Social Return on Investment Valuing what you do Guidance on understanding and completing the Social Return on Investment toolkit for your organisation 60838 SROI v2.indd 1 07/03/2013 16:50
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Introduction Why should we do it? Everything we do causes a change in the world around us. For most voluntary and community sector organisations their aim is to make a positive change and create social, community or environmental value. This is a change that isn t about how much money you can make but rather about changing lives, communities or the environment. It can be quite difficult to measure how much social, community and environmental value a project makes. There is no well known system like there is in finance to measure how much added value or profit is being made. However, in a challenging funding environment it is becoming increasingly important to be able to prove that what you do has a value, and how much. You need to prove that you have a project that is worth investing in, making things better for the environment or community even when it is not immediately obvious in terms of profit. Using a method of measuring the value you create can help to provide valuable evidence for decision making and put you on equal footing with other budget demands by giving a full picture of what goes on. Worcestershire County Council 2012 3 60838 SROI v2.indd 3 07/03/2013 16:50
How will we do it? To help value what you do we can use a method called Social Return on Investment. This method tries to help you to measure the changes you create and to give them a financial value. We use a financial value because money is something which most people from the general public to commissioners understand. This can help make your results easier to understand. For example, it may be easier to understand the value of 1,000 saved on psychiatric hospital treatment compared to the value of 3 people with improved mental health. This support package has been produced to help explain and guide you through the process of Social Return on Investment. It includes documents explaining the process, forms to help you collect the data you need and a spreadsheet to help you calculate the overall result. Who will do it? The idea is to provide a suitable support package so that organisations will be able to work out their value themselves. There are many benefits to carrying out the work yourself: You know your organisation better than anyone else so you will know the full range impacts you have. You will benefit from the learning and understanding you gain of where other people value what you do. It may help you to improve or create a monitoring framework to help you collect the information which helps you to prove your worth. 4 60838 SROI v2.indd 4 07/03/2013 16:50
Method and Principles Social Return on Investment is a method to help guide your thinking about your project and what you do. It helps you to think about the changes your activity makes and tries to measure this change so you really can measure and value the impact you have. The method itself is a simple one however it is not always easy to do. To measure your Social Return on Investment you need a good understanding of your project and also a selection of data and information about what it does and the effects it has. The amount of this information you already collect will have an impact on how easy or hard you find it to measure your Social Return on Investment. Principles Social Return on Investment is an established methodology used around the world which has some important principles it is useful to follow. Only include what is material - You do not need to include absolutely every impact that your project produces. You should decide which effects are the biggest and most important and include these. Don t over claim - The process of Social Return on Investment means that you will have to make some decisions or assumptions about what you include, how you measure things and what value you give them. It is very important when you are making these decisions that you are realistic about the amount of change which is caused by you. You need to be careful not to over claim. You may need to think about what would have happened anyway without your intervention. Be transparent - Where you have made decisions or assumptions about what to include in your Social Return on Investment you need to be transparent about this. You may need to explain your reasons behind decisions so that anyone looking at your results can see what they are based on and why. Worcestershire County Council 2012 5 60838 SROI v2.indd 5 07/03/2013 16:50
What you need to know To work out the value you create we need to look in detail at what you do and the impacts you have. To do this there are four questions you will need to think about. Who do you affect? Which groups of people experience a change because of your activity? These are your Stakeholders What effects do you have? What actually changes for these people because of your activity? These are your Outcomes How do you know something has changed? We need to count, measure or ask something which shows that a change has happened. These are your Indicators How much is that change worth? We need to give that change a value In Social Return on Investment this value is in terms of money In many cases the outcome will not already have a defined financial value, so for these we need to think of something else we can use to give it a value we call this a proxy. We use a Proxy to help us put a monetary value on things which don t already have one. We have developed a Social Return on Investment Family Tree which shows you how the overall Social Return on Investment is built up from a series of smaller pieces of information. Outcome Indicators Proxy value PROJECT Outcome Indicators Proxy value 6 60838 SROI v2.indd 6 07/03/2013 16:50
Identifying & Measuring Outcomes Some organisations will already have an identified set of outcomes they produce and they may be collecting information to measure how many outcomes they are achieving. For some other organisations identifying and recording outcomes may be a new thing, but it is an important part of Social Return on Investment and of valuing what you do. Identifying Outcomes As part of your Social Return on Investment you will need to think about your project activities and identify and measure the outcomes you produce. Even if you already have a set of outcomes identified which you measure it can be worth going through the process of thinking about your changes and coming up with outcomes to see whether you have already identified all of your organisation s important outcomes. Outcome result of activity what actually changes e.g. young person is able to access employment. There are two bits of information which you probably already have which can help you to identify what your outcomes might be. These are your aims and your outputs. Aims Aims are your plan for what your project is meant to do. They show your reason for being and what you hope to achieve. You probably already have a set of 3 or 4 statements which describe your aims. These statements describe what you hoped to achieve so they can be a good start for thinking about what actually changes Aims A set of over-arching ideas of what you plan to achieve e.g. to set up a local meeting place to reduce social isolation. Worcestershire County Council 2012 7 60838 SROI v2.indd 7 07/03/2013 16:50
your outcomes. You should think about whether you are achieving what you planned and whether this is broken down into smaller chunks - what changes are there which help you achieve your Aims. Outputs The second bit of information which may help are your outputs. These are the activities which you deliver, such as providing a training course or holding a youth group once a week. Each output is delivered with the idea of bringing about a change so you need to think what changes actually result from your outputs. For example why do you deliver a training course? The change you hope for your outcome is that the recipient is able to get a job. Output activities delivered e.g. 15 hours of mentoring A final effective way to identify what changes for people is to just ask them. Get your stakeholders involved and ask them what changed for them as a result of using your project. This can be very good for identifying the unintended outcomes which you hadn t planned for but which happened as a result of your activity. These unintended outcomes can be either positive or negative but it is important to try to include them in your analysis even if they are negative. There is a lot of information available about understanding outcomes. The Charities Evaluation Services have produced a useful guide which can help if you want more information and help on how to identify and measure the outcomes for your project. It can be found free online: http://www.ces-vol.org.uk/ downloads/yourprojectanditsoutcomes-139-146.pdf. They also have a number of case studies online covering the overview of a project and the outcomes which were identified for it available here: http:// www.ces-vol.org.uk/index.cfm?pg=310 8 60838 SROI v2.indd 8 07/03/2013 16:50
Measuring Outcomes This is where the process can become a bit trickier and a stage which many organisations are at. You have now identified what changes as a result of your activities, now you need to work out how much change there is or how many people experienced it. For this we need to find an indicator for each outcome. So imagine an outcome for a stage school perhaps young people gain acting experience a suitable indicator which we can use to measure this might be the number of people aged 10-25 who took part in productions. This is something specific which we can count we have set age boundaries so we know what we mean by young people and we know we will be able to get hold of this data. Indicator something which is specific and measurable which can be used to prove whether an outcome has occurred When thinking about your indicators it can be useful to think about what data and information you already collect. Some of this may already contain what you need to show a change has occurred. Sometimes you may not already have the information that you need and you might need to actually do research or set up a process to collect it in the future. This may in particular involve doing more evaluation after an activity has been delivered, such as conducting surveys a couple of months after a client has completed a training course to see whether they are now in employment. Before and after Testing or recording a factor, such as confidence or fitness, before someone joins a project and then again after they have taken part in an activity can actually demonstrate the change that has happened. This is something which very few organisations are doing already although it provides an excellent Worcestershire County Council 2012 9 60838 SROI v2.indd 9 07/03/2013 16:50
indicator. It could be worth thinking about starting this sort of monitoring for your organisation if you wanted to be able to regularly prove the value you create and show you have a good evidence base behind the results of your Social Return on Investment. Surveys or interviews If you are unable to measure before and after then it is possible to use the clients own knowledge of what has changed as an indicator. You could use a survey or interview at the end of a project to ask a client if they now feel fitter or healthier this can be effective but it does rely on the client recognising the change. You may find that there are some outcomes that you cannot find a suitable indicator for. Here you have two options, you may wish to keep the outcome as it is but explain that you were unable to measure it. There are some things that it just may not be possible to measure or that you don t have the time or resource it would take to collect. Or alternatively if you think the outcome is too important to exclude it s value you may want to go back and redefine your outcome slightly to something which you can find an indicator for. This might mean you don t capture the whole value but this may be a better solution than not including any of the value by leaving it out. Recording the information A table has been included with this support package which can help you record all the information which you are collecting around stakeholders, outcomes and indicators. You do not need to use this table but it might be useful in structuring the work you are doing and showing you which outcomes you still need to find indicators for etc. There is also space in the table to record the source of your indicator so you know where you are collecting your data from. 10 60838 SROI v2.indd 10 07/03/2013 16:50
Giving it a value The next stage in the process is giving your outcomes, which you have now identified and measured, a financial value. This is probably new to any organisations who haven t been through the process of a Social Return on Investment analysis before and can be tricky. In many cases the outcome will not already have a defined financial value, so for these we need to think of something else we can use to give it a value we call this a proxy. Proxy an implied value through association or relative to something else. A proxy is a value of one thing which we use to suggest a value for something else. We look for something similar which does have a market value to give us an idea of the value of our outcome. For example we could use the market value of driving lessons to suggest a value for the benefit of being able to drive. Proxy Bank We are developing our own bank of proxies in Worcestershire. This will contain a selection of proxy values which have been agreed as a suitable value to use for a particular outcome. This might contain values you need for your analysis. This bank also includes references to sets of standard costs such as costs of particular crimes, or of health or social care appointments or treatment which might be helpful. We aim to continue to build up this proxy bank with more values over time. From previous Social Return on Investment projects around the UK there is also a national indicator and proxy bank which could help you to decide how best to value your outcome. See: http://www.sroi-uk. org/vois-database. This also only contains a limited number of different outcomes at present. Worcestershire County Council 2012 11 60838 SROI v2.indd 11 07/03/2013 16:50
Thinking of your own proxy For those outcomes where there is not already a suitable proxy it may be necessary to try to think of your own proxy. It can help by starting to think about what would have happened if the outcome had not occurred? We may be able to work out the cost of the consequences of the outcome not happening in order to come up with our proxy value. For example: Without being able to make new friends through a group they attend, older members may suffer adverse effects on their mental health, such as depression, in this case the cost of the treatment for depression, including doctors appointments and medication could be a proxy for the outcome made new friends. Another approach you could take would be to think about what would we have to pay to achieve the same results? For example Thinking of a local amateur acting society called The Stage Society : For young people one of the outcomes identified is that they gain acting experience. Another way to gain acting experience could be through attending acting classes or theatre school. So in this case the value of gaining acting experience is taken as the cost of attending acting classes to achieve this outcome in a different way. 12 60838 SROI v2.indd 12 07/03/2013 16:50
You may need to take this second approach if you find that you are unable to find a suitable proxy to value the consequences of an outcome not occurring. For example For a service stimulating older people s memories: The consequences of deteriorating memory may be that a person is less able to live independently and requires additional care or even residential care, however the uncertainty in what type of extra care a person might need might mean that it is not possible to put a single value on the consequences of deteriorating memory. Instead we can use the other method and use the cost of a service to improve memory for example a game to improve memory as the best value of a proxy that you can find. You may find that in some cases this is undervaluing the outcomes you produce, however in some cases this may be the only option if information simply isn t available. Remember your stakeholder When valuing the outcomes it is important to keep in mind the stakeholder as the suitable proxy may be different for different stakeholders. The example above around depression and making new friends may be more suited to a group of older people who might otherwise be socially isolated than the working population who may be more likely to interact with people regularly. Worcestershire County Council 2012 13 60838 SROI v2.indd 13 07/03/2013 16:50
Working with the Toolkit If you have worked through identifying and collecting your outcomes, indicators and proxies then you should now be ready to calculate your Social Return on Investment using the spreadsheet toolkit. This document helps guide you through putting the information you have collected into the toolkit. Project Details - Defining scope The project details tab is where you can set out the details of what your analysis covers. This is particularly important if your organisation carries out a number of activities or if you are only doing the analysis on a particular part of what you do. Clearly defining the scope helps you or anyone else looking at the analysis understand exactly what was included and what wasn t. There is also space on this tab to record the aims you identified as well as the stakeholders who you considered to be important. The Analysis Period defines what period of time you want to calculate your SROI over. If your project just lasts for 6 months and you want to calculate the SROI for the whole 6 month project you should enter 6 months in these boxes, similar if it is a 3 year project you can enter 3 years for the toolkit to calculate the SROI for the whole 3 year project. Commonly organisations want to calculate the SROI for an activity which they do continuously over no set time period. In these cases it is common to do an SROI analysis to look at 1 year of activity so that you are able to say that your activity produces a net benefit of x per year. When entering the Analysis Period, remember to enter the time period as a number in the left hand side of this box AND the type of time period from the drop-down list (e.g. one-off, months, years) in the box on the right hand side. If you do not enter anything in these boxes the toolkit with use a default value of 1 year. 14 60838 SROI v2.indd 14 07/03/2013 16:50
Inputs The Inputs tab is where you record any investment made in your project. Some inputs may be financial, in the form of grants, donations or income made from charging. Some inputs into the project may not already be in financial form, for example the time given by volunteers, or services or goods donated. For these factors we will need to give them a financial value, for example for volunteer time we can look at a suitable hourly rate for that time if it was paid for. For each input you include you will need to select the input type from the drop-down box, the financial value it is given and the time period this cost applies to. You should only include the inputs which go towards the activity you are doing your analysis for. This is more important if you are only doing the Social Return on Investment for a small amount of what your organisation does. Benefits Calculations Measuring Outcomes The Benefits Calculation tab is where you record all the details of the value that your project creates. It is here where you record your outcomes, the indicators of how you measured them, and the proxy value you assigned to each one. For each outcome record the name of the outcome in the outcome column and the indicator you used to measure it in the indicator column. Next you are asked to select which of the five benefit categories in the drop down that each outcome most belongs to. This can be valuable when looking at the results to see which areas most value is created in for the project. Worcestershire County Council 2012 15 60838 SROI v2.indd 15 07/03/2013 16:50
Once you have selected a benefit category a number of the boxes will turn a bright red colour. This is to show you which boxes must be filled in for the calculation to work and for the toolkit to produce a result. Bright red boxes must be completed The column quantity requires you to have collected quantitative data about the number of times the outcome occurred, which in most cases will mean the number of people who experienced it. While thinking about the outcomes you also need to think about how much of the change observed is due to your intervention as opposed to an activity by somebody else. This is called your Level of Impact in the toolkit. For example 10 people may have achieved an outcome but how much was this a result of you action and how much might be due to other influences? You need to think about what would have happened anyway so that you can work out how much impact you had. The toolkit contains a drop down box where you can select the level of impact which you think your project had as low, medium, high or very high. If you select low this means you think around 25% of the change was due to your activities, medium means 50%, high means 75% and very high means 90%. You may need to provide evidence to demonstrate your level of impact. The evidence you need to provide is different depending on the level of impact you claim to have. There is a hierarchy of evidence where more robust evidence is required for higher claims of impact. This is shown in the diagram over the page. 16 60838 SROI v2.indd 16 07/03/2013 16:50
Level of Impact Evidence Required Very High Study of large sample High study of small sample Medium Case Studies Low Expert opinion Benefits Calculations Valuing Outcomes The next stage is in valuing your outcomes. There is space to record the proxy you used for each outcome, its value and the period this covers, e.g. per year, per month, per week. When thinking about the proxy value and the period it covers you need to consider how often that value will apply. For example if your outcome is improved health and the proxy you are using is the cost of a visit to the doctors at 39 per session, you need to consider how many trips to the doctors you have prevented. If you think you have saved perhaps one trip a month then enter Month in the Cost per column. If you think you have saved one trip a year then enter Year. Worcestershire County Council 2012 17 60838 SROI v2.indd 17 07/03/2013 16:50
Another example could be where attending a social group prevents someone having to use a day care one day a week. Your proxy could be the cost of a day of care, but because you are saving one day a week you would enter per week in the Cost per column. If you entered per day instead then the toolkit would include this proxy 7 times each week which would considerably over estimate the value being produced. For the final stage of the benefits calculations you will need to think about how long the outcome will last for. For example training may help someone into employment which may last for a number of years, however, over time experience in the job may have more impact than the initial training so the effect does not last forever. The length of time which an outcome lasts for is to be recorded in the column duration in years. You can enter any value in this column up to 5 years. Some effects will not last beyond the length of the intervention these should be recorded with a one year duration. An example of an outcome which doesn t last beyond you period of intervention or support might be the example around a social group preventing the need for day care if the socialgroup was no longer there then the person may need something else to do in the day which might have to be day care, therefore the outcome does not last beyond the intervention. For many outcomes however the effect will outlast the period of intervention so you need to be careful not to confuse the amount of time your project runs for with the amount of time an outcomes will last. For any outcomes which last more than one year in duration it is important to consider if the effects will be just as strong in subsequent years or whether there will be a drop-off. For example a person may gain knowledge about first aid from a training course which lasts longer than the length of the training course so the duration in years is recorded as 4 years. However, each year that passes the person is likely to remember less and less of what they learned so the amount of knowledge they have falls or drops-off each year. 18 60838 SROI v2.indd 18 07/03/2013 16:50
You will need to consider whether the drop off is low, medium or high. If you think there will only be a small reduction in the effects you should select low this translates to a drop off of 25%. This means that the effects in year 2 are 75% of the effects in year 1. Selecting medium means there will be a drop off of 50% so that in year 2 the effects are just 50% of what they were in year 1. Selecting high means there will be a drop off of 75% so that in year 2 the effects are just 25% of what they were in year 1. So in our first aid course example we decided that they might forget 50% of what they learnt each year, so we entered medium in the drop off box. This means that in year two they just remember 50% of what they learnt in the training course, in year three they remember 25% and in year four they remember around 12.5%. Notes and missing data To the far right of the benefits calculation table there is a column called notes. This column is for you to use if you wish to make any notes. Anything you enter in here will not affect the calculation but it may help you to remember or a reader to understand your data. It can be really helpful to include the source and thinking behind the proxy you have used in this column so that anyone looking at the data can see that you have used a sensible and appropriate value. We know that there will be times when you know your organisation is delivering a particular outcome but a lack of data may mean you don t have all the information you need to include it in an SROI calculation. This might be because there is no suitable monitoring data or you do not have a suitable proxy. Below the main benefits calculation table there is a smaller secondary table which is laid out in the same way. This secondary table is there for any outcomes you wish to be recorded but which don t have the full information to be included in the calculation. Data in this secondary table will not affect the SROI calculation. Worcestershire County Council 2012 19 60838 SROI v2.indd 19 07/03/2013 16:50
Toolkit Troubleshooting Problem Bright red cells have appeared on the benefits calculation tab. Solution These cells need to be completed with the relevant information. Once you have completed these cells the bright red colour will disappear. If you are unable to complete all of these cells in a row then you will be unable to include this outcome in your calculation and will need to delete the information in this row. Problem The toolkit has not produced any results and shows an error in the results box on the results tab. (see picture). Solution Check that you have entered some information on the benefits tab. You must enter at least one outcome for the toolkit to calculate the results properly. Check that there are no bright red boxes on the benefits calculations tab. These must be completed for the calculation to work (see above). Check that you have selected one of the five benefit categories the calculation will not work if you have not selected one of the categories. 20 60838 SROI v2.indd 20 07/03/2013 16:50
Results what do they mean? Once you have been through all the stages of the Social Return on Investment process and put all of your data into the toolkit you will be presented with a result in the Results tab of the toolkit. It is important to understand what these results are telling you so you know how to use them when reporting the value your organisation makes. Very simply the toolkit compares the value of inputs into your project with the value of all your benefits your positive outcomes. If your organisation is adding value you would expect the value of the benefits to be larger than the inputs. The main result of a Social Return on Investment analysis is the Net SROI Ratio. This is essentially the ratio of your benefits to your inputs. This is presented in the box at the bottom of the results tab. In the example below there is a net SROI ratio of 4.14. This means that for every 1 that is invested a value of 5.14 is produced giving a net added value of 4.14. The box below shows the results for a project as they would be displayed in the toolkit. The payback period tells you how long the project would need to be running before the value of the benefits would be more than the inputs. In this case after just 3 months your project would be creating more benefits than the amount invested. The value of 22,521 is the total value of the benefits the project would create if it was run for 1 year. When you entered your benefits into the toolkit you were asked to assign each outcome to one of five categories. The toolkit produces a chart to show you which areas your project is contributing most value to. Worcestershire County Council 2012 21 60838 SROI v2.indd 21 07/03/2013 16:50
Uncertainty Because a number of aspects within the model are based on assumptions the result given should not be treated as an absolute and precise value created, but should instead be conveyed as a best approximation of value based on the evidence submitted and assumptions made. An element of uncertainty has been built into the model results this is based around the Level of Impact. This is one aspect which is considered to potentially have the highest level of uncertainty. The range of results is produced using a range of 10% around each level of impact selected for each outcome. However, you should also remember that your Social Return on Investment is more than just a number or a ratio; it is also about understanding the outcomes you produce and the difference this makes to people s lives, communities or the environment. SROI can be one of a range ways you may wish to communicate this value. Uncertainty Range* Net SROI Ratio could be between 3.97 :1 and 4.31 :1 Value of running the project for 1 Year 22 60838 SROI v2.indd 22 07/03/2013 16:50
Glossary Aims The aims are a set of over-arching ideas which a project hopes to achieve. For example: To run an older people s social club to provide a place for older people to meet friends, get out of the house and reduce social isolation. Stakeholders These are the groups of people who are affected by your activity. For example stakeholders for an older people s social club may include: older people over 60, staff, volunteers and family or carers of the club members. Outcome Description of what actually changes for the stakeholders. These can be different to the aims of the project and can be positive or negative. They may also affect a wider range of stakeholders than those who the project is specifically targeted at. For example: an outcome for the volunteer stakeholder group is that they are Healthier. Outcomes may quite closely reflect the project aims but are often in smaller chunks and look more closely at what changes for that stakeholder group. Worcestershire County Council 2012 23 60838 SROI v2.indd 23 07/03/2013 16:50
Indicator This is something which is specific and measurable which can be used to evidence whether an outcome has occurred. For example with our outcome Healthier volunteers a suitable measurable indicator might be Volunteers reported increased physical activity of 3 hours per week since volunteering. Proxy value As many of the things we include in the analysis will not have an easily defined financial value we use the financial value of something else to try to give us a suitable financial value for the outcome. We call this a proxy. A proxy is an implied value through association or relative to something else. So for our outcome/indicator we need to think how we could reach the same outcome if we paid for it. For example with our healthier volunteers doing more physical activity they could also do more physical activity if they paid for a gym membership. As a gym membership has a defined financial value this would be a suitable proxy. We assign the annual financial value of healthier volunteers the same financial value as an annual gym membership. 24 60838 SROI v2.indd 24 07/03/2013 16:50
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