Social Return on Investment Measuring the added value of social projects the Equal SROI pilot progra

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Social Return on InvestmentMeasuring the added
value of social projects the Equal SROI pilot
programme in Scotland

• Sheila Durie
• Haldane Associates/Forth Sector

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What is Social Return on Investment?

• A way of representing the monetary value of
  social, community and environmental impacts
• A methodology based on standard accounting and
  commercial investment principles
• A way of combining economic, social and other
  results from an investment into one index of
  blended value
• Particularly appropriate in measuring social
  enterprise impacts

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What is Social Return on Investment?

• Standard process and series of stages
• Understanding scope and boundary issues
• Stakeholder analysis
• Develop an impact map (i.e. linking stakeholder
  objectives with outputs and impacts)
• Identify appropriate indicators
• Collect monitoring information on outcomes
• Collect financial information
• Desk research to find financial information on
  indicators, unit costs and benchmarking data
• Calculate SROI
• Do a sensitivity analysis and articulate
  assumptions
• Produce an SROI report

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Structure of the Equal pilot

• Funded by the European Equal programme through
  the Social Economy Scotland Development
  Partnership
• Match funded by Communities Scotland
• Management and administration by Forth Sector
• Delivery by Haldane Associates and Forth Sector
• Peer support from New Economics Foundation and
  the European Social Return on Investment Network

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Aims of the Equal pilot

• To help 12 organisations embed the SROI approach
  within their organisation and publish SROI
  reports
• To focus on Wider Role projects supported by
  Housing Associations and social enterprises
  funded by Futurebuilders and Social Investment
  Scotland
• To learn about the issues involved in adopting
  the SROI methodology
• To develop common methods for financialising
  social and environmental value that will make it
  easier in future to implement SROI in other
  organisations
• To determine what, if any, role SROI can have in
  future investment and grant decision making, and
  improving understanding of sustainability
• Developing better methods for stakeholder
  analysis and impact mapping
• Development of innovative methods for measuring
  value in some key areas, such as employability

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Lessons learned from 2004/05 work

• Start up social enterprises have a number of
  difficulties in undertaking SROI
• immature financial systems
• lack of participant monitoring information
• fuzzy objectives expressed by stakeholders
• They may be enthusiastic about the SROI concept,
  but are actually not ready to engage
• This means that any SROI analysis will make many
  assumptions, and that SROI should be repeated
  over a longer period, with more information
  collected
• Value changes, and most likely reduces, over
  time. Most of the value appears to be created in
  the start up phase, unless participants are moved
  on regularly
• Many organisations see SROI at first sight as
  being time consuming and difficult

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One of the original case studies Re-Union Canal
Boats Ltd
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What was measured and financialised

• Increased earnings potential of the social
  entrepreneurs
• Personal and social development of the volunteers
• The increase in the boat value arising from the
  volunteer input
• Local economic impact through purchasing
• Impact on trip participants
• Community benefit from improved canal access
• Deadweight was current rates of volunteering in
  the community

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Benefits that could not be turned into money at
the time

• Improvements in well-being for trip participants
• Environmental benefits from increased canal use
  (e.g. keeping the canal clear)
• Increased environmental awareness amongst
  disadvantaged residents, resulting in less damage
  and vandalism on the canal
• Increased perception of community safety
  alongside the canal

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Results

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SROI analysis
The value created by Re-Union after a five year
period, assuming no further increase in net
social benefits, is 404,716, for an initial
investment of 88,058. Re-Union added value is
404,716 - 88,058 i.e. 316,658. SROI is
calculated by subtracting the costs from the
benefits and dividing the result by the costs,
and is therefore a ratio of 3.60 1. This was
the lowest SROI index, reflecting difficulty in
finding financial information for indicators. The
highest was 12.81
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The Equal pilot organisations

• Cunninghame Housing Association/Impact Arts
• The Wise Group/Cadder Housing Association
• Grampian Housing Association/Solstice Nursery
• Home Support Scotland
• YMCA Perth
• Subliminal Directions
• Factory Skatepark
• Forth Sector (Six Marys Place Guest House)
• Kibble Works social enterprise model
• Kibble Community Warehouse
• SROI analysis on an individual participant

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Areas of activity within the pilot organisations

• Young disadvantaged people
• improving employability
• improving educational attainment
• reducing anti-social behaviour
• Stabilising young homeless people
• Retaining older people in their homes
• People with mental health issues
• improving employability
• supported employment
• improving well-being
• Moving long-term unemployed people into
  employment
• Youth work in the community
• Recycling

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Measurement methods developed

• Financial proxies and benchmarking for
• Employability and distance travelled
• Individual personal and social development
• Impacts on referral agents and partners
• Social networks/social capital
• Mental health gain

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Features and lessons from the SROI work

• Finding a methodology of valuing social impacts
  that operates within a disciplined framework
  which minimises subjective judgements
• There may be compatibility between any criteria
  that are developed to identify investment
  readiness and readiness to participate in SROI
• good financial systems
• organisational stability and procedures
• management commitment
• monitoring and evaluation framework
• understanding of social impacts

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Features and lessons from the SROI work

• Making SROI more accessible and easier to
  implement, through common indicator banks and
  common methods for valuing common social impacts,
  will enable more organisations to use it in
  future
• SROI appears to build on other methods such as
  social auditing which are being used more
  extensively in the sector, but work in the pilot
  suggests overlap is minimal
• SROI can get the social enterprise sector used to
  technical investment language
• Understanding stakeholder value is key to
  building a more effective business case
• Many funders are expressing an interest in
  understanding SROI, and using it in
  decision-making