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Social Return on Investment (SROI) for Effective Altruism

Explore the concept of SROI, valuation methods, and the subjective nature of value in social work. Learn to assess and communicate the impact of social initiatives for sustainable outcomes.

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Social Return on Investment (SROI) for Effective Altruism

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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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