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Social Return on Investment, Valueing what matters

Social Return on Investment, Valueing what matters. Context, 16. March 2009. Social Return on Investment. What exactly are we ‘selling’? A method, a technique? More accounting work? More registration / burocracy ? More complexities? Or: Efficiency? cost savings? More income?.

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Social Return on Investment, Valueing what matters

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  1. Social Return on Investment,Valueing what matters Context, 16. March 2009

  2. Social Return on Investment • What exactly are we ‘selling’? • A method, a technique? • More accounting work? • More registration / burocracy? • More complexities? Or: • Efficiency? • cost savings? • More income?

  3. Why SROI • To be more effective and efficient • To be more sustainable • To learn about value-drivers • To improve your work • To demonstrate the value the social work!

  4. Financial Accounting • How come nonprofits spent thousands of dollars on financial accounting bookkeeping • The mission is not financial but social • Not willing to spent time and money on social accounting • …no incentive…

  5. SROI: Incentives • Attract new donors / sponsors • Compete for scarce sources (money, volunteers, etc); • Participate in tenders • PR and Marketing

  6. SROI: what it is and what it is not • SROI is not just a number • Based on good assumptions • Transparent • Future oriented • Context • It is a story about value-creation

  7. What is Value? • Value is subjective • Itmaybe different for different persons • Itcanvary in different situations • Somethingcan have value without cashflows taking place

  8. Value Price Costs Value – Price - Costs “Value is in the eye of the stakeholder”

  9. Cost and cost savings • Cost savings always reflect the ‘low’ level of value • Prices in nonprofit are based on costs • Nonprofits tend to report about costs • For-profits seek the highest value • For profit prices reflect value, not costs

  10. The value of intangibles • Nonprofit services are often intangible • Is it possible to value an intangible service/good? • How can you “put a money value on self-esteem”?

  11. Nike • Nike is not selling shoes… • Know the stakeholder(group): people between 15-25 years of age • Research their value-perception of image • How much is the stakeholder prepared to pay? • Can be different for different stakeholders • Can be different in different countries

  12. Valuation • To put a money-value on a product or service, when market-prices are not available. • Money expresses “value” into a number. • Money used as unit of measurement of value. • What is the magnitude of the value?

  13. Why percentages and symbols are notenough

  14. Percentages and symbols are notenough…

  15. Valuation Methods • Willingness to Pay (WTP): How much are you prepared to pay? • Marketing • Willingness to Accept (WTA): How much are you willing to accept? • Insurance • Taxes

  16. The value-game • Making cards (5-10) with different products/services from which you know the value (but do not show!) ; related to the situation of the client • Insert one card with the issue you want to monetise • Ask people to put the cards in order of preference

  17. Case: Care for handicapped child • Impact: less time spent on bringing child to special school • Indicator: less time spent per year • Valuation: • Cost savings method: • More extra time to work: extra income

  18. Value-mapping • Put in order of preference (selected on basis of real use; with description) • A new car • Going out for diner • New television set • Less stress about childcare • Subscription on magazine • Holiday to Barcelona • Weekend Center Parks

  19. Order of preference (example) • Subscription on magazine • Going out for diner • New television set • Less stress about childcare • Weekend Center Parks • Holiday to Barcelona • A new car

  20. Value • Subscription on magazine (100 euro) • Going out for diner (150 euro) • New television set (300 euro) • Less stress about childcare • Weekend Center Parks (500 euro) • Holiday to Barcelona (1000 euro) • A new car (10.000 euro)

  21. Value Assessment • Always know what is important to your stakeholder group; what do they use/need? • Issues related to their live/needs/environment • Young people: Ipod, PSP, Nike, lunch in McDonalds, etc. • Older people: mobility, welfare facilities, meals, etc. • Offer 5 till 10 ‘alternatives’; • Don’t ask for their WTP in ‘money’-terms

  22. Ability to pay • Maybe a stakeholder has the willingness to pay, but cannot afford it • Government / foundation makes payment • But how do they know it has value to the stakeholder?

  23. Other way • “If this project leads to time savings related to your child, would you be willing to…” • Do two days of voluntary work/month? • Ending subscription? • Skip your holiday this year? • What is the ‘sacrifice’ the stakeholder wants to make?

  24. Participatory Impact Assessment Scholten&Franssen, 2008

  25. Scientific proof • Are data 100% accurate? • Biases in answers etc. • No real payments are made • Marketing plans are based on perceived value-methods • Do we need scientific proof? Or a range? • Cost - Benefit of analysis • Fuzzy Logic

  26. The value of a disabled…. • The life of a disabled…is not what we are valueing! • We are valueing the magnitude of value, created by an investment in changing an undesired situation

  27. Ethics • Is it ethical to spent money, without knowing how much value you are creating? • If you do not create (enough) value, don’t spent the money!

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