Development Prospect and Implementation of SROI in East Asia SROI International Conference 2012 February 17, 2012

Ken Ito, Assistant Professor, Graduate School of Media and

Governance, Keio University

Masatoshi Tamamura, Associate Professor, Faculty of Policy

Studies, Keio University

Ken Ito

- Assistant Professor, Faculty of Media and Governance,

Keio University

- Japan Advisor, Asian Venture Philanthropy Network

- 10 years of private sector experience including 7 years in GE

Commercial Finance, one of GE Capital in Japan

- Director at Center for Social Innovation at Institute for Strategic

Leadership (2008 to 2010)

- Community Mobilizer, Ashoka Changemakers (2011)

- MBA, Thunderbird AGSIM (Arizona, US)

- Email : ken.ito@sv-tokyo.org

1. J-SROI Project

Joint research by non-profit intermediary (Center for Public

Resource Development), academics(Keio Univ., Tokyo Univ.) and

business (Daiwa Securities)

To research SROI model and explore possible implementation in

Japanese environment for accelerated growth of social investment

Funded by Japan Foundation from 2010-2012

• Conduct two days training in Tokyo

• Literacy review • Review on case study

• Comparative study on other methodology on quantitative / qualitative evaluation

Study on SROI Model

• Conduct 20+ interviews on SROI practitioners and researchers in Europe and US

• Analysis on the usage. policy /market environment

Field Research in US and Europe

• Create 6 SROI case analysis using Japanese case

• Organize study group to accumulate knowledge in case analysis

Creation of SROI Case Studies

• Identify SROI’s possible impact to Japanese environment

• Build up strategies to implement SROI for growth of Japanese social sector / social investment

Study on Implementation Model

Sep-Dec 2010 Jan-Apr 2011 May-Oct2011 Nov 2011-Feb 2012

2. Initial Assumptions

Quantified evaluation of social impact could be key driver to mobilize untapped charity resources into non-profit sector by demonstrating the social impact in numbers

SROI could be particularly useful to attract business resources to invest into social sector

SROI could be also impactful to government sector which seeks productivity growth in social welfare field

SROI could be a sector-wide (or industry-wide) standard to measure social impact

SROI could accelerate investment approach or social investment eventually

3. Initial Research Findings on SROI Major drivers

1. SROI as an effective impact measurement framework

• An outstanding tool to design maximized social impact by visualizing and examine co-relation between input, output and outcome

• SROI is not a measurement standard, but a standard for measurement protocols for social impact

2. Quantitative analysis as a tool for consensus building and stakeholder involvement

• SROI analysis starts from stakeholder analysis and end at feedback to stakeholders to create a consensus on social value among different stakeholders

• Quantities measurement to build up set of numbers as “common language” among different stakeholders

SROI as a communication framework through impact evaluation

4. Initial Research Findings on SROI - Challenges

1. Challenge on setting a standard of analysis and reporting

• More guidelines may be necessary on scope of the analysis or set of assumptions of valuation

• Need to ensure the quality of assurance process. Lack of standard may threaten the value of methodology itself

2. Capability issues for smaller size non-profit

• SROI analysis need skill-set such as accounting or project management which all the non-profit doesn’t have

3. Hesitation towards quantified evaluation

• Traditional non-profit shows hesitation to accept quantified evaluation method because they believe social values cannot be quantified

Standardilization and reporting capability as challenges

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＃ 所在 団体名 氏名 タイトル 組織タイプ

米国

1 San Francisco SVT Group Sala Olsen Founding Partner コンサルティング

2 San Francisco REDF Cynthia Gair Managing Director of Programs 中間支援組織

3 San Francisco ZeroDivide Paul Lamb / Laura Efurd 財団

4 San Francisco Hewlett Foundation Harold Jacobs 財団

5 New York Acumen Fund Marc Manara Water Portfolio Manager 中間支援組織

6 New York Robin Hood Foundation Michael Weinstein Senior Vice President 財団

7 New York Rockefeller Foundation Antony Bugg-Levine Managing Director 財団

8 New York Jed Emerson コンサルティング

9 New York New York University Jill Kickul Professor 大学

欧州

10 London SE Investment Fund Ceryse FearSocial Enterprise Investment Fund

Contract Manager中間支援組織

11 London CAN Richard Kennedy Social Investment Manager 中間支援組織

12 London Nef Consulting Michael Weatherhead コンサルティング

13 London Bridges Ventures Michele Giddens 中間支援組織

14 London Impetus Trust Julia Grant Portfolio Director 中間支援組織

15 London Unltd Katharine Danton Director of Research and Policy 財団

16 London New Philanthropy Capital Tris Lumley シンクタンク

17 London Private Equity Foundation Hearvey Koh 財団

18 London Social Finance Martin Rich 中間支援組織

19 London SROI Network Jeremy Nicholls 中間支援組織

20 London David Carrington コンサルティング

21 Amsterdam Noaber Foundation Pieter Osthlander 中間支援組織

22 Amsterdam Scholten & Franssen Peter Scholten コンサルティング

23 AmsterdamGlobal Alliance for Banking on

ValuesDavid Korslund Senior Advisor 業界団体

5. Interviews on SROI Practitioners and Researchers

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• Background and cause of quantified evaluation of social impact

• How SROI helps to pursue organization’s mission and goals?

• What are the purpose of SROI analysis?

• Who are the subjective of analysis?

• What are the challenges for implementation - Reporting Capability of subjective organizations? Any capacity building efforts?

• How do you create consensus on the goals of evaluation?

• Why not other tool, but SROI?

• How do you utilize the SROI reports and process of the analysis? What are the accomplishment?

• What are the future plans to develop them further?

Key Questions

6. Findings from Interviews in Europe/US

7. Background – Charity Market in Japan

Small and fragmented non-profit sector (40,000 NPOs for

0.2% of GDP with average of 1.3 employees/organization)

Strong tradition of cooperatives (JA bank with $800 billion

USD asset, Consumer Co-op with more than 20 million

memberships) but disconnection with other social sectors

Limited tax benefit for non-profit entity – only 200+ of

them allowed for tax exemption for funds raised

Small market for charitable donations -- Ave. giving of

\3,166 / year/ household (over $2,000 in US), total size of

\850 billion ($11 billion) private giving including corporate

donations*2

*1 Ministry of Internal Affairs and Communications (2008) *2 NPO Research and Information Center, Osaka University (2004)

Fragmented and small Japanese charity sector

8. Growing SE Sector and Taxation Reform

*3 “Report on Social Business”, Ministry of Economy, Trade and Industry (2008)

Undefined but growing “Social Enterprise” sector

• No official definition of “social enterprise”

• Estimated number of SEs as 8,000, size of SEs as \240 billion)*3

• 47% operate as non-profit, 20% as company and 33 % other

forms (individual, cooperatives etc.)

• Government provide financial support for start-up social

enterprises (\7.8B in 2010, \10B in 2011,\3B in 2012)

Government’s policy change on charity taxation and Mar 2011 Earthquake

• Mar 2011 earthquake raised more than \ 300 billion donations –

creating new culture of giving

• Tax reform for charitable contribution to non-profit in June 2011

– 50% tax deduction of contribution amount from income tax (up

to 25% of one’s income tax). Target to multiply private giving to

the social sector

Taxation reform for growth of charity market

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Fund Providers

7. Findings from Interviews in Europe/US

Demand Challenge

Government

- Pressue on budget

- Financial effeciency

- Need to establish selection criteria for

commissioning out operations

- Princple of equal distribution but not

imapct based selection and focus

- Lack of sense of productivity

Foundation

- Shrinking Asset and operation budget

- Needs for additional fund mobilization

from business sector

- Lower attention to Impact if donor is

not imapc focus or not focused on

quantitative measurement of Impact

Business

- Impact based grant as a part of CSR

strategy

- Familiarity on investment like approach

(for financial industry such as PE/VC)

- Focus of CSR could be determined in

relation with its core business but not

impact focus

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Fund Recipient

7. Findings from Interviews in Europe/US

Demand Challenge

Non-profit

Traditional non-profit is less

focused on and it creates more

demand for SROI as

management capacity building

tool for maximized social impact

Lack of professional expertise to

conduct analysis in-house or

lack of budget to outsource the

analysis

Hybrid Non-profit

and Social

Business

Needs for social KPI apart from

financial index such as revenue

or number of customers

Some assume financials and

other management KPIs are

good enough to demostrate

their impact

8. Summary of Research Findings from Europe/US Practices

Implementation of SROI relying on the stakeholders if they

can share the value behind the SROI concept

SROI is not for everyone -- Agreement between donor and

recipient critical to create opportunities for SROI to be fully

utilized - such as investor mindset donors and social enterprise

with strong desire to demonstrate productivity as a typical case

Government sector has incentive for SROI implementation

because of budget pressure and requirement for enhanced

accountability to report social outcomes

Foundations shows interest if they have strong needs for

raising external funds, or if they have donors or board

members with business background

Acceptance of SROI in Europe/US and its implication

Right combination of stakeholders makes SROI work

9. SROI Implementation in Japan

Center for Public Resource Development

Keio University

Meiji University

International Development Center of Japan

Research Projects

Pilot Implementations / Feasibility Studies

Microsoft Japan

Created SROI case study on its grantee

Ministry of Education

Feasibility study to evaluate social impact of R&D program for

science and technology at National Institute for Science and

Technology Policy

Pilot project by Research Institute of Science and Technology

for Society with Keio University

Ministry of Health, Labor and Welfare

Conducting pilot program to evaluate social impact of elderly

care services (Conducted by Nomura Research Institute)

10. SROI research and practice in East Asia

• Meiji University (Tokyo, Japan)

• Keio University (Japan)

• Nomura Research Institute (Japan)

• International Development Center of Japan(Tokyo, Japan)

• Social Resources Institute (Beijing, China)

• Korean Advanced Institute for Science and Technology (Korea)

• Busan University (Busan, Korea)

• Work Together Foundation (Seoul, Korea)

• Hong Kong Council for Social Services (Hong Kong)

• Institute of Social Entrepreneurship Asia (Philippines)

11. Summary

Impact of SROI : Enables Cross Sector Communication for Maximized Social Impact

SROI works as analysis tool for maximized social outcome planning for optimized resourced allocation as well as stakeholder involvement

Key factor for successful implementation would be its focus on creation of common language among different stakeholders in the process of quantitative analysis

Strategies for Market Penetration

Identify the demand for SROI based on the needs of different stakeholders and their context

Create cases by carefully matching the needs and demand of funders and fund recipient

Establish operation know-hows in local context (such as to overcome hesitation on quantified evaluation)