With the increasing debate about the social investment vs. philanthropic donations, organizations are under the pressure of reviewing the way they demonstrate the impact of their programs for multiple reasons.
SROI = Social Return on Investment – Methodology implemented is inspired by Social Value International. At its core, SROI is a measurement valuing both financial and non-financial outcomes. SROI quantifies and monetizes social impact in a clear and consistent way, enabling stakeholders to measure the achievement of social impact against three primary performance indicators, being appropriateness, effectiveness and efficiency.
3. 3
BACKGROUND
HOW/WHY DID THE PRACTICE EMERGE
The past decade has seen increasing interest in measuring the social impact of projects, programs,
organisations, businesses, and policies.
• Managers want to know what results have been achieved, with a view to improving future
performance. Where did the money go? What’s the outcome generated?
• Investors want to know the social value their money is creating. Corporations are increasingly
interested in social investment and CSR Departments are requesting bigger budgets.
• Governments have a strong imperative to measure the social impact of policies, programs and
funded activities in order to increase accountability and reach better outcomes.
4. 4
The objective also is to drive improvements that increase the value of programs to the people they
serve while helping organizations to plan better, implement more effectively, and successfully bring
initiatives to scale.
BACKGROUND
HOW/WHY DID THE PRACTICE EMERGE
The objective is to create tools and/or mechanism that help organizations measuring the intangible
impact generated and provide an estimation to its value.
5. 5
Few guidelines and frameworks have been created:
BACKGROUND
SOCIAL IMPACT MEASUREMENT TOOLS & FRAMEWORKS
• Guide to Social Accounting and Audit by the Social Audit Network
http://www.socialauditnetwork.org.uk/
• Social Impact Analysis by Social Impact Analysis Association http://www.siaassociation.org/
• Social Return On Investment (SROI) by the UK SROI Network http://www.thesroinetwork.org/
• Measuring and Improving Social Impacts: A Guide for Nonprofits, Companies, and Impact Investors
by Marc J. Epstein (Author), Kristi Yuthas (Author) http://goo.gl/CKMuUZ
• B Corp (B Impact Assessment) by B Corporation http://www.bcorporation.net
• Demonstrating Value (DV) by Vancity Community Foundation www.demonstratingvalue.org
• Global Impact Investing Rating System (GIIRS) by B Lab www.giirs.org
• Impact Reporting & Investment Standards (IRIS) by Global Impact Investing Network (GIIN)
www.iris.thegiin.org
• Sustainable Livelihoods (SL) by UK DFID www.eldis.org
6. 6
Over the last decade, Social Return on Investment (SROI) has emerged as an approach to
meet these demands.
SROI quantifies and monetizes social impact in a clear and consistent way, enabling
stakeholders to measure the achievement of social impact against three primary
performance indicators, being appropriateness, effectiveness and efficiency.
BACKGROUND
SROI – ROLLS-ROYCE Of The SOCIAL IMPACT MEASURMENT
7. 7
Roberts Enterprise Development Fund (REDF) in California pioneered work on Social Return on
Investment (SROI). In its report in 2000, REDF said it had undertaken work on SROI because:
“We wanted to answer a series of questions important to practitioners and philanthropists/investors,
including:
BACKGROUND
HISTORY OF THE SROI
●● how can we measure the success of our efforts?
●● how do we know whether we’re accomplishing what we set out to do?
●● how can we make informed decisions about the ongoing use of our resources?
●● how can REDF test and convince others of what we believe to be true: that for each dollar
invested in our portfolio agencies’ efforts, there are impressive, quantifiable resulting
benefits to individuals and to society?”
8. 8
This work was picked up by the new economics foundation, and by other agencies in the UK and in
Europe, and culminated in the UK Government’s Cabinet office: office for the third Sector launching
its Measuring Social Value project in 2008 and the Scottish Government launching the SROI Project
to run parallel with this.
BACKGROUND
HISTORY OF THE SROI
In 2002 then in 2006, the Hewlett Foundation's Blended was brought forward by a group of
practitioners from the US, Canada, UK and Netherlands who had been implementing SROI analyses
together to draft an update to the methodology.
This resulted in another formal revision to the method, produced by a consortium led by the SROI
Network, published in the 2009 Guide to SROI
9. 9
SIAA and The SROI Network are coming together to form Social Value International, the largest
international social value network in the world
For the next few months, both organizations will be undergoing a transitional period in which their
activities will be changing towards the merge.
BACKGROUND
From SROI to SOCIAL VALUE INTERNATIONAL
10. 10
Sougha – Abu
Dhabi –
Empowering &
Employing Micro-
Entrepreneurs
Women – SROI
1:4.8 2009-2012
Ahdaaf – Dubai –
Engaging under-
privileged
children – SROI
1:1.98 2013-2014
Conversations –
Dubai – Integrating
Children with
Disabilities –
SROI 1:4.45 2012-
2013
#30daysofsharing
– Dubai –
Training Emirati
Chef’s &
Economical
Activation – SROI
1:2.01 2014
Intajee and
Zaree– Oman –
Empowering local
farmers SROI
1:1.39 2015
Emirates NBD Bank Emirates NBD Bank Khalifa Fund (KFED) Du Telecom Omran Tourism
BACKGROUND
SROI in the Middle East
Palestyle– Dubai – Social
Fashion Brand –
SROI 1:2.40 2013-2014
Palestyle
11. 11
MEASURING THE SOCIAL IMPACT IN FINANCIAL TERMS
SROI = Social Return On Investment – Methodology implemented is inspired by Social Value
International www.socialvalueint.org . At its core, SROI is a measurement valuing both financial and
non-financial outcomes
• SROI is a form of stakeholder-driven evaluation blended with cost-benefit analysis tailored to
social purposes.
• It tells the story of how change is being created and places a monetary value on that change and
compares it with the costs of inputs required to achieve it.
• Practitioners work to the seven principles of SROI outlined in the Guide to Social Return on
Investment.
12. 12
for every $1 spent on the initiative, the
program generated $# of social impact
and for $20,000 invested in a particular initiative,
there was a creation of $500,000 of total social
value
MEASURING THE SOCIAL IMPACT IN FINANCIAL TERMS
13. 13
BACKGROUND
SROI – FOR INSTANCE
• To plan future programs or create KPIs
• To assess existing programs
• To consider between various focus areas
• To create local/country-wide benchmark for social investment strategies
• To compare programs and their values
• As a mechanism to better engage stakeholders
Usage of SROI Framework’
14. 14
BACKGROUND
SROI – FOR INSTANCE
There are two types of SROI:
• Evaluative, which is conducted retrospectively and based on actual
outcomes that have already taken place.
• Forecast, which predicts how much social value will be created if the
activities meet their intended outcomes.
15. 15
BACKGROUND
WHO CAN USE SROI ?
Types of organisation SROI has been used by a range of organisations across the not for profit (or
voluntary), public and private sectors, including those that are small, large, new and established.
NGOs and Social
Enterprises
Private
Businesses
Funders Commissioners Governments
Improve
performance,
inform expenditure
and highlight
added value.
Analysing the value
arising from
trading activities
Assess risks and
opportunities
arising from the
impact of their
products on
stakeholders.
Measure
effectiveness of
CSR programs and
impact generated
Help them decide
where to invest,
and later to assess
performance and
measure progress
over time
Application
bidding,
procurement and
monitor the
performance of a
successful
contractor
For developing
policy for which
recognition of
social value is
important
16. 16
As with most performance assessment and evaluation frameworks, SROI is
based on program logic (or ‘theory of change’ or ‘logic model’).
inputs are applied to service activities to
produce outputs, from which outcomes are
derived, which result in impacts
SROI METHODOLOGY & PRINCIPLES
17. 17
SROI – THE SEVEN PRINCIPLES
Involve stakeholders Stakeholders should inform what gets measured and how this is measured and valued
Understand what changes
Articulate how change is created and evaluate this through evidence gathered,
recognising positive and negative changes as well as those that are intended and
unintended
Value the things that
matter
Use financial proxies in order that the value of the outcomes can be recognised
Only include what is
material
Determine what information and evidence must be included in the accounts to give a true
and fair picture, such that stakeholders can draw reasonable conclusions about impact
Do not over claim Organisations should only claim the value that they are responsible for creating
Be transparent
Demonstrate the basis on which the analysis may be considered accurate and honest, and
show that it will be reported to and discussed with stakeholders
Verify the result Verify the result. ensure appropriate independent verification of the account
19. 19
SROI – THE SIX STAGES
Stage 1: Establishing scope and identifying stakeholders
Stage 2: Mapping outcomes
Stage 3: Evidencing outcomes and giving them a value
Stage 4: Establishing Impact
Stage 5: Calculating the SROI
Stage 6: Reporting, using and embedding
SROI – THE IMPACT MAP
23. 23
SOCIAL
CHANGE
My entrepreneurs
beneficiaries have reported
that they are now more
knowledgeable on
management of start-ups,
more aware of the market’s
risks and opportunities as well
as ways to raise funds. They
have reported that are more
confident and skillful.
24. 24
SOCIAL
CHANGE
My entrepreneurs
beneficiaries have reported
that they are now more
knowledgeable on
management of start-ups,
more aware of the market’s
risks and opportunities as well
as ways to raise funds. They
have reported that are more
confident and skillful.
25. 25
SOCIAL CHANGE
Indicator 1: Entrepreneurs are able to
run a business.
Indicator 2: Entrepreneurs are better
able to raise investment funds
Indicator 3: Entrepreneurs are more
confident and skilled
My entrepreneurs
beneficiaries have reported
that they are now more
knowledgeable on
management of start-ups,
more aware of the market’s
risks and opportunities as
well as ways to raise
investment funds. They
have reported that are
more confident and skilled.
INDICATORS OF CHANGE
26. 26
SOCIAL CHANGE
Indicator 1: Elderlies are fitter
Indicator 2: Elderlies fall less
Indicator 3: Elderlies go less to hospitals
Created a fitness club
for elderlies which
offers group activities
and exercises sessions
INDICATORS OF CHANGE
27. 27
SOCIAL CHANGE
Indicator 1: Increase of new activities
beneficiaries are taking part of
Indicator 2: Increase in beneficiaries’
number of new friends
Indicator 3: Increase of beneficiaries
level of social skills acquired
Reduced social
isolation for
disadvantaged
people
INDICATORS OF CHANGE
28. 28
Indicator 1: Increase of new activities beneficiaries
are taking part of
Indicator 2: Increase in beneficiaries’ number of new
friends
Indicator 3: Increase of beneficiaries level of social
skills acquired
Reduced social isolation for 30 disadvantaged people:
25
5
30
QUANTITY
How many
beneficiaries have lived
the change ?
29. 29
Indicator 1: Increase of new activities beneficiaries
are taking part of
Indicator 2: Increase in beneficiaries’ number of new
friends
Indicator 3: Increase of beneficiaries level of social
skills acquired
Reduced social isolation for 30 disadvantaged people:
1 Year
3 Years
5 Years
DURATION
For how long the
change will last? 1 – 5
years
30. 30
Identify appropriate financial values – these are a way of presenting the relative importance to a
stakeholder of the changes their experience
What is valuation?
This process of valuation is often referred to as monetization because we assign a monetary value to
things that do not have a market price
In SROI we use financial proxies to estimate the social value of non-traded goods to different
stakeholders.
As SROI becomes more widespread, monetization will improve and there will be scope for pooling
good financial proxies
31. 31
Stakeholder Outcome Indicator Financial Proxies
Disadvantaged
people
Reduced social
isolation
Increase of new activities
beneficiaries are taking part of
The cost of the new memberships in
social clubs.
Entrepreneurs
Better able to run a
business
Increase in market share
The divide of company's total
revenue by entire industry's total
market sales
Person with
physical health
problem
Improved physical
health
• Number of visits to doctor
• Extent of improvements in
health (self reported)
• How often they exercise
• Cost of visiting private doctor
clinic
• Cost of health insurance
• Cost of gym membership
Local
community
Improved
perception of the
local area
Residents report improvements
in local area
• Change in property prices
• Amount spent on home
improvements
32. 32
INDICATOR:
Enhanced their
social status
and networks.
This valuation has been created to help social
housing providers in the UK place a value on the
social outcomes of their community investment
work. Reference: http://goo.gl/SktZFX Technique
of valuation of wellbeing in a UK context equals to
OMR 650 per person per year. Based on the cost of
living average comparison between UK and Oman:
Reference http://goo.gl/3w1Zpw is (-66.2%).
Therefore our valuation of the enhanced of social
status and networks is 650 – 66.2% = OMR 219.7
OMR 219.7
The consideration
made is the value
to an individual of
being a member
of a social group.
This is an average
value where the
individual is 25-49
years old located
in the UK and
readjusted to an
Omani context.
Financial Proxies
Omani women got involved into a training on soft skills and handcrafts.
33. 33
INDICATOR:
Gained new
skills on how to
deal with an
early age group
of Kids
The cost of hiring a child
psychiatrist to gain skills
in dealing with an early
age group of kids
AED 1,000
Interview with American Center for
Psychiatry in order to gain skills in
dealing with an early age group of
kids.
The cost for one consultation is AED
500
The total for two coach
500*2 = 1,000Drh
Football coaches reporting gaining new skills while dealing with early age group of
disadvantaged kids
Financial Proxies
34. 34
INDICATOR:
Increased
reputation and
enhanced social
positioning
A good proxy for the value this change was
considered to be the cost of one month
campaign for an NGO (AED 2,000) or
organizing a community event AED 3,000.
The average value of these proxy activities
is AED 2,500 – inputted after consultation
with a leading marketing agency based in
Dubai
AED 2,500
The consideration
made are either by
running a marketing
campaign or
organizing a
community event
aiming to realize the
same outcome for an
NGO.
NGOs supported the implementation of a corporate CSR program and coordinated the community
events:
Financial Proxies
35. 35
INDICATOR:
Feeling
happier and
proud.
Valuation Source: This valuation has been
created to help social housing providers in the
UK place a value on the social outcomes of
their community investment work. Technique
of valuation of wellbeing: http://goo.gl/SktZFX
Technique of valuation of wellbeing in UK =
OMR 7,650 per person per year. Based on the
cost of living average comparison
between UK and Oman: Reference
http://goo.gl/3w1Zpw is (-66.2%) therefor
our valuation of pride is OMR 7,650 – 66.2% =
OMR 2,585.7
OMR
2,585.7
Using the contingent
valuation method, a
course that enabled
someone to increase
their confidence in
regards to family and
others. This valuation is
the value to an adult of
having high confidence
levels. This is an average
value for an individual
from UK applied to an
Omani context.
Women feeling happier and proud of themselves after enrolling to a community development
program
Financial Proxies
36. 36
Indicator: 5 Entrepreneurs are better able to run business
Actual Impact = 100,000 – [(100,000*15%) + (100,000*5%) + (100,000*20%)] = $60,000
100% =
$20,000 * 5
= $100,000Deadweight:
They are studying
business affairs
at the university
15%
Displacement: Chance to
interact with actual
entrepreneurs and read
start-ups magazines
5% 20%
Attribution: The
university organizes
start-up weekend
and seminars
10% per year
Drop-off:
They might
need to
refresh and
update their
learnings
after a year
REAL IMPACT CREATED
37. 37
Actual Impact YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
60,000 60,000 54,000 48,600 43,740 39,366
Applying a drop-off of 10%
-10% -10% -10% -10%
The drop-off stops after the number of years identified as duration. I.e. If the duration of the
impact sustains for 3 years, the above table will be as follow:
Actual Impact YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
60,000 60,000 54,000 48,600 0 0
-10% -10% -10% -10%
38. 38
Formula of the Present Value
Year 1 Year 2 Year 3 Year 4 Year 5
Benefits 60,000 54,000 48,600 0 0
Discounted Value 60,000 / 1.03 54,000 / (1.03)² 48,600/ (1.03)³ 0 0
Present Value 100,194.2
Example: Discounted Value 3%
+ + + +
39. 39
Calculating SROI
You are now in a position to calculate the initial SROI ratio. This is a very simple sum. You divide
the discounted value of benefits by the total investment
SROI Ratio = Present Value / Value of inputs
= 100,194.2 / 45,000
= 2.22
For every $1 invested there is a return on investment of 2.22
Creation of $ 100,194.2 of Social Value
40. 40
Sensitivity Analysis
After calculating the ratio, it is important to assess the extent to which your results would change if
you changed some of the assumptions you made in the previous stages.
The aim of such an analysis is to test which assumptions have the greatest effect on your model.
The standard requirement is to check changes to:
• Estimates of deadweight, attribution and drop-off;
• Financial proxies;
• The quantity of the outcome;
• The value of inputs, where you have valued non-financial inputs
41. 41T H A N K Y O U
Sustainable Square Consultancy and Think Tank
www.sustainablesquare.com
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Hinweis der Redaktion
As deadweight increases, your contribution to the outcome declines. When deadweight is high this may mean that the outcome is no longer material to your analysis.