Social Return on Investment Return on Investment ROI Belsif

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					                                                  Return on Investment (ROI)
                                                   Every investment requires a profit
                                                   Profits are in the future: investing
              Social Investment and
                                                   is risk-bearing
               Performance Measurement
                                                   Forcast costs and benefits
                                                   Select best option

              • BELSIF, Brussels
              • 19th May, 2005.

Blended Value                                     Social Return on Investment
 Every enterprise – profit and nonprofit           A quantitative measure of social
 – creates value: financial and social /           impact from a capital investment
 These values may be positive or
 negative                                          Results-oriented instead of process-
 Social and Financial Profits                      oriented
 Optimize the mix                                  subsidies and grants are capital

Goals of SROI-research                            SROI Methodology
 Management-tool for social entrepreneurs          Scope (project/business)
    Track financial and social performance of a    Stakeholder-analysis
   social enterprise
                                                   Impact and indicators
    Attract (new) investors
                                                   Analysis of all costs and benefits
    PR/marketing and reporting
                                                   Projections of social results
 Instrument for (social) investors
                                                   Accounting social value
    the (future) value of their investment

Social Impact                                          Example Jobcentre
 Input                                                  Input: number unemployed people (100) +
 Activities                                             Activity: employment-finding by jobcentre
 Output: “Bucks and Acres”                              Output: number of newly employed people
 Outcome: all sustainable results                       (50)
                                                        Outcome: number of employed people that
 IMPACT (Outcome minus ‘what would                      got a sustainable job (25)
 have happened anyway’:                                 Impact: number of people that would have
 “deadweight”).                                         found a sustainable job anyway, without the
                                                        support of the jobcentre (10)

Indicators                                             Projections
 Set indicators for impacts                             Monetize indicators in euro-value
 Make these indicators SMART                            Make multi-year-projection of social
 (Specific,Measurable,Acceptable,Realistic and Time)    costs and benefits
 in order to:                                           Apply investment-selection-methods
    Translate indicators in costs and benefits            Payback-period
    Put metrics in context                                Internal Rate of Return IRR
                                                          Net Present Value

Social costs and benefits                              Discount-ratio and risk
 Costsavings:                                           The percentage with which future
     less social allowances                             cashflows are discounted to calculate
     lower crime-rates                                  present value
     Increased social participation                     Statebonds: 4-5%;
     Less hospital-days                                 high risk investments + 20%;
     Lower polution/less emissions, etc.
                                                        Shareholder-value: “shareholder-price
    Increased tax-income
                                                        is what you pay, shareholdervalue is
    Increased wages
                                                        what you get”

    Guidelines for SROI                                        Critics on SROI
•    Include both positive and negative effects in the          Strategic
     assessment.                                                   Do you really want to know the impact of a social
•    In any quantification, include only impacts that are         investment?
     clearly and credibly attributable to the venture.
•    Put metrics into context to give the value of the
                                                                  Is it acceptable to use DCF on virtual money
     numbers meaning
                                                                  How to calculate attribution and deadweight
•    Be clear about all assumptions, address the riskfactors
     and include a sensitivity analysis.                        Practical
•    Include a plan for ongoing social impact tracking.           Costs / time
                                                                  Implementation / regular accounting
                                                                  Other PM and Quality-systems

Source: Olsen and Lingane, San Francisco, 2004.

                                                               Valid Express

                            • Valid Express
                            • Restaurant Fifteen
                            • GOTW (nef – England)

    Valid Express - results                                                    Restaurant Fifteen

     Financial Value / ROI
         402.000     / 1.79
     Social Value    / SROI
         2.242.000 / 13.19
     Blended Value / SROI ratio
         2.644.000 / 6.69
     Number targetgroup-employees: 22
     Percentage targetgroup-employees:

Fifteen - Results                     GOTW – nef England

 Calculated social costsavings per     Incremental social value created by the GOTW
                                       programme £ 492,000, or £ 4,470 per client.
 employee: 8.367                       The projected SROI ratio is 1 : 10,5
 Number of t.g.-employees: 15 per ½    Payback period: 9 months, based on 17 clients
 year                                  in sustained employment
                                       Required number of clients to break-even on
 Total Annual costsavings: 251.010     the programme investment is 13 clients
 Financial results projected
 break even after 2 years              info:

 SROI ratio: 1 : 8.3

Belgium                               European SROI Network (ESROIN)

 SROI-Pilotproject by Hefboom          Researchprojects in
   (together with HIVA-Leuven and          UK: England, Scotland and Ireland
 6 social enterprises                      Netherlands + courses
 Results expected autumn 2005              Germany
                                       Global SROI-conference Brussels 2006
                                       Social Venture Competitions

              PO Box 59695
           1040 LD Amsterdam
             The Netherlands
           Tel. +31-20-4894364


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