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Value for Money (VfM) in international development: useful elements of

Social Return on Investment (SROI)

Michael Weatherhead

nef consulting (new economics foundation)

23rd November 2010

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“Wider social and environmental costs and benefits for which there is no market price also need to be brought into any assessment. They will often be more difficult to assess but are often important and should not be ignored simply because they cannot easily be costed.”

HM Treasury Green Book

1.Effectiveness, not lowest cost

2.Wider costs and benefits

3.Whole-of-life costs

Treasury VfM Definition

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Value for Money

Money

Environment

People Inputs Outputs

Resources / Investment

Service & Wider Outcomes

Economic

Environmental

Social

Often VfM is understood by

comparing unit costs

Real VfM is achievedby comparing outcomes

with investment

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How does SROI fit in?

• Framework for telling us how effectively money is spent – make VfM decisions

• Adjusted form of cost-benefit analysis.

SROI = value of positive + negative outcomesinvestment (or cost)

• Essentially a measure of the efficiency of achieving outcomes

• It considers triple-bottom-line benefits and investments – economic, social & environmental

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Taking a lead

• Stakeholder informed in development of:– Theory of change (logic model)– Understanding of outcomes– Understanding of value of outcomes– Understanding of impact considerations

Inclusion of these considerations builds a case to put to any donor

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National Accounts of well-being

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Understanding impact

• Deadweight: what would have happened anyway?

• Attribution: how much is down to this project, and how much down to other factors?

• Displacement: have we just moved an outcome to / from somewhere else?

• Benefit period: how long does the outcome last, and does the effect ‘drop off’ over time?

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Impact: Attribution

• Attribution – how much credit can your organisation take for the outcomes?– Expressed as a percentage– Not an exact science

• Methods:– Based on your understanding of the journey

of change– Involve stakeholders – interviews or surveys– Consult with other organisations

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Attribution stages

1. No account of attribution levelsEffectively attribution = 100%

2. Informed estimate of attribution levels Qualitative research allows SROI practitioner to divide attribution between contributors

3. Quantitative researchQuantitative stakeholder research gives average stakeholder’s view on contributors

4. Academic researchAcademic research can help refine (although not replace) stakeholder research

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