More
income
taxes
More
sales
tax
Self-­‐
sufficiency
Fewer
people
reliant
on
public
benefits
Capacity
Less
likely
to
return
to
old
habits
Fewer
people:
Usurious
financial
instruments
CONTRIBUTIONS
SAVINGS

7. SROI
• Translate ROI to SROI:
• Clearly state your assumptions
• Use and document research to cite your analysis
Financial Benefit
Cost of Investment
SROI =
SOCIAL
Societal Contributions + Savings
Cost of Investment
=

8. A primer on SROI
• SROI was first developed in 1997 by Roberts
Enterprise Development Fund (REDF) to analyze the
impact of seven nonprofit organizations in San
Francisco
• These nonprofit organizations were running 23 social
purpose enterprises—a proving ground for business/
financial concept like ROI to be adapted as a program
tool
• SROI grew from there:
– Methodology paper released in 2001
– Framework document launched in 2005
– Guide to SROI analysis published in 2006
– DIY Guide released in 2007
– SROI Network formed in 2008
– Since then, affiliated SROI Networks in Japan, Sweden,
Australia, the Netherlands, and the UK. SROI guides
published in French, Korean, and Chinese.

9. What is program evaluation?
• Program evaluation is gathering
information about (some aspect
of) a program in order to make
necessary decisions about the
program.
• There’s lots of kinds of evaluation:
– Needs Assessment
– Process evaluation
• Pareto Principle

10. Why is it helpful?
• Helps you understand the impact
of your work
• Validates what we’re doing &
how we’re doing
• Provides evidence for public,
promotion, funders and
duplication

11. CDFI Sample SROI
What values does a CDFI create for Society?
Social Impact:
Annualized Contributions to Society
$
Income Taxes Paid, Social Security, Sales
Tax Dollars Spent
Annualized Savings to Society
+ $
Total One-Year Social Impact
$
Determining the Social Return on Investment:
Present Value of Social Investments
(Over Five Years)
$
CDFI One-year Program Cost / $
Social Return on Investment
%

12. Sample CDFI Title Slide
Societal Contributions

13. Annualized Contributions to
Society
Topline Outcome:
# of quality, permanent employment jobs created
Total Annualized Income
Job
#1
Wages
and
Benefits
+
Job
#2
Wages
and
Benefits
+
Job
#3
Wages
and
Benefits
+
.
.
.
All
jobs
created
________________________
TOTAL
INCOME
2014 Income Tax Rates
Income Tax Contributions
Federal
15.0%
+
Social
Security
6.2%
21.2%
TOTAL
INCOME
x
21.2%
Societal
Contribu4on

14. Sample CDFI Title Slide
Societal Savings

15. Annualized Savings to Society
Topline Outcome:
XX working in quality, permanent employment in 2014
• Y were receiving Food Stamps at program entry
Total Annualized Food Stamps Payouts
$252 avg per month
x 12 months per year
x Y recipients
$ Food Stamps savings
• Temporary Assistance to Needy Families (TANF) and
Unemployment savings are calculated in the same way
– Based on real data collected during program intake
– Knowledge that payouts stop when individual is on the job

16. Understanding Outcome Estimation
(EITC participation in WY)
=Income due to intervention"
Your topline
outcome group"
Research expected rate of
participation (7 of 10, 70%)"
Calculate your org’s
rate of participation"
(9 of 10, 90%)"
Take the difference (2), and
research/calculate cost of
participation per person"
x Proceeds from "
participation"

17. The Final Calculation
• 1 = One Year Program Cost
• 2 = Contributions to Society + Savings to Society
– Take one-year results and project out for as many years
your enterprise is comfortable.
– Three to five years is typical due to uncertainty beyond.
Five years is typical for startup financial projections.
– For each year the projection extends, discount the
social benefit to account for inflation and risk.
• 30-year bond rate or CPI
• Risk factor is an internal, defensible election like 5% (or more)
SROI = Social Financial Benefit2
Investment1

18. Where do you go from here
1. Do your quick wins first.
2. Be as much of a “Data Geek” as you like.
Go as far as your interest, resources and
ability to sustain assessment over time.
3. This can be heady stuff. Make it
thoughtful, defensible and approachable.
Don’t be arrogant.
4. Be informed and humble.
5. Move the conversation from grants to
investment.

19. Grow in your capacity
Level
1
Level
2
Level
3
Level
4
Enterprise
Social
Outcome
Measurement
Neither
inputs/
ac4vi4es
or
social
impact
of
enterprise
are
measured
Enterprise's
social
inputs
and
ac4vi4es
measured
(e.g.
#
of
employees;
#
of
trainings
held);
data
collected
ad
hoc
from
various
sources
In
addi4on
to
inputs
and
ac4vi4es,
social
outputs
measured
(e.g.
income
or
housing
status
of
employees);
some
data
collec4on
systems
exist
but
not
necessarily
coordinated;
data
some4mes
used
to
refine
enterprise
service
delivery
Comprehensive,
coordinated
data
collec4on
and
tracking
system
used
to
track
both
outputs
and
outcomes
(e.g.
%
decrease
in
substance
abuse)
over
4me;
data
trends
analyzed
and
used
to
refine
enterprise
service
delivery
From
REDF's
capacity
assessment
tool

20. Resources
• Lingane, A. & Olsen, S. (2003). Guidelines for social return
on investment. Working Paper Series, Center for
Responsible Business, UC Berkeley. Retrieved from
http://escholarship.org/uc/item/6xp540hs
• McNamara, C. A Basic Guide to Program Evaluation.
Authenticity Consulting, LLC. Retrieved from
http://www.tgci.com/sites/default/files/pdf/A%20Basic
%20Guide%20to%20Program%20Evaluation_0.pdf
• SROI Network. SROI: A History. Retrieved from
http://www.thesroinetwork.org/what-is-sroi/a-history-of-sroi
Lawson F. Knight
iiCredit
Development
Wind River
Development Fund
lawson@wrdf.org
(307) 828-1618
Arum Kone
Chief Technology
Officer & Data
Scientist
Wind River
Development Fund
arumkone@wrdf.org
Brett White
Executive Director
Wind River
Development Fund
brettwhite@wrdf.org