Social Return on Investment Measuring the added value of social projects the Equal SROI pilot programme in Scotland

1. Social Return on InvestmentMeasuring the added value of social projects –the Equal SROI pilot programme in Scotland Sheila Durie Haldane Associates/Forth Sector

2. What is Social Return on Investment? A way of representing the monetary value of social, community and environmental impacts A methodology based on standard accounting and commercial investment principles A way of combining economic, social and other results from an investment into one index of ‘blended value’ Particularly appropriate in measuring social enterprise impacts

3. What is Social Return on Investment? Standard process and series of stages: Understanding scope and boundary issues Stakeholder analysis Develop an impact map (i.e. linking stakeholder objectives with outputs and impacts) Identify appropriate indicators Collect monitoring information on outcomes Collect financial information Desk research to find financial information on indicators, unit costs and benchmarking data Calculate SROI Do a sensitivity analysis and articulate assumptions Produce an SROI report

4. Structure of the Equal pilot Funded by the European Equal programme through the Social Economy Scotland Development Partnership Match funded by Communities Scotland Management and administration by Forth Sector Delivery by Haldane Associates and Forth Sector Peer support from New Economics Foundation and the European Social Return on Investment Network

5. Aims of the Equal pilot To help 12 organisations embed the SROI approach within their organisation and publish SROI reports To focus on Wider Role projects supported by Housing Associations and social enterprises funded by Futurebuilders and Social Investment Scotland To learn about the issues involved in adopting the SROI methodology To develop common methods for financialising social and environmental value that will make it easier in future to implement SROI in other organisations To determine what, if any, role SROI can have in future investment and grant decision making, and improving understanding of ‘sustainability’ Developing better methods for stakeholder analysis and impact mapping Development of innovative methods for measuring value in some key areas, such as employability

6. Lessons learned from 2004/05 work Start up social enterprises have a number of difficulties in undertaking SROI: immature financial systems lack of participant monitoring information ‘fuzzy’ objectives expressed by stakeholders They may be enthusiastic about the SROI concept, but are actually not ready to engage This means that any SROI analysis will make many assumptions, and that SROI should be repeated over a longer period, with more information collected Value changes, and most likely reduces, over time. Most of the value appears to be created in the start up phase, unless participants are moved on regularly Many organisations see SROI at first sight as being time consuming and ‘difficult’

7. One of the original case studies – Re-Union Canal Boats Ltd

8. What was measured and financialised Increased earnings potential of the social entrepreneurs Personal and social development of the volunteers The increase in the boat value arising from the volunteer input Local economic impact through purchasing Impact on trip participants Community benefit from improved canal access Deadweight was current rates of volunteering in the community

9. Benefits that could not be turned into money at the time Improvements in well-being for trip participants Environmental benefits from increased canal use (e.g. keeping the canal clear) Increased environmental awareness amongst disadvantaged residents, resulting in less damage and vandalism on the canal Increased perception of community safety alongside the canal

10. Results

11. SROI analysis

12. The Equal pilot organisations Cunninghame Housing Association/Impact Arts The Wise Group/Cadder Housing Association Grampian Housing Association/Solstice Nursery Home Support Scotland YMCA Perth Subliminal Directions Factory Skatepark Forth Sector (Six Mary’s Place Guest House) Kibble Works social enterprise model Kibble Community Warehouse SROI analysis on an individual participant

13. Areas of activity within the pilot organisations Young disadvantaged people: improving employability improving educational attainment reducing anti-social behaviour Stabilising young homeless people Retaining older people in their homes People with mental health issues: improving employability supported employment improving well-being Moving long-term unemployed people into employment Youth work in the community Recycling

14. Measurement methods developed Financial proxies and benchmarking for: Employability and ‘distance travelled’ Individual personal and social development Impacts on referral agents and partners Social networks/social capital Mental health gain

15. Features and lessons from the SROI work Finding a methodology of valuing social impacts that operates within a disciplined framework which minimises subjective judgements There may be compatibility between any criteria that are developed to identify investment readiness and readiness to participate in SROI: good financial systems organisational stability and procedures management commitment monitoring and evaluation framework understanding of social impacts

16. Features and lessons from the SROI work Making SROI more accessible and easier to implement, through common indicator banks and common methods for valuing common social impacts, will enable more organisations to use it in future SROI appears to build on other methods such as social auditing which are being used more extensively in the sector, but work in the pilot suggests overlap is minimal SROI can get the social enterprise sector used to technical investment language Understanding stakeholder value is key to building a more effective business case Many funders are expressing an interest in understanding SROI, and using it in decision-making