nef (the new economics foundation) Grants or contracts – are you ready for the change? Eva Neitzert nef (the new economics foundation)

Outline NEF Context Winning contracts – demonstrating value Commissioners – are they ready? Questions

nef (the new economics foundation) NEF Independent ‘think-and-do’ tank that develops innovative solutions to promote: –social justice –environmental sustainability –economic well-being Long history of third sector involvement –Measurement, commissioning, social enterprise

nef (the new economics foundation) Context

nef (the new economics foundation) Demonstrating value Telling your organisations’ story Providing evidence Social Return on Investment (SROI) SROI Ratio= [Net present value of benefits] [Net present value of investment] e.g. A ratio of 3:1 means that investment of £1 delivers £3 of social value

nef (the new economics foundation) How does SROI work? Stage 1: Engage stakeholders to develop an impact map Stage 2: Indicators, data collection and monetisation Stage 3: Model and calculate SROI Stage 4: Report and embed

nef (the new economics foundation) Example: Mill Race IT StakeholderInputActivityOutputOutcome Participants (32) Skills Time Trained in computer recycling IT skill set No. of recycled computers Increased self-confidence Improved mental health Sustainable employment Improved life stability Participants’ families TimeEncourage family member Continued participation Improved mental health of participants Increased income for family Less time spent on care for family member Local government N/A No. of computers recycled and diverted from landfill Reduced landfill expenditure Improved local environment National Health Service N/A Prolonged support for participants Improved skills for participants Reduction in care costs Improved mental health of participants

nef (the new economics foundation) The value of SROI Capturing the value of better outcomes and wider impacts Example: Shaftesbury Young People –Higher unit cost –BUT better outcomes – reduction in number of NEET care leavers –SROI showed that every additional £1, generated between £4.40 and £6.10 in social value

nef (the new economics foundation) Treasury Definition VfM Quality and whole of life costs –“VfM is defined as the optimum combination of whole- of-life costs and quality (or fitness for purpose) of the good or service to meet the user’s requirement. VfM is not the choice of goods and services based on the lowest cost bid.” HM Treasury (2006) Value for money guidance Wider cost and benefits –“Wider social and environmental costs and benefits for which there is no market price also need to be brought into any assessment. They will often be more difficult to assess but are often important and should not be ignored simply because they cannot easily be costed.” HM Treasury Green Book

nef (the new economics foundation)

Seeing the full picture

nef (the new economics foundation) 1. Activity 2. Output 3. Service level outcomes 4. Camden Community outcomes –social –economic –environment 5. Value –Quantitative –Qualitative –Monetizeable Where value accrues: - To Service - Camden wide - central government Sustainable Commissioning outcomes framework Community strategy & Corporate priorities Commissioner & service user priorities National outcome frameworks

nef (the new economics foundation) Day Care Services pilot Procurement phase Innovation Service Specification - outcome focussed - Added social, economic and environmental outcomes accompanying service outcomes - Co-production principles Pre-Qualification Questionnaire Made ‘consortium/partnership friendly’ Inserted Question on wider outcomes Adjusted weighting accordingly Tender SchedulesOutcome framework part of ‘provider method statement’ in Schedule 1 (double weighted) Further schedules outcome focussed - Pricing schedule – need to level the playing field

nef (the new economics foundation) Outcomes of the tender process Consortium of 3 medium-sized locally based 3 rd sector providers Not cheapest Commitments to: –involve the wider community through use of volunteers –Co-production - peer led support and education initiatives and time-banking –Bulk buying of catering supplies from local sources –Recycling, walking and cycling initiatives with service users and staff Key point: This result was achieved not just because better skills of third sector providers, but because they could use them…

nef (the new economics foundation) So …

nef (the new economics foundation) Further information Resources Sustainable Commissioning Model Briefing Measuring Value: a guide to SROI SROI Training Courses