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Using Social Return on Investment (SROI) to purchase public benefit: the case of waste management. Eva Neitzert Aniol Esteban nef (the new economics foundation). NEF. Independent ‘think-and-do’ tank concerned with promoting innovative solutions to promote economic well-being - PowerPoint PPT Presentation
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nef (the new economics foundation)
Using Social Return on Investment (SROI) to purchase public benefit: the
case of waste management
Eva Neitzert
Aniol Esteban
nef (the new economics foundation)
nef (the new economics foundation)
NEF
• Independent ‘think-and-do’ tank concerned with promoting innovative solutions to promote economic well-being– Environmental sustainability– Social justice– Well-being
• Long-standing relationship to third sector– e.g. Social Enterprise Partnership, Performance Hub,
Social Enterprise Ambassadors Evaluation etc. • Measurement matters
– Tool development - Social Return on Investment (SROI) and LM3
nef (the new economics foundation)
Why SROI?
• Valuing mission-driven organisations• Captures social value by translating outcomes
into financial values• SROI Ratio = [value of benefits]
[value of investments]eg. Ratio of 2:1 means that for every £1 invested in organisation £2 of social value are generated
• Social includes the environmental and economic = triple bottom line
nef (the new economics foundation)
More than a ratio…
• Participative framework for finding out about how an organisation creates value
• 4-stage process– Stage 1: Boundary setting, stakeholder
engagement and impact mapping– Stage 2: Data collection– Stage 3: Modelling and calculation– Stage 4: Reporting and embedding
nef (the new economics foundation)
Doing an SROI Stakeholder
Input Activity Output Outcome Outcome indicator/proxy
Participants(32)
SkillsTime
Trained in computer recycling
IT skill setNo. of recycled computers
Increased self-confidenceImproved mental healthSustainable employmentImproved life stability
# gaining employment and average wage earned (£13,500)
-ATTRIBUTION-DEADWEIGHT
Local government
Not applicable
Not applicable No. of computers recycled and diverted from landfill
Reduced landfill expenditure Improved local environment,
# of tonnes diverted/ cost per tonne (£39)DEADWEIGHT
National Health Service
Not applicable
Not applicable Prolonged support for participants, improved skills for participants
Reduction in care costsImproved mental health of participants
Reduction in use of mental health services – unit cost of in-patient mental health care (£20,500)
nef (the new economics foundation)
Case-study…
• Social enterprise that provides bulky waste collection in Lancashire
• Context: ongoing research on benefits of TSOs in waste management activities
• Contract with council to collect domestic bulky waste
• Organisation reuses / recycles materials, trains disadvantaged people and sources goods to poor families.
nef (the new economics foundation)
Stage 1…
• Boundary setting: local (area in which contract is developed) / beyond local
• Stakeholder engagement: limited // only interviews with organisation and LA’s
• Impact mapping based on interviews
Impact mapStakeholders Needs Activities Outputs Outcomes
Local Authoriti
es
Divert waste from landfill
Reuse and recycling bulky waste
Waste diverted from landfill
Savings to LAs (*)Reduced
environmental impact
Contribution to council targets
Households in need
Low cost furniture
2nd hand furniture showroom
Furnished homes:
cost savings
Reduced debtIncreased well-being Increased community
cohesion
VolunteersTraining /
Personal development meaningful use of time
Training and supervision
Learning new skills
Working as a part of a team
Improved skills and
employability
Increased self-esteem
and confidence
Improved well-beingEmployment
Reintergration with family and community
nef (the new economics foundation)
Stage 2: data collected
150 tones diverted from landfill
90 volunteers, 67 obtained qualifications, and 11 got a job after one year
5,436 people assisted in 2007 - £260k estimated savings compared to the cost of buying second hand good
250k Money spent locally
nef (the new economics foundation)
Stage 3: calculation
Avoided landfill tax: £ 3,600
Carbon savings £ 1,413
Reduced env. impacts landfill £ 750
Savings to families in need £ 138,705
Improved human capital £ 132,000
Benefits to individuals £ 24,750
nef (the new economics foundation)
Stage 3: calculation
Benefits to Local Authorities £69,600
Benefits to Local citizens and communities £164,205
Wider benefits (national and global citizens) £67,413
Cost of scheme is covered with grants and with revenue from sales of reused material.
The total public investment in the Bulky Waste collection programme amounts to £185,000 (165k contract / 20k grants)
nef (the new economics foundation)
Stage 4:
Each public £ invested scheme has generated:
• £0.37 of added value to LA’s • £ 0.88 of added value to Local citizens and communities• £ 0.36 of added value to national and global citizens
Total £1.61 per public £ invested
SROI 1.61 : 1
nef (the new economics foundation)
Stage 4:
Previously council would pay £110,000 to take all bulky waste to landfill (no additional benefits created).
Value per additional investment of £56,710: • £1.23 to LA’s• £ 2.9 to local citizens and communities• £ 1.19 to national and global citizens
Total: £5.32 per additional public £ invested
SROI: 5.32 : 1
nef (the new economics foundation)
£ is only part of the story
(Non-monetised):
Increased environmental awareness. Reduced environmental impact at source, positive impact on local economy from 33 jobs supported by scheme and about £250,000 income spent locally. stronger community cohesion through integration of socially disadvantaged people with more than 600 people taking part in events, increased well-being to families, improved well-being to individuals volunteering, innovation, replication potential
nef (the new economics foundation)
Seeing half the picture
Social enterprises, third sector orgs
nef (the new economics foundation)
Seeing the full picture
Social enterprises, third sector orgs
Public service contracts
nef (the new economics foundation)
The problem
• Efficiency agenda– Focus on cash-able savings
• Service specifications focus on:– Activities– Outcomes
• Unit cost becomes driving force
nef (the new economics foundation)
1.
Activity
2.
Output
3.
Service level outcomes
4.
Camden Community outcomes
–social–economic–environment
5.
Value–Quantitative–Qualitative–Monetizeable
Where value accrues:- To Service- Camden wide- central government
Sustainable Commissioning outcomes framework
Community strategy & Corporate priorities
Commissioner & service user priorities
National outcome frameworks
nef (the new economics foundation)
Day Care Services pilotProcurement phase
Innovation
Service Specification - outcome focussed
- Added social, economic and environmental outcomes accompanying service outcomes- Co-production principles
Pre-Qualification Questionnaire
Made ‘consortium/partnership friendly’
Inserted Question on wider outcomes
Adjusted weighting accordingly
Tender Schedules Outcome framework part of ‘provider method statement’ in Schedule 1 (double weighted)
Further schedules outcome focussed
- Pricing schedule – need to level the playing field
nef (the new economics foundation)
Outcomes of the tenderprocess• Consortium of 3 medium-sized locally based 3rd sector
providers• Not cheapest• Commitments to:
– involve the wider community through use of volunteers– Co-production - peer led support and education initiatives and
time-banking – Bulk buying of catering supplies from local sources – Recycling, walking and cycling initiatives with service users and
staff
• Key point: This result was achieved not just because better skills of third sector providers, but because they could use them…
nef (the new economics foundation)
So …
nef (the new economics foundation)
Further information
•eva.neitzert@neweconomics.org
•www.neweconomics.org.uk
Measuring Value: A guide to Social Return on Investment (2008)
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