1. Measuring Social Return For Social Enterprise1

2. Measures social and economic objectives
Double Bottom Line
Financial
Sustainability
Social
Impact
Measures social and economic objectives 2 2

3. Objectives are Aligned
Vision
Social Impact
Objectives
Sustainability
Mission 3 3

4. Objective Examples Social Impact
Scale
Services rendered
Clients served
Jobs created
Client income
New tax revenue
Public assistance saving
Sustainability (Enterprise Performance)
Operating efficiency
Net profit/loss
Donor dependency
Sales volume
Gross margin 4 4

5. Measuring Social Objectives
Select impact measurements early and do a baseline study.
Build information system to collect and measure impact
Collect anecdotes evidencing hard-to- measure social impact.
Budget for social impact monitoring.
Social impact measures depend on the mission. 5 5

6. Measurement Challenges
Financial sustainability objectives are easier to set and quantify, than social objectives
Business issues can overwhelm social objectives.
Insufficient funds, inadequate, time skills/systems to measure social impact.
Unaccustomed to measuring social returns in “business” terms. 6 6

7. Social Impact and Social Return
Social impact - measures qualitative and quantitative social impact based on social objective and type of organization
Social Return on Investment (SROI) - measures the social value the social enterprise creates in financial terms as a ratio of the investment.
*Investor= donor, taxpayer, sponsor or private contributor.
SROI can be measured in social and/or financial benefit, and capacity building or systemic change and is quantified in dollar terms. (SROI is the social “bottom line” for social investors. SROI measures the social value The Program creates in financial terms as a ratio of the investment. Financial returns in the for-profit sector are measured in the increase of value of the stocks of an enterprise held by shareholders [private gain]. Social returns are different in that the gains are public. For example, a project to reduce airborne pollution levels in a community can produce social returns in terms of reducing pollution-related illnesses, as well as general increase in the quality of life. Social returns too, can be measured in financial terms. Reductions in pollution related illnesses usually mean lower medical expenses, and fewer days taken off work. Both medical expenses, and a day of labor can be measured in monetary terms.)
!! Quantitative determination (in currency) of what the investor* is getting in return for funds expended on social programs.
*Investor= donor, taxpayer, sponsor or private contributor. 7 7

8. SROI Framework Investment-oriented
View grants and subsidies as investments in relation to the overall capital structure of the social enterprise.
“Double-bottom line" value proposition
A successful SE business model must balance social purpose and enterprise value creation.
Practical Tool
To be effective, SROI must be designed to inform the work of practitioners over time: ongoing measurement and assessment tools are a critical element. 8 8

9. Understanding Value Creation
Economic Value
Traditional value creation in for-profit businesses (profit)
Social Value
Traditional value creation in non-profit organizations, leading to improvements in the lives of individuals or society as a whole.
Socio-Economic Value
Builds on the foundation of Economic Value by adding Social Value that can be quantified and expressed in economic terms (monetized), either as cost savings (e.g. reduced need for public assistance) or increased revenues (e.g. increased tax paid).
Unquantifiable Social Value
Place SROI in larger context of value creation that include qualitative aspects not included in the SROI analysis (e.g. quality of life issues) 9 9

10. Understanding Value Creation (2)
Economic Value
Traditional value creation in for-profit businesses (profit)
Social Value
Traditional value creation in non-profit organizations, leading to improvements in the lives of individuals or society as a whole.
Socio-Economic Value
Builds on the foundation of Economic Value by adding Social Value that can be quantified and expressed in economic terms (monetized), either as cost savings (e.g. reduced need for public assistance) or increased revenues (e.g. increased tax paid).
Unquantifiable Social Value
Place SROI in larger context of value creation that include qualitative aspects not included in the SROI analysis (e.g. quality of life issues) 10 10

11. Measuring and Monetizing Value
Monetized
Social Impact -
Expenses directly associated with social mission =
Social Value
Excess Cash Generated,
not including:
Grants and Subsidies
Expenses directly associated with social mission =
Enterprise Value
Blended Value
Enterprise Value
= economic value of the enterprise. Cash flow analysis of business performance.
Social Value
= direct demonstrable cost saving and revenue contributions
Blended Value
= enterprise value + social value – debt
(Remove Long-Term Debt) 11 11

12. Blended Value Blended Value Social Economic Value
The concept of “blended value” arises from the notion that value has within it three component parts: economic, social, and environmental. While traditionally people have thought of nonprofits being responsible for social and environmental value and for- profits for economic value; in fact both types of organizations generate all three value sets. The rise of social enterprise, corporate social responsibility, social investing, and sustainable development are all examples of how various actors are pursuing a blend of financial, social, and environmental value. The blended value proposition is drawn from the belief that “value” is inherently whole; hence this school of thought is moving from measuring multiple bottom lines to focusing on a single value sign—blended value—or “total value” creation. 12 12

13. SROI Examples Job created Fair wages Income-generated by enterprise
=cost savings on public assistance
Fair wages
= increase in taxable income
Income-generated by enterprise
= savings to donor
Enterprise profit
= investment $ for other social programs 13 13

14. Examples of SROI formulas
Economic impact = Public assistance savings + earned income Program costs Return to tax payers = Reduced government funding + increased tax payments Program impact= Total employees Total target employees 14 14

15. For More Information… Roberts Enterprise Development Fund www.redf.org
Blended Value Map
National Social Venture Competition (
International Finance Corporation ( 15 15