social return on investment, valueing what matters context, 16. march 2009
DESCRIPTION
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!TRANSCRIPT
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?
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!
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…
SROI: Incentives
• Attract new donors / sponsors• Compete for scarce sources (money,
volunteers, etc); • Participate in tenders• PR and Marketing
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
What is Value?
• Value is subjective– It may be different for different persons– It can vary in different situations
• Something can have value without cashflows taking place
Value
Price
Costs
Value – Price - Costs
“Value is in the eye of the stakeholder”
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
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”?
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
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?
Project ABC +/-
Impact 1 +Impact 2 +Impact 3 -
Why percentages and symbols are not enough
Project ABC +/-
%
Impact 1 + 40Impact 2 + 60Impact 3 - 20
Project ABC +/-
% value result
Impact 1 + 40 10 + 4Impact 2 + 60 10 + 6Impact 3 - 20 100 - 20
- 10
Percentages and symbols are not enough…
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
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
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
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
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
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)
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
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?
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?
Participatory Impact Assessment
Scholten&Franssen, 2008
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
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
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!