Transcript Social Return on Investment
Social Return on Investment:
Practical Tools for Cost Benefit Analysis Reclaiming Futures Webinar
Kristina Smock Consulting
July 28, 2010
What is Cost-Benefit Analysis?
Costs Benefits Do the economic benefits of providing this service outweigh the economic costs?
Benefit-to-Cost Ratio monetary value of benefits monetary costs of obtaining them
Case Study
• Prevention • Engagement • Housing • Education and jobs
Calculating Costs
Divide budget into individual program areas that each match with a specific outcome Include all costs that are necessary in order to achieve the outcome Time period for costs should match time period for outcomes Make sure all relevant costs are captured in your final cost-benefit ratio
New Avenues’ Costs
Outputs and Outcomes
Intervention Outputs Outcomes
No Outcome Data?
Apply your output data to studies showing the outcomes of similar interventions.
Calculate how many people would have to benefit for the program to pay for itself.
Compare the costs of two alternatives.
Sample Outcomes
104 homeless youth exited street life 32 homeless youth obtained GEDs 99 homeless youth obtained jobs 182 homeless youth committed to case management
Identifying Benefits
Direct benefits to individual participants Benefits to other individuals Cost savings to society Financial returns to society
Sample Benefits
Reduction in victimization rates and criminal activity for youth who exit street life Increase in lifetime earning potential for youth who earn GEDs Increase in personal income and tax contributions for youth who obtain jobs Reduction in long-term risks of substance abuse for youth who engage in case management
Calculating Monetary Value of Benefits
Financial benefits
• Aggregate actual short-term benefits for all participants • Estimate long-term benefits by applying formulas from research
Non financial benefits
• Convert to monetary value based on research studies • Some benefits cannot be converted to monetary value
Calculating Actual Cost Savings Based on Government Records
Challenges of Calculating Actual Cost Savings from Records
Privacy issues Data base incompatibility Time lags Getting cost data Finding a comparison group
Examples from New Avenues
Example 1: Reception Center
1,392 youth diverted from juvenile detention system $144: Reception Center intake $365: Juvenile detention intake Total cost savings: $307,632
Example 2: Runaways
Outcome • 456 runaways accessed Reception Center National data • 40% of runaways become homeless • 50% of homeless youth access shelter • Average shelter stay: 4 months Cost of shelter: • $62 per day Cost savings: • $677,040
Example 3: Jobs
99 youth placed in jobs Average earnings: $20,294 for 65 full time workers and $7,382 for 34 part time workers Estimated annual tax contributions in first year of employment: $337,490
Example 4: Victimization
Outcome • 104 homeless youth exited street life National data • Half of street youth have been robbed • Half of street youth have been attacked Cost of victimization: • Robbery: $15,600 per incident • Assault: $40,700 per incident Cost savings: • $2.9 million
New Avenues’ Findings
$1.00
$4.12
New Avenues saved the community the equivalent of $4.12 for every $1.00 it spent in 2004-05 across all of its programs
Challenges of the Methodology
Multi-layered research Time consuming and labor intensive Detailed documentation required Not all benefits can be captured
Cost-Benefit Worksheet Example 1.
2.
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6.
Cost of program or program component:
$195,203
Unit of cost:
Per year
Number of youth served by program component during time period covered by unit of cost:
456 runaway youth were served
Outcome during same time period:
100% of runaway youth served were reunited with their families or connected to appropriate services when reunification wasn’t possible.
Primary or secondary data tied to outcome showing what would have likely happened to participants without the intervention:
Nationally, 40% of runaways end up homeless.
Data showing per unit monetary equivalent of outcome:
Nationally, about half of all homeless youth access shelter services, for an average of 4 months. The cost to provide shelter and basic services for each youth who accesses it is $62 per night, or an average of $7,440 for 4 months. Since only half of all homeless youth access shelter services, the average cost per youth is $3,720.
Calculate Ratio
100% x 1,392 x $221
Answer 5 x Answer 3 x Answer 6 Answer 1
195,203
= $1.58 in benefits for every dollar spent per year
Total Cost Benefit Total cost savings for the costs in Answer 1:
$678,528 + $307,632 $195,203
= $5.05 in benefits for every dollar spent per year
Note: Numerator and cost benefit ratio are slightly different than in the report because of differences in rounding.
Questions and Discussion