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Structure
• What is SROI and why is important?
• Introduction to SROI principles?
• Step-by-step guide to doing an SROI
• Practical exercise: theory of change
• Guidance on commissioning an SROI
• Guidance on becoming a practitioner
What is SROI?
• A form of cost benefit analysis/a tool for
assessing the value for money from a
programme or policy:
SROI = [Value of positive and negative
outcomes]
[Cost of intervention]
e.g. Every €1 invested in X, generates €3 in social value
• Social value is generated when resources,
inputs, processes or policies are combined to
generate improvements in the lives of individuals
or society as a whole.
History
Mid 1990s:
REDF
California
Early 2000s:
nef and SROI Network
UK
Late 2000s/10s
mainstreaming and
international growth
Africa, Argentina, Australia, Bangladesh, Belgium, Bulgaria, Canada, China, Germany, Greece, India,
Japan, Korea, Netherlands, Nigeria, Poland, Ireland, South Africa, Spain, UK, US
Problem 3: Leaving out what
matters
Value what we
measure
Allocate resources to what
we value
What really matters is left
out of decision-making
Measure the wrong
things
So why SROI?
• SROI sets out to improve decision-making by:
– Measuring the things that matter
– Involving stakeholders that are often excluded
– Valuing the things that matter
– Focus resources where they can maximise impact
– Distinguish between initiatives/policies that are more
and less effective for their intended beneficiaries
Value for money
• More and more focus on achieving ‘value for money’
– Squeeze on resources
– Increasing demand
• Often interpreted narrowly as lowest cost
• An outcomes approach puts quality and effectiveness at
the heart of the analysis
Value for Money
Money
Environment
People (time & skills)
Inputs Outputs
Service & Wider Outcomes
Economic
Environmental
Social
Often VfM is understood by
comparing unit costs
Real VfM is achieved by comparing outcomes
/ impact with investment
Impact / SROI
Impact
Resources / Investment
Principles
1. Involve Stakeholders
2. Understand what changes
3. Value the things that matter
4. Only include what is material
5. Do not over claim
6. Be transparent
7. Verify the result
SROI step-by-step
Engage stakeholders to establish the theory of change
Data collection to evidence outcomes and impact
Build the SROI model and calculate SROI ratio
Report
Stakeholders
• Definition: Any actor that has an effect on, or is effected
by the intervention
– i.e. they contribute to the change or experience the change
– Does not have to be individuals (e.g. the State, the environment)
• SROI is concerned with the value to material
stakeholders
Objective: Develop theory of change
Stakeholder Activity Outputs Medium-term change
Long-term change
Apprentices Training Sourcing trips Emotional support
Numbers completing training Numbers of qualifications
Improved skills (cookery, social, financial)
Stable employment Improved family life Reduced risk of homelessness
State Apprenticeship programme
Annual number of graduates
Fewer ‘NEET’ young people More opportunities for young people
Increased social mobility Reduced risk of homelessness
Family members Apprenticeship programme
Numbers of families affected
Improved relationships
Improved family life
Children Children have positive role model and
Numbers of children affected
Children have increased opportunities
Improved career choice and life chances
Develop a theory of change
•
Output: Tells you an activity has
taken place and is usually
quantitative (e.g. number of
people trained)
Outcome: The change that occurs
as a result of an activity (e.g.
improved well-being of training
participants)
Understanding outcomes
Hours spent with clients
Families engaged
Incidence of depression
Number of GP visits
Quality of family relationships
Length of engagement
Educational attainment
Output
Output
Outcome
Output
Outcome
Output
Outcome
Local
service,
meeting
place
Emergency
relief
Make new
friends
People learn to
communicate in
a new
environment
(e.g. new
migrants learn
English)
Social
interaction
(sometimes the
only interaction
recipients have)
REDUCED
ISOLATION
Personalised
service
Meet immediate
hunger needs for
self and/or family
in a nutritious
way Availability of
nutritious and
regular
meals (either
prepared or
via food
hamper)
Have a
peaceful
night’s sleep
Able to afford
previous
“luxuries” –e.g.
toiletries, cup of
coffee at a café,
petrol for the car,
visit to relatives
INCREASED
CONFIDENC
E
IMPROVED
PHYSICAL
HEALTH
IMPROVED
QUALITY OF
LIFE
Better
attendance at
school as no
longer
embarrassed
to send
children
Confidence in
welfare
providers
Develop
regular food
habits
Build up
immune system
Learn how to
cook nutritional
food
No need to make
choices between
life’s essentials
Have money
leftover for bills
Able to pay
for school
related costs:
uniforms,
fees, food in
lunchbox
Better financial
resilience for
the future
Ability to plan
for the future
Able to cope
with life’s
demands and
pursue non-
subsistence
goals (e.g.
job, housing)
BETTER
PERFORMAN
CE AT
SCHOOL
Identify services to meet other needs
(e.g. debt advice, housing support)
Theory of change: Food Bank
Improved social
skills
Provision of
breakfast
before school
and regular,
nutritious
meals
Interaction with
classmates and
other children
outside the
classroom
Develop
consistent eating
habits
Kids are equipped
to concentrate in
class
Kids are more
settled in class
Improved
performance in
school
School Meals Programmes
Better life
chances
One stakeholder: Children
Summary: Indicators
• Translate outcomes into something measurable
• Use a mix of: – Objective indicators
– Subjective reports
– Third party reports
Outcome Indicators Type
Reduced social isolation
Key worker reports change in participants social life
Third party
Participant reports feeling less isolated
Subjective
Participant takes part in new social activities
Objective
Distance-travelled tools
• Most outcomes are not binary
– Has physical health improved? Yes/No
• Outcomes often have:
– Size: how much change?
– Qualitative dimensions: what does it look like?
– Time: over how long?
• Best Practice: Use a distance-travelled tool
What if we weren’t here?
• Need benchmarks to estimate what would have happened
anyway
• Ideally this would be a control group (e.g. matched comparison
groups, randomised controlled trials)
• In absence SROI asks to make adjustments for deadweight:
o Trend data
o Estimates from other controlled evaluations
o Other literature/judgement
Other adjustments
• When benefits are displaced/substituted from another
place or person i.e. no new benefit is created
• When a proportion of the observed benefit is attributable to other actors (attribution)
• Benefit period – the length of time over which outcomes are expected to endure
– e.g. benefits of an employment training programme may endure for some years after the course
• Drop off – the rate at which benefits decrease over time
– e.g. it is likely that benefit for training participants wears off as time goes on
Valuation in SROI
• All prices are approximations of value, or what are
known as proxies
• Look at value to all stakeholders, not just the state
• Use various techniques to understand how stakeholders
value outcomes & to identify financial proxies
• Proxies act like a conversion rate – they allow different
outcomes to be compared in the same currency
• Negative outcomes are given a minus sign in front of the
value so that they are ‘netted off’
“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
Treasury VfM Definition
Financial proxies
• SROI uses financial proxies to estimate the
social value of non-traded goods to different
stakeholders.
• Financial proxies are values that are close to the
outcome that we are interested in
• Value is contextual: it means different things to
different people.
Some examples
Stakeholder Outcome Possible Proxy
Individual Improved financial skills
and budgeting
• Difference in cost of
banking and loans for
people on low incomes
• Actual average change
in income as a result of
dealing with problematic
debts
• APR charged by
payday loans
Individual Avoidance of reoffending • Value of time not spent
in custodial sentence
• Wage penalty for ex-
offenders
State Reduction in reoffending • Avoided criminal justice
costs (police, courts,
prison etc.)
Cashable savings
• In some cases, financial values are more readily
available (e.g. costs of services)
• However, these are are also proxy values:
– Unit vs. marginal costs
– Resources are ‘freed up’ rather than ‘paid back’ to Exchequer or
taxpayer
– Representation of the value of that outcome to society, rather
than a saving per se
Why value non-traded
outcomes?
“There is a distinction to be made…between the sort of borrowing you incur to pay civil servants, for defence, or for schools and hospitals and what we are doing here, where we are taking an investment in two particular banks…those banks are worth a great deal…there is every reason to be confident that…the British taxpayer will get its money back” [Alistair Darling, 2008]
Final calculations
• Sensitivity analysis – tests how the SROI ratio changes when key assumptions are altered (e.g. the value of proxies)
• Key checks – Deadweight, attribution and drop off
– Financial proxies
– Outcomes
– Monetised inputs (e.g. volunteer time)
• Check how much change would be required to get a ratio of 1:1 (increase/decrease!)
• Very useful for strategic planning
Making the most of your SROI
• Measurement
– Put in place/improve outcomes data collection
– Embed SROI knowledge and practice across
organisation (e.g. training of staff)
– Plan for updates
• Intervention
– Respond to recommendations for improvement of
intervention
– Use to help decision making
Commissioning an SROI
• Accredited practitioner
• Experience in M&E/economic evaluation
• Clarity on scope – should determine price
• If forecast, plan for data collection to update in the future
• Guarantee of ‘assurance-ready’
SROI Practitioner Accreditation
• Approximately 4 assurance rounds per year
• Cost is £320 + VAT
• Principles-based assessment by two accredited
practitioners
• Opportunity for feedback and resubmission
• Must have completed SROI training
• Also possible to have report assured only
Contact
Eilis Lawlor
Just Economics
eilis@justeconomics.co.uk
+44 20 77545991/07917276127
www.justeconomics.co.uk
© Just Economics Research Ltd.
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