Session agendaBackground • REDF • What is SROI?• SROI history• How does SROI support community goals?
SROI: Building Blocks• Overview of early SROI methodology • Different goals, different analyses• Views of Value• Costs & investment / Benefits & Impact
SROI analysis to help organizations manage their work • Identifying the best questions• Identifying reporting that fits the need• SROI in a context of multiple tools for analysis & reporting
SROI: What REDF Learned / Changes to our approach • Challenges and unanswered questions led to new system
development >> underway– Systems & automation– Analyze to answer specific questions– Include both monetary & non-monetary analysis
SROI: Discussion – What’s Next? • …• …
• How is SROI relevant to community needs?
• How has REDF approached SROI ?
• What have we learned, and how are we changing our approach?
• How can SROI other community organizations?
• What can we expect in the coming years?
Session Goals
What is REDF?
REDF is an intermediary that helps nonprofit jobs-focused social enterprises employ people with multiple barriers
REDF contributes to the fields of philanthropy and social enterprise by communicating the lessons we learn through publishing, speaking, and sharing information on our website (www.redf.org)
In all areas of our work, REDF is deeply committed to measuring the results of our efforts
Work brings dignity and independence to people living with severe barriers to employment
People with severe barriers to employment can be most effectively trained and employed by non profit-run businesses
REDF dramatically boosts nonprofit-run businesses ability to succeed
REDF Theory of Change
What is REDF’s theory of change
Employment
Help people move into employment and out of poverty
Social enterprise
• REDF provides the capital, know-how and networks to start and grow job creating social enterprises
• REDF shares lessons to build the field nationally
• Social enterprise jobs are a first step and pathway into the regular work-force for those who can’t get jobs otherwise
• The enterprises and their employees earn income – Offsetting taxpayer costs
• A social enterprise job leads to a rise in hours worked, health status and income; and reduces homelessness and incarceration
• Social enterprise is an innovation that would benefit every community
REDF
• SROI analysis assess the financial and non-financial value created by an organization relative to the financial investment it requires
• The value that SROI assesses can be value to individuals, to organizations, or to communities
What is it?
• Assess different types of value created
• Inform decision-making
• Align investment with value
Social Return on Investment (SROI)
What canit do?
Evolution of SROI*
1800s Cost-benefit analysis first developed
1970s Cost-benefit analysis required for US federal gov’t spending
1993 First known SROI by social enterprise fund: Coastal Enterprises
2000 First SROI Methodology documented by REDF2006 SROI Framework published by group of practitioners
2008 SROI Network forms to promote consistency and ongoing development of methodology
2009Scottish and UK Governments pilot adoption of SROI for government grants; SPM Network emerges in microfinance
2010-11 Mushrooming applications and versions
• REDF – SROI Act II development and piloting underway
• Company & Nonprofit Managers: NGOs (advocacy, politics, human services, green building, education, health and prevention, etc.), private corporations (family-owned, venture, emerging markets), publicly-listed corps (Nike, Philips), McKinsey, KPMG, etc Investors – Large institutional investors (CalPERS, AIG, UBS), venture capitalists (community development, cleantech), philanthropists and foundations (diverse fields)
* Appreciation to SVT for this chronology
What does measuring impact have to do with helping people or improving communities?
Increasingcommunity needs
Urgency
stretched resources
I want to put time and money where they will really make difference!
So I want to know
Is what we are doing working?
How can I show others that this works?
How can we know which aspects of our work need improvement ?
…and I want to know
Which projects should our organization invest in?
Should I put resources into Project A or Project B?
Where will my money do the most good?
Measuring the impact of our work gives us answers SROI allows us to compare results
Is what we aredoing working?
How can we knowwhich aspectsof our work weneed to improve ?
How can I show others that this works?
Where will mymoney do themost good?
Which projectsshould ourorganizationinvest in?
Should I spend my time on Project A or Project B?
Impact comes in many forms and all forms of impact require investment
What is this activity’s impact on individuals?
Social Impact
What financial impact does this activity generate?
Financial Impact
What benefits to society does this activity generate?
Community /Societal Impact
• Different program goals require different assessments of results and their costs
• Social sector work requires assessment of both monetary and non-monetary results
SROI is just one of REDF’s tools for measuring performance
Individual (Enterprise employees)
Enterprise(program) Organization Society &
Community
• Demographics
• Social outcomes
• Stories
• Demographics
• Social outcomes
• Financial results
• SROI
• Cost / Benefit analysis
Measurement methods
• Individual improvedlives
• Group of improvedlives
• Healthy, growing /sustainable
• Improved society
• Dollar impact on community
• Cost effective strategies
Desired outcomes
• Social outcomes tracking system
• Healthier, moreeffective organizations
REDF Approaches to Measuring Impact
Individual (Enterprise employees)
• Demographics
• Social outcomes
• Stories
Assessment methods
• Individual improvedlives
Desired outcomes
Methodology
• Interviews, interviews, interviews!
– Face-to-face interviews with employees at time of hire and at 6 month intervals, up to 24 months
• What do we ask?
– Employment
– Wages
– Barriers to employment
– Housing situation
– Usage of social services
– Self-esteem
– Social support
• Collect, compile, quantify
REDF Approaches to Measuring Impact
Individual (Enterprise employees)
Enterprise
• Social outcomes
• Stories
• Demographics
• Financial data, reports
• Customer, staff, employee feedback
Assessment methods
• Individual improvedlives
• Jobs that help individuals improvetheir lives
• Healthy, viable businesses
Desired outcomes
Methodology
• Monthly review of business operations
• Monthly and annual enterprise financial statements
• Collect, compile, quantify
REDF Approaches to Measuring Impact
Organiza-tion
Society &Community
• Track all programs’ participants
• Customized database
• SROI
• Cost / Benefit analysis
Assessment methods
• Improved internal practices
• Better help for people in need
• Improved society
• Dollar impact on community
• Cost effective strategies
Desired outcomes
Methodology
• Assess organization’s existing monitoring and reporting needs
• Bring together specialists in client data evaluation and information technology to design customized system
• Test, use, refine
REDF Approaches to SROI
Individual (Enterprise employees)
Society &Community
• Demographics
• Social outcomes
• Stories
• SROI
• Cost / Benefit analysis
Assessment methods
• Individual improvedlives
• Improved society
• Dollar impact on community
• Cost effective strategies
Desired outcomes
Methodology
• Use Individuals’ Social Outcome information and Enterprise Financial information to
• Calculate investment used to create & support individual’s employement
• Collect, aggregate, and analyze data showing individuals’ employment and life changes over time
• Calculate monetary and non-monetary impact of individuals’ changes
• Compare changes’ impact to investment they took
How Does REDF’s SROI Measure Impact on SOCIETY ?
Social Mission Impact Business Enterprise Impact
Enterprise
• Investment in social services
• Usage of social services data
• New taxes generated
• Investment in business
• Business valuation
• Business sustainability
Enterprise
SROI FRAMEWORK / ANALYSISImpact of social enterprise on society / community
What questions are we trying to answer?
• How many individuals has the social enterprise employed?
• Is the social enterprise meeting the social mission goals and requirements set out for it?
• With an investment of $___, what impact can we have on #___ people?
Social Impact Financial Impact Community / Societal Impact
• How is the social enterprise performing financially?
• Is the social enterprise meeting the business / financial goals and requi-rements set out for it?
• To what degree is the enterprise able to sustain itself financially, versus require subsidization?
• What are the benefits to society resulting from the social enterprise’s work?
• For each dollar invested in the social enterprise, what are the resulting cost savings to society?
SROI Reporting Can Tell One Part of a Complete Story
REDF Social Impact Preport: Social Mission Performance
REDF Board Dashboard: Financial Performance
REDF SROI Report: Community / Societal Impact
In social mission work, value and return take numerous forms. Because of this, meaningful SROI analysis goes beyond one metric or one formula; SROI approaches must include the capacity to assess both monetary and non-monetary forms of value
SROI: What REDF learned >>> changes to our SROI approach
Measurement of impact and SROI analysis can give clarity to social mission work
SROI analysis must be easier to do and it must be replicable
The challenges to determining causality and identifying comparable activities / measures for benchmarking continue to need creative solutions
SROI: What REDF learned and changes to our SROI approach
REDF developed its original SROI modelin 2000
In 2010 we launched the design and piloting of an automated SROI system, SROI Act II
REDF’s SROI ACT II
Outputs >>> Outcomes
Funder
Nonprofit Organizationor Initiative
Services Seeker
Services Purchaser
Outputs(e.g., # of ppl employed)
Outcomes(e.g., individualsmove out of poverty)
OutputData
OutcomeData
Assistance, Link to networks
Program Interventions
Targeted Activity
Activities
Grants – start upGrants – ongoingStaff time
Grants, Earned Income, Staff time
Time, Activity participation
Payment for services
Input
AccountingSoftware
PerformanceMgmt Software
SROI Act II PlatformDashboarding, Analysis Templates & Reports
Social mission performance data and financial data brought together for targeted, reliable analysis via system links
SROI Act IIExample: Monetary Analysis
EXAMPLE A - ANSWERING A FINANCIAL RETURN QUESTIONA hypothetical analysis using CVE as a hypothetical organization using SROI Act (note that all facts and metrics are invented for this example ) Question: What is CVE's annual cost per target employee ("participant") employed at CVE's IME,
compared to the annual community savings generated?
Who: Stakeholders who might ask this question include S.F. City and County government and foundation funders
Analysis components: Source of component dataCost components= Total IME 20xx cost, # target ("participant") employee FTEs in 20xx
IME 20xx cost (i.e.all IME business and social costs) = $350,000 CVE accounting system# target IME employee FTEs 35 ETO
Benefit components= Est. community cost savings (based on change in target employee's use of ETO outcomes re reduced use of svcs, eg foodstamps, community svcs -orig REDF SROI methodology, but with updated $s) calculated with
SROI-SW resident data (e.g. cost of foodstamps)Average community cost savings per IME employee in 20xx $15,000
SROI-SW Reports Reporting on above data could take a variety of forms. SROI-SW would have pre-programmed calculations and reporting format to accommodate those desired, for example:
Net (estimated - average) cost savings for the program = $525,000
20xx Community savings above program cost = $175,000 ( or "for every dollar paid into IME, 1.50 in community cost savings is generated")
One donor's view of cost savings generated by their donation (e.g. a $50,000 donation to CVE for IME) "Our $50,000 donated to IME in 20xx, generated $75,000 in community cost savings"
Estimated investment / return for funding that builds a program * (* roi-type calcs, per original SROI model or simplified formula) (e.g. $100,000 capital investment toward expansion of IME)
SROI Act [SROI 2.0 product working title]
SROI Act IIExample: Non-Monetary Analysis
EXAMPLE B - ANSWERING A NON-FINANCIAL RETURN QUESTIONA hypothetical analysis using CVE as a hypothetical organization using SROI 2.0 (note that all facts and metrics are invented for this example )
Question: How long does it take, and what does it cost for CVE participant-employees to overcome barriers x and y?
Who: Stakeholders who might ask this question include government contract / compliance officials, e.g. from Dept. of Rehabilitation
Analysis components: Source of component data
Investment components = Total $$ to get Work Prep prog started (or for expansion) CVE Accounting systemCost components= Total CVE Work Prep program ongoing costs in 20xx, # FTE participants CVE Accounting system
CVE Work Prep 20xx cost = $150,000 CVE accounting system# 20xx participant FTEs in Work Prep program 45 ETO
Barrier progress components= baseline and subsequent progress measures on x, y barriers ETO (in the form of % reduction over, e.g. 1 year)
SROI-SW Reports Reporting on above data could take a variety of forms. SROI-SW would have pre-programmed calculations and reporting format to accommodate those desired, for example:
Annual cost per FTE for % reduction of x, y barriers $3,333
Cost / results for a particular contract (or grant) 18 (your $60k contract buys services that reduce x,y barriers by --% over 1 year for 18 FTEs) (e.g. a $60,000 contract for Work Prep participant services)
Estimated investment / return for funding that builds a program * (* roi-type calcs, side by side with projected #s FTEs / individuals' barriers reduced over time- (e.g. $100,000 start up toward the ongoing Work Prep program) and, if appropriate, any specific related community savings, eg reduction of recidivism
leading to estimate of lowered re-incarceration costs)
SROI Act [SROI 2.0 product working title]
SROI – What’s Next?Pressures in two directions
OutcomesCost per person per year*
Employment rate Average wage Annual earnings 81% employed within prior 6 months $10.96 Increased $12,800 vs.
before hire ~$4,000-8,000
67% employed within prior 3 months $9.62 Increased $1,270 vs.
control group $32,600
Broad Definition of SROI Narrow Questions Regarding Outcomes and Cost
E.g., “Are the results worth the effort?” E.g., What is the cost per person?
* <_________>
SROI – What’s Next? Questions that further SROI development must address
Investment inProgram X = $___
How do we keep the broad SROI questions in mind (“is it worth the effort?”) while ensuring credible links to the right detailed questions about costand benefit?
Who needs to know and how does the “who” affect what analyses are appropriate?
How can we ensure that rigorous investment and cost analyses are paired with equally rigorous analyses of outcomes?
How can we ensure that the outcomes we cite are generated by the activity we measure?