Download Introduction to Social Return on Investment

Money talks
Social Return on Investment
The economic and social value created by social
firms
Sheila Durie
The SROI Network and the SROI Project in
Scotland
The economic case
The economic case is strong for investment in
social firms and in employing people with
disabilities
In the UK, Government estimates that a disabled
person will stay on long-term benefits for an
average of 8 years, and so every time a social
firm employs a disabled person, we should
count 8 years of benefits saved for the state. In
the UK this would amount to over 70,000 euros
for each disabled employee in a social firm.
Social Value Creation
BUT
There are also benefits to other stakeholders, such as the
people who work in social firms, their families, their
communities, health services etc. Social firms create value
for these stakeholders as well and have potential economic
consequences for local state expenditure, as well as wider
benefits to society
SOCIAL FIRMS CHANGE PEOPLE’S LIVES
The challenge has been to measure these benefits and bring
them into our business case for investment
This is what ‘Social Return on Investment’ is designed to do
Why Social Return on Investment?
• It describes the VALUES of changes to stakeholders by
using financial proxies to represent values not usually
captured in a market economy – social, community and
environmental benefits
• It gives a voice to stakeholders that have been excluded in
the past, e.g. disabled workers in social firms and theirt
families
• It is based on standard accounting and commercial
investment principles
• It makes sense to funders as a way of representing the
value created by an activity and helps communicate of the
value of the work to ‘the people that matter’
• It involves measuring change –what funders are really
looking to invest in
How does it work?
Inputs
Outputs
Outcomes
Impacts
Theory of Change
For each stakeholder (e.g. disabled workers, their families, their
community, their state support agencies, local employers and
businesses etc.) we look at:
Inputs - resources invested in the activity
Outputs – the description of the activity e.g. 20 disabled people employed
Outcomes - changes to people resulting from the activity, i.e., a new job,
increased income, improved stability in life, improved quality of life
Indicators of change – how do we know change has happened
Quantities of change – how many of the stakeholder group experience
change
Financial proxies – how we value the change
Impact = Quantities times proxies, less reductions to reflect that some
change happens anyway and some change is created by other factors
SROI aims to be as robust a
process as possible
• Based on a set of principles
• Based on a consistent process and set of
stages
• Quality assurance processes are now in
place through the SROI Network
Understand what
changes
Value the things
that matter
Only include what
is material
Do not over claim
Be transparent
Verify the result
Case studies from social firms
in the UK
• Six Mary’s Place Guest House
• Solstice Nurseries
• Lawnmowers Independent Theatre
Company
• Millrace IT
• Pack IT
• Overall summary analysis of the benefits
to the state from social firms in the UK
Six Mary’s Place Guest House SROI Study
Six Mary’s Place SROI results
Total value added
Value added per
participant
Potential mental health savings to NHS through
reduced use of services by employees in the social
firm
£424,152
£21,208
Welfare benefits savings to the state
£13,998
£1,029
New tax income to the state
£8,780
£646
Increases in personal income of trainees leading to
improved quality of life
£16,280
£814
Increases in personal income of employees leading
to improved quality of life
£12,199
£897
Total impact in 2006
Investment was £72,258
SROI Index
SROI Index for the NHS
£424,152
£24,593
£5.87
868
Solstice Nurseries Social Firm SROI Study
Solstice SROI results
Total value added
Value added per
participant
Potential mental health savings to NHS through
reduced use of services by employees in the
social firm
£137,420
£11,452
Salary savings to NHS from secondment
£10,396
Welfare benefits savings to the state
£15,085
New tax income to the state
£12,630
Increases in personal income of trainees leading
to improved quality of life
£14,040
Increases in personal income of employees
leading to improved quality of life
£9,996
Disabled people are more socially included
£12,170
£1,014
Total savings for 2006
SROI Index
£211,737
£2.93
£13,636
£1,170
Lawnmowers Independent Theatre
Company SROI study
The Krokodile Krew – hosting
nightclubs and events
Changes that were valued
• Maintenance of independent living
• Costs saved to government in consultancy
work undertaken by Lawnmowers
• Increased earnings of participants
• Value of specialist input on training
compared to other training available
• Savings on day care provision for clients
who were empowered to join
Results
• Lawnmowers returned £4.25 in social value for
every £1 invested initially
• Payback period of 9 months
“This SROI analysis has explored some of the
connections between the social aims of the
project’s work and the economic advantage of
organising support to people with Learning
Disabilities… a standard economic appraisal
used in normal business analysis is not
appropriate here and certainly will not capture
the real value of the work of Lawnmowers.”
Millrace IT SROI study
• Social firm offering computer recycling, in
partnership with a commercial company
• Investigated the incremental costs and savings
of employing disabled people
• Monetised landfill costs avoided, welfare
benefits reductions and tax take increases for
employed staff, and potential NHS savings
• £20,561 average savings per participant from
the NHS
• SROI index of £7.44 for every £1invested
PACK IT SROI Study
• Social firm offering fulfilment services: mailing,
storage, assembly, distribution
• Investigated the incremental costs and savings
of employing disabled people
• Monetised welfare benefits reductions and tax
take increases for employed staff, avoidance of
day care costs, incremental leisure expenditure
• Recognised distance travelled as an important
social impact but didn’t monetise it
• SROI index of £1.90 for every £1 invested
Applying an SROI approach to the
social firms sector in the UK
• Taking the numbers of disabled people in full and parttime employment at the time (2008),assuming 75% were
previously long-term benefit claimants and would expect
to remain on benefits for 8 more years - £30.6million
annual savings to the Treasury
• If all workers experienced the same social inclusion
gains as the workers at Solstice, then another £1m in
value has been created for disabled workers
• If all those with mental health problems working in social
firms experience the same mental health improvement
as Solstice, Millrace IT and Six Mary’s Place, then the
health service in the UK might be saving in the
region of £8.4million each year
Further information on SROI
The SROI Network in the UK is the home of quality
standards and also has European and
international memberships. The website has a
downloadable Guide to SROI:
www.thesroinetwork.org
The SROI Project in Scotland will by the end of
this year hold a databank of indicators and
proxies for use in SROI analyses
www.sroiproject.org.uk