Social return on investments (SROI) A disruptive approach to the conventional way of designing, creating, getting approval and implementing both capital and operational facilities investments

SROI is the application of a set of principles within a framework that is designed to help bring about consistency, while at the same time recognizing that what is of value will be very different for different people in different situations and cultures.

SROI: a way of reporting on value creation A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments with the social aspect as a main point. Originated by Roberts Enterprise Development Fund in the 1990’s primarily for non-profits. Low and High Risk Allocation: is the act of organizing projects or tasks into two categories: Low risk strategy and high risk strategy. Low risk strategy:  is comprised of tasks that are either proven as “fundamentals” or tasks that have provided some sort of positive SROI in the past. High risk strategy: is comprised of tasks that have no identifiable ROI before you complete them. anything with unidentifiable ROI is high risk to management

The stages in SROI Establishing scope and identifying key stakeholders. It is important to have clear boundaries about what your SROI analysis will cover, who will be involved in the process and how. Mapping outcomes. Through engaging with your stakeholders you will develop an impact map, or theory of change, which shows the relationship between inputs, outputs and outcomes. Evidencing outcomes and giving them a value. This stage involves finding data to show whether outcomes have happened and then valuing them. Establishing impact. Having collected evidence on outcomes and monetised them, those aspects of change that would have happened anyway or are a result of other factors are eliminated from consideration. Calculating the SROI. This stage involves adding up all the benefits, subtracting any negatives and comparing the result to the investment. This is also where the sensitivity of the results can be tested. Reporting, using and embedding. Easily forgotten, this vital last step involves sharing findings with stakeholders and responding to them, embedding good outcomes processes and verification of the report.

Check point: recognize any positive or negative outcomes ? 6 principles of SROI #1 Establishing scope and identifying stakeholders (i.e. everyone who has a 'stake' or an interest in the subject of the SROI) Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders Scope: purpose, audience, background, resources, who will do the work, range of activities, time period, forecast or evaluation If you are forecasting your return it may be more difficult for you and your stakeholders to assess possible unintended consequences. However, you may be able to use other people’s previous experience of similar activities to identify unintended outcomes ID stakeholders: who, what, when , where & WHY Think about each stakeholder’s inputs, outputs and outcomes before meetings to ensure that time is used as efficiently as possible Check point: recognize any positive or negative outcomes ?

6 principles of SROI #2 Map outcomes by creating an impact map. By involving stakeholders in constructing the Impact Map you ensure that the outcomes that matter to those who are directly affected will get measured and valued. Create a loose impact map format : excel or word doc Id inputs : External, internal, past projects/programs Value inputs: discover non monetized . Clarify outputs: quantitative Describe outcomes: organization’s objectives, views of your stakeholders.

6 principles of SROI #3 Evidencing outcomes and giving them a value: collect evidence on the outcome that is occurring, and assess their relative importance by valuing them. Developing outcome indicators: applied to outcomes as these are the measures of change that we are interested in Collecting outcomes data: available from existing sources (internal or external) Establishing how long outcomes last: time periods Putting a value on the outcome: show how important they are relative to the value of other outcomes

6 principles of SROI #4 Establishing impact: establishing impact is important as it reduces the risk of overclaiming and means that your story will be more credible Deadweight and displacement: measure of the amount of outcome that would have happened even if the activity had not taken place Attribution: assessment of how much of the outcome was caused by the contribution of other organizations or people Drop-off: how long do the outcomes last/diminished returns Calculate your impact: expressed in %

6 principles of SROI #5 Calculating the SROI: calculate the financial value of the investment and the financial value of the social costs and benefits. Projecting into the future: how long an outcome would last Calculating the net present value: costs and benefits paid or received in different time periods need to be added up Calculating the ratio: divide the discounted value of benefits by the total investment SROI ratio = Present Value Value of inputs Sensitivity analysis : assess the extent to which your results would change if you changed some of the assumptions you made in the previous stages. Payback period: what point in time does the value of the social returns start to exceed the investment? Investment Annual impact/12

6 principles of SROI #6 Reporting, using and embedding: stage gives guidance on how to make the most of all of your hard Reporting to stakeholders: relevant to the audiences that you decided upon when you set your scope enough information to allow another person to be assured that your calculations are robust and accurate Using the results : the SROI analysis needs to result in change ensure that the organization acts on the recommendations and that findings feed into your strategic planning process Assurance: appropriate independent assurance of your report’s claims

Thank You lamorgan@hotmail.com

Sources www.thesroinetwork.org www.neweconomics.org www.ces-vol.org.uk/index.cfm?pg=140 www.proveandimprove.org www.philanthropycapital.org