Transcript Slide 1

Why SROI?
Why should I care?
What will SROI do for me?
Social Purpose Enterprise Managers Forum
March 27, 2009 at SiG@MaRS, Toronto
1
Presentation Agenda:
1.
2.
3.
4.
5.
6.
Start with philosophy – what do you believe
What do you need to know
What do others need to know
How can everyone find out
2 cases – Renaissance in Montreal; TurnAround
Couriers in Toronto
SROI in Canada – what’s happening?
2
The big questions……
SE performance measurement starts with philosophy - the existential questions need
to be asked and answered

Why are we doing this – or for a start up … why do we want to do this?

Who or what does this enterprise benefit?
What do we – as founders, leaders, managers – of this enterprise need to
believe to go down this path?


How can we transform these beliefs into goals and action?

How and to whom should the value of this SE be communicated?
3
Why Measure
3 reasons:
1.
Establish a process to compare against set goals and progress towards
meeting those goals – how well are we doing?

Take ownership of your value creation

Turn the power dynamic btw funders and SE operators on its head
2.
Create a framework from which to internally and externally communicate
outcomes or results
3.
Establish an ongoing mechanism to engage stakeholders in the value of your
mission and enterprise activities
The trick with performance measurement is to frame it as a means to an
end, not an end in itself. PM is about learning and learning how to get
better. It is not about pointing fingers and blaming people when things
don’t go as planned.
4
Process and Methodology
First step is to jointly agree on specific strategic issues – for both social and
business missions - to address.
For the social mission we begin by seeking the answers to the following questions:
1)
2)
3)
4)
5)
1) Who are - or will be - the target employees?
2) How is the social mission currently being managed?
3) How should social mission success be defined?
4) What social support infrastructure is or should be in place?
5) How much should be spent on social costs ?
5
SROI Report Card: Year End
Social Enterprise X: Social Mission Overview
Goals
Methods
Success Metrics
6
SROI Report Card: Year End 2006
TurnAround Couriers: Social Mission Overview
Goals
Methods
Success Metrics
• Hire couriers and office
administrative staff from
disadvantaged youth
population
• Recruit youth from youth
shelters and youth
serving agencies across
Toronto
• Youth are able to get out
of shelter system and
into independent
housing
• Provide transitional work
experience to enable
youth to develop
employability skills, a
resume and a support
network
• Provide a real job, not a
job training experience
• Youth meet or exceed
job expectations
• Establish a supportive
management
environment
• TurnAround helps youth
secure next job and
establish a career path
• Enable youth to access
the mainstream job
market
• Assist youth with
planning and making
next steps regarding
housing and employment
• Youth are able to get off
and stay off government
financial assistance
• Enable youth to stabilize
life situation, begin a
career path and leave the
shelter system
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Measurement Framework
Need a flexible measurement framework that makes sense for the social enterprise
stage of development
SCP
is not prescribing predetermined notions of success
SCP
does call for clear definitions around who a social enterprise is employing
and how this population(s) is being helped
SCP
does require that costs associated with the social mission be accounted for
separately to better understand the cost structure of the enterprise and plan for
future growth
SCP
is interested in supporting and working with social enterprise organizations
that see the value in setting up a success measurement framework
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Thinking About Success
There are two primary areas where SCP evaluates success. These
include the setting and reaching of clear goals around:
1.Providing supportive employment and skill development opportunities to
disadvantaged populations
2.Social enterprise profitability, ability to scale operations and eventually
cover all social and financial costs
A social enterprise is achieving success if both enterprise target
employees and the enterprise itself are able to develop paths
towards self-sufficiency
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Analyzing Success through Asset Building
Significant
departure from traditional welfare economics
Increasingly,
lack of access to assets ( financial, social, physical and natural) is a
key indicator for why certain groups slip into and/or cannot move out of poverty
SCP is taking an asset-based approach through utilizing the Sustainable
Livelihoods framework – a framework that address where people are now, where
they want to go and how they want to get there (refer to handout)

10
Getting Started
Before a measurement framework can be developed the mission objectives of
the enterprise need to be clearly defined and articulated
Questions that need to be asked and answered regarding the social mission
include:
1) Who are - or will be - the target employees?
1)
2)
3)
4)
2) How is the social mission currently being managed?
3) How should social mission success be defined?
4) What social support infrastructure needs to be put in place?
5) How much can we spend on social support infrastructure (social costs) ?
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What is SROI?
An attempt to quantify the social value being generated by an organization as a
result of an investment made in that organization
An
evaluation strategy to determine what organizations and programs are
delivering the ‘best’ social returns
Defined
invested
Units
impact
as a ‘return’ because it is a result of resources (financial and human)
being measured encompass social, socio economic and/or environmental
This
approach is gaining popularity as competition for charitable dollars continues
to increase and social organizations recognize the need to report on the social
value of their work
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SROI in the Context of Social Enterprise
Robert’s
Enterprise Development Fund (REDF) – leader in developing and
disseminating learnings regarding: social, economic and socio-economic value of
social enterprise
SROI
evaluation approach lends itself well to social enterprise model in that it
encompasses both financial and social outcome areas
A
key contribution of this approach is the focus on distinguishing between the
different costs in a social enterprise to enable managers to better understand where
specific costs are coming from
Need
for social cost accounting in order to reasonably project costs of social
support infrastructure now and in the future
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SCP SROI Methodology: Summary Calculation
•SROI in SCP’s measurement framework attempts to measure the monetary
value associated with providing a job to someone previously unemployed
and in receipt of government income assistance and/or services.
•It can be defined by the following equation:
Net Cost to Society
Before Employment
+
Net Benefit to Society
After Employment
x
Total Investment
Long Term
Multiplier
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Net Cost to Society
Before Employment
+
Net Benefit to Society
After Employment
x
Total Investment
Long Term
Multiplier
Where
•
Net Cost to Society Before Employment = The monetary value of government and social assistance associated
with target employees prior to employment in the social enterprise (net of any taxes being paid)
•
Net Benefit to Society After Employment = The monetary value of the taxes paid by the target employee after
being employed by the social enterprise (net of any ongoing social assistance)
•
Total Investment = The total amount of money invested in the business in order to create the benefits to society.
This includes any grants and additional social support infrastructure costs. It also accounts for any operating losses
incurred by the business.
•
Long Term Multiplier = A multiplying factor that attempts to estimate the value that can be attributed to the social
enterprise because its employees are more likely to maintain employment over the long term than would otherwise
have been the case. In other words, this annuity rate accounts for the fact that the net benefit to society associated
with a particular social enterprise employee will continue to accrue throughout the working life of that employee.
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Calculating Cost and Benefit to Society
• Implement surveys at particular points in time with individual target employees
•Social enterprise management/staff and/or SCP will implement surveys
(baseline and follow up)
•Situate data in a cost-benefit framework to account for societal “costs” attributed
to an employee before hire into a social enterprise versus the societal “benefits”
that can be attributed after hire
• Two case examples to follow explain the kind of quantifiable data collected in
the baseline and follow up questionnaires/interviews that feed into the SROI
calculations
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Case Example
Josh had lived most of his live in the inner city, had a high school education, a criminal record and minimal
employment experience. Before he was hired at Inner City Renovation (ICR) he was part of a community-based
carpentry skill development program that provided on the job training in housing renovation. While part of this
program, he was able to collect government income assistance and family allowance benefits for himself, his wife
and six children. Neither Josh nor his wife had any other employment related income. Based on his family make
up, Josh and his family received approximately $2100 per month - $25,200 annually - of government income. This
income was not taxable. After Josh was hired at ICR his annual employment income replaced the majority of the
government income he and his family had been receiving but Josh was still eligible for family allowance of
approximately $800 per month based on his family size and through declaring his paychecks. Josh’s gross annual
employment income was $20,230 from which he paid income tax and contributions to Employment Insurance and
Canada Pension Plan totaling $4,235.
Based on the information above, Josh’s individual ‘before and after’ or cost/benefit analysis looks like this:
$25,200 (annual government income assistance) – 0 (annual income tax paid before hire) + $4,235 (annual income tax
and contributions to CPP and EI paid after hire) – $9,600 (annual government income assistance after hire) = $19,835
$19,835 represents the (monetized) value – or Change in Societal Contribution - created by employing Josh, decreasing
his need for government income assistance by $15,600 or 62% and generating new tax revenues of $4,235.
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Case Example
Steven was twenty-one years old, unemployed, hadn’t finished high school and living in a youth shelter in Toronto.
Before he was hired at Turn Around Couriers he had worked on and off at odd jobs but had no steady employment
record. Steven was surviving on social assistance monthly payments of $520. The youth shelter receives a $53
per diem rate, per youth, from the city for operations. The average stay at a youth shelter over the course of a year
is 4.5 months. Steven found out about the employment opportunity at the bike courier company through a youth
employment agency and ended up working there for 3 months. An estimated annual average cost per youth who
accesses employment and related services is $2,726. While employed at the bike courier company, Steven went
back to school and got his GED (General Education Development). Over the course of 3 months Steven made
$2,630 of employment income and got off social assistance. He was able to save enough money to get out of the
shelter system and move in with some friends. After deciding that bike couriering was not for him, Steven secured
a full time retail job paying minimum wage ($7.15 (2004)) per hour to pay his bills while he explored opportunities
for a career in the trades.
Based on the information above, Steven’s individual ‘before and after’ or cost/benefit analysis looks like this:
7,261 (average annual shelter costs per youth) + $2,726 (average cost per youth for employment and related services) + $6,240 (annual basic
income allowance - not including shelter allowance - through Ontario Works program for single male) = $16,227
$16,227 ( annualized total of above societal costs) – 0 (annual income tax paid before hire) + $1,287 (income tax based after hire) – 0
(government income after hire) = $17,514
$17,514 represents the (monetized) value – or Change in Societal Contribution - created by employing Steven, helping him save enough
money to leave the youth shelter system eliminating his need for government income assistance by $6,240 or 100%, eliminating his need for
and use of youth employment service agencies and generating new tax revenues of $1,287.
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Turn Around Couriers Year 4 October 2005 - September 30 2006
Social Service Usage:Shelter
Baseline Income
TAC and Next Job
Services and Employment
EmploymentGovernment
Tax Contr.Total
Tax
Social Service Usage
A
$ 2,808.00
$ 2,808.00
$7,339
$0
B
$ 2,808.00
$6,432
$ 9,240.00
$8,669
$0
C
$ 2,808.00
$6,432
$ 9,240.00
$5,067
$0 $
2,808.00
F
$ 2,808.00
$12,744
$ 15,552.00
$11,755
$445 $
2,808.00
G
$ 7,261.00 $ 2,726.00
$ 9,987.00
$10,592
$267
H
$ 7,261.00 $ 2,726.00
$2,412
$ 12,399.00
$27,160
$3,900
I
$ 7,261.00
$2,412
$ 9,673.00
$17,834
$1,916
J
$ 2,808.00
$6,432
$ 9,240.00
$10,278
$219
K
$ 7,261.00 $ 2,726.00
$2,412
$ 12,399.00
$18,432
$2,043
L
$ 7,261.00 $ 2,726.00
$ 9,987.00
$18,653
$2,090
M
$ 2,808.00 $ 9,600.00
$ 232.00 $ 2,576.00
$3,195
average number of TE = 8
Government
$
$
$
$
Net Change
$2,808
$9,240
6,432.00
$0
12,744.00
$445
$10,254
$16,299
$11,589
$9,459
$14,442
$12,077
2,808.00
0
-
Total Net Change for Employee Group
Average change per TE
Sample Size
Direct Social Support Infrastructure (SSI)
Total Investment
Year Three SROI
Cost Savings to Society
Societal Payback Period
86,613
$7,874
11
0
$0
$62,992
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TURNAROUND
COURIERS
SROI Report Card: Year Four October 2005 - September 2006
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SROI Report Card: Year End 2006
Enterprise: TurnAround Couriers
Location: Toronto ON
Financial Performance
Date of Inception: October 2002
Social Return On Investment
Total Sales Revenue:
$239,000
Average Change in Societal Contribution (Target
Employees):
$7,874
Total Grants and Subsidies:
$0
Average Number of Target Employees:
8
Number of Target Employees in Sample Group:
11
Total Sales Revenue and Grants:
$239,000
Additional Social Support Infrastructure:
$0
Total Operating Profit (Loss):
$16,000
Total Investment in Year Three:
$0
Overview of Business
• Did not require additional investment and was cash flow positive
• Officially launched on-line courier order service in December 2005
• Grew sales 76% from Year 3
• Royal Bank of Canada continues to be TurnAround’s biggest client
• 6 of Canada’s top law firms (by size) are TurnAround clients
Sustainable Livelihoods Outcomes (sample group)
• 100% target population recruited from shelters able to get out of shelter system
and secure independent housing
Current Year Cost Savings to Society:
$62,992
Cumulative Cost Savings (prior to Y4):
$128,178
Total Cost Savings to Date:
$191,170
Cumulative Societal Payback Period:
2.08 years
Cumulative SROI:
191%
Overview of Target Population (sample group)
• Youth recruited from 6 different youth shelters and employment service agencies
across Toronto
• 64% recruited directly from shelters
• 100% male
• Average age: 22
• 91% unemployed at time of hire
• 64% receiving social assistance at time of hire
• 73% had been involved with the justice system prior to hire
• 73% did not complete high school
Employment Outcomes (sample group)
• More than doubled average number of target hires from Y3 to Y4
• 71% who relied on income support through social assistance at time of hire were
able to get off and stay off
• Increased target/non target staff ratio from 75% to 80%
• Founding Manager encourages target hires interested in TAC operations to get
engaged in business strategy and growth to position themselves for operations
management roles in the future
• 45% continue to work at TAC
• Founding Manager assists target hires to effectively deal with outstanding legal
issues they have had in the past
• Paid out $141,426.00 in target hire wages and courier commissions
• 27% moved onto mainstream employment in courier industry and office
administration
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SROI Report Card: Year End 2006
Definitions and Methodology
Total Investment Required for Year Three
Total operating losses + Grants and Subsidies + Additional Support Infrastructure
= Total Investment Required
• Represents all cash injections in the business
Average Change in Societal Contribution (Target Employees)
• Difference between the direct societal “cost” or “benefit” contributed
by the employee before hire versus after hire
Annual Government Financial and/or Social Service Assistance Before Hire - Annual Income
Tax Paid Before Hire + Annual Income Tax Paid After Hire
= Average Change in Societal Contribution
Current Year SROI
• Return on investment generated by the current year change in target
employee financial position
Current Year Cost Savings to Society
• Dollars saved that year by employing target group and eliminating or
lessening government financial assistance
Average Change in Societal Contribution / Total Investment Required
=Current Year SROI
Average Change in Societal Contribution x Average Number of Target Employees
Societal Payback Period
• The number of years it would take for the social returns to equal the
financial investment
The calculation is the inverse of the Current Year SROI or:
Total Investment Required/Total Change in Societal Contribution
Cumulative SROI
• Average social return on investment generated by year 1, 2, 3 and 4
change in target employee financial position
Cumulative Societal Payback Period
• The number of years it would take for the social returns to equal the
financial investment made in Y1, Y2, Y3 and Y4 combined
Y1 + Y2 + Y3 + Y4 Change in Societal Contribution / Y1+Y2 +Y3 + Y4 Total Investment =
Cumulative SROI
Y1+ Y2 + Y3 + Y4 Total Investment / Y1 + Y2 + Y3 +Y4 Total Change in Societal Contribution x 4
years
Data Gathering Process
•The sample group was drawn from youth that worked at TurnAround Couriers for two months or more in
Year 4
• Target employees complete surveys to obtain socio-economic and sustainable livelihood data
•A second survey is undertaken at six months or a year to determine changes for target employees
•Only target employees who are employed for two months or more are considered for SROI calculations
22
SROI Report Card: Year Ending March 31 2007
23
SROI Report Card: Year End March 31 2007
Renaissance: Social Mission Overview
Goals
•
Provide job skills training
and employment
placement to people with
employment barriers
•
Help participants at end of
employment placement to
access mainstream job
market and/or formal
education system
•
Be a leader in sustainable
reusing practices of
clothing and other
consumer goods
Methods
• Deliver six month skills
training program
(Reintegration Program)
accredited by Emploi Québec
– to eligible participants
• Provide ‘real world’
employment placements in
retail, office administration,
maintenance, shipping and
handling
• Provide specialized training,
personal counseling and post
training follow up to assist
participants transition into
mainstream employment
• Continually improve
collection and sorting
practices to create access for
low income people to
modestly priced, reused
consumer goods
Success Metrics
• Maintain an 80% or better
employment
placement/return to school
rate after program
completion
• Continue to generate an
operating profit while
running a successful
employment training
program
• Continue to be recognized as
a Bruntland enterprise in
Québec
• Re-sell 35% or more of
reused goods collected in
network of stores
• Sell at least 95% of remaining
goods to recycling operations
• Ensure that 5% or less of
collected goods goes to
landfill
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SROI Report Card: Year End March 31 2007
Enterprise: Renaissance Quebec
Location: Montreal, Quebec
Date of Inception: 1994
Social Return On Investment
Financial Performance
Total Sales Revenue:
$5,435,185
Total Grants, Gifts and Subsidies (GGS):
$286,636
Total Emploi Quebec Service Contract
/Social Support Infrastructure:
$2,735,336
Total Sales,GGS and Government Contracts:
$8,457,157
Total Operating Profit (Loss)
$324,813
Total Investment:
$2,697,159.00
Overview of Business
• Self financing through in-store sales accounts for 70% of Renaissance’s
revenues
• Increased sales from last year by 9%
• Opened two new stores/work centres in Montreal
• Renovated all stores in network for better look and efficiency
• Sourced and implemented new management information system for
collection and production processes
Sustainable Livelihoods Outcomes
• Adapt training program and services to address specific employment
barriers of particular groups such as:
• Project Integration – customized program for young visible
minorities with low French speaking skills
• Holistic training model incorporates life skills training (e.g. budgeting), oneon-one coaching and referral to community resources to help participants
effectively deal with personal issues while working
• As an ongoing support Renaissance multi-services office is open to all
participants who finish the integration program
Average Change in Societal Contribution (Target Employees):
$5201.00
Annual Number of TE Completed 6 Month Reintegration Program:
162
Current Year Cost Savings to Society:
842, 562.00
Current Year SROI
31%
Societal Payback Period:
3.2 years
Cumulative (past 3 years) Cost Savings to Society:
$2,858,022.00
Annuity Multiplier:
13.4
Present Value of Total Cost Savings to Society over 30 Years
$7,903,232.00
Projected Long Term SROI:
293%
Overview of Target Participant Group
•
•
•
•
•
•
•
•
•
100% unemployed and meet Emploi Québec’s eligibility requirements
89% female; more than 80% women recently arrived in Quebec
66% from Africa or Haiti
25% are people over 45 years old
54% are people 35 years and under
58% with little or no significant work experience in Quebec
36% under-educated
22% have difficulty staying employed
26% have financial difficulties
Employment Outcomes
• 89% of participant group that completed reintegration program entered mainstream
employment or returned to school after completing employment training program
• 90% secured employment
• 65% secured full time employment
• 35% secured part time employment
• $8.62 average hourly wage for next job
• 10% went back to school
• 11% did not secure employment or go back to school
25
Challenges with SROI Approach
Overarching
challenge is to develop a SROI framework and ultimately a system
to function as an integral tool for social enterprise strategic development
Want
to avoid pitfalls of setting up an evaluation process seen only as an
accounting exercise with limited value for decision-making within individual social
enterprises
SROI
as a concept and evaluation strategy is new and evolving and a lot more
testing and refining is needed before touting success of this approach
Deciding
on what social outcomes of target employees to track
Creating
and establishing an assessment and tracking process that has value for
target employees (ie Asset Development Planning) - the nature and needs of
different target groups should shape tool development
26
Why measure/SROI recap…..
Being truly engaged in and committed to performance measurment/SROI
analysis contributes to mission understanding and avoiding mission drift


All SEs need a compelling story and SROI analysis/reporting tells that story
Can provide a useful platform to involve and engage different staff groups and
levels, enable them to directly ‘see’ the value of their work and be a mechanism for
direct input into SE strategic direction

collecting and USING socio- economic output/outcome data can be a feedback
loop into management processes, budgeting and decision making for SE strategic
direction

Can
glean key metrics/outcomes for use in PR campaigns and funder/investor
relationship building
27
If you remember one thing from this presentation…..
make it this:
be open to embracing performance measurement as a practice that is
an integral and connected – not isolated and external - component to
your social enterprise

Why?
It
tells your SE story, communicates your value creation and can be used
as a platform to engage a variety of stakeholders into your conversation of
why your SE needs to exist
28
Demonstrating Value Project
• Collaborative research project to develop a framework for assessing the
impact and performance of social enterprises in Canada.
• Engages both social enterprise investors and operators in a process to
develop and pilot a framework that will assist a social enterprise and their
stakeholders to understand, communicate and assess financial
performance, organizational sustainability, and mission-related impacts.
http://www.enterprisingnonprofits.ca/projects/demonstrating_value
29
Thank you
Please contact us if you have further inquires at:
416 646 1871 x110 – Joanne Norris
For more information, please visit our website:
www.socialcapitalpartners.ca
We utilize our website to disseminate our portfolio SROI Reports, learning reports
and to keep people updated on what we are up to