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social
impact:
the foundation of social
return on investment (SROI)
www.neweconomics.org
Chapter One
Introduction
and Purpose
Many organisations have social, environmental and
economic impacts that have an effect on people,
their communities and the environment for the
better. They may be a social enterprise, a private
business, a voluntary organisation or a government
initiative. Some may be large and others run by a
very small group of people. They may work across the
sectors and can have unique objectives or they may
have objectives shared by several other organisations.
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1.1
Chapter Two
www.neweconomics.org
2.1
Chapter Three
Terms
and Definitions
There are 4 main elements needed to measure
social value creation: inputs, outputs, outcomes
and impacts.
Now, these terms mean different things to
different people, so let me clarify how they are
being used here.
Inputs are the resources you need in order to make
something happen. Theyre measured as a cost.
For example, the cost of equipment for running
a computer training programme.
Outputs are the direct result of your business
objective or programme goal. So for example,
25 people learned new computer skills as a result
of your training programme.
An outcome is a change that has occurred over the
longer term. So for example, the number of people
that started work and improved their personal
circumstances as a result of the training programme.
This outcome can be measured in their own terms,
for example, the value of their increased income.
It could be measured from the perspective
of a different stakeholder like the government.
In this case, the value of the outcome would also
include increased taxes paid or reduced support
payments by the state.
Key Terms
Inputs
Outputs
Outcomes
Impacts
www.neweconomics.org
3.1
Chapter Four
What Gets
Measured,
Gets Valued
The first thing that needs to be decided in any
organisation is What outputs do we measure?
Well, Im joined by Gabin Sinclair from Ocean, an
independent music venue in Hackney, East London.
Hes going to tell us about their experience.
Jessica Boyd: Hi Gabin, could you start by telling
us a bit about Ocean?
Gabin Sinclair: Well Ocean is a state of the art music
venue, with the vision of contributing to Hackneys
regeneration through music.
JB: So you could say that youre helping to improve
Hackney as a place to live and work. Thats a pretty
big goal.
GS: Thats right, but we believe that creating
a vibrant music scene, one that the local
community can participate in, will help regenerate
that community. Getting young people involved
is particularly important.
JB: So, how do you go about doing this?
GS: Ocean brings in musicians who otherwise
wouldnt be seen or heard live. Giving them the
opportunity to perform, helps them to be noticed.
We also work with other community groups who want
music to be a part of their programmes. Ocean also
runs Rising Tide which is our education programme
with a more focused target group most of the
students on Rising Tide programmes are aged
between 16 and 22.
JB: I see, so what outputs do you actually measure?
GS: Well, our outputs are the participation rates
or you could say, the number of people attending
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... Continued
4.1
Stakeholders (external)
# of people at community
and music events
# of people enrolled
in programmes
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4.2
Chapter Five
Value is in
the Eye of the
Stakeholder
As Gabin explained to us, looking at your outputs
can help demonstrate how well youre meeting
your objectives.
www.neweconomics.org
Value is in the
Eye of the Stakeholder
Identify and prioritise all your stakeholders
Consult with them (where possible) to identify
common priorities
Measure progress towards achieving your objective
Understand how their objectives match or conflict
with your objectives
Tell your stakeholders what you are doing well,
where you could improve and your future goals
... Continued
5.1
JB: Would you say that your objectives have ever been
out of step with a key stakeholder?
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5.2
Chapter Six
Social Return on
Investment
Weve looked at measuring outputs and identifying
outcomes in relation to the objectives of different
stakeholders. Were now going to look at monetising
the value of social impacts.
Im going to hand over now to Jeremy Nicholls from
the New Economics Foundation and to Stephanie
Robertson... and they will introduce Social Return
On Investment.
Jessica Boyd: Hi
Social Return on
Investment
www.neweconomics.org
... Continued
6.1
www.neweconomics.org
Outputs
51,000
110 clients
involved in
programme
Outcomes
Direct 19
clients gain
long term
employment
(increased
wages, reduced
state benefits
paid)
Indirect
15% reduction
in re-offending
Impacts
Direct 17
clients into long
term
employment
(deadweight
accounted for)
Indirect
15% reduction
in re-offending
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
3,670
3,830
3,990
4,150
4,320
Employment: to state
8,940
9,050
9,150
9,270
9,380
Reduced re-offending
96,216
86,647
... Continued
6.2
GOTWs SROI
Monetary value of impact
543,000
Investment
SROI Ratio
51,000
10.5 : 1
SROI Review
The SROI ratio helps to tell your story,
it is not the whole story!
Set objectives and identify output indicators
Think through outcomes. Decide which can be
measured and monetised. Find data
Calculate outcome. Subtract deadweight
to illustrate impact. Check your assumptions
The SROI ratio is the total monetary value
of impact, divided by the investment
www.neweconomics.org
6.3
Chapter Seven
The Essentials
and Further
Resources
It certainly makes sense to me. I need to decide
how to measure outputs against my objectives so that
I can monitor how well I am achieving these.
www.neweconomics.org
The Essentials
Understand stakeholder needs and match them
to your organisations objectives
Decide how to measure outputs against
your objectives
Putting yourself in your stakeholders shoes can lead
to new ways of understanding value creation
Report on the whole process, not just the numbers
Government statistics and other data can be used to
calculate how you create social impact*. Dont overstate what was actually achieved
7.1