Kat's SROI Lecture, Mar 2009
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Transcript of Kat's SROI Lecture, Mar 2009
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Measuring What Matters Social Return on Investment (SROI)
Katherina Rosqueta, Executive Director Center for High Impact Philanthropy
School of Social Policy & Practice (SP2)March 2009
THE CENTER FOR
High Impact Philanthropy
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Purpose of SROI
Measure social impactLearn from past programs
Improve for future programs
Decision making among programmatic options
Communicate to Donors / Stakeholders
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ROI = Gain or Loss from InvestmentCost of Investment
Return on Investment (ROI), is the ratio of money gained or lost (realized or unrealized) on an investment, relative to the amount of money invested.
Return on Investment (ROI) Definition & Example
Cost of Project = $500
Ex. 1:
Sales from Project = $750
ROI = 750-500
500
250
500=
.5 or 50%=
Cost of Project = $500
Sales from Project = $1250
Ex. 2:
ROI = 1250-500
500
750
500= 1.5 or 150%=
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REDF SROI: Measuring Value & Return
Apply 6 stage process
1. Enterprise Value
2. Social Purpose Value
3. Blended Value
Value
+
=
4. Enterprise Index of Return
5. Social Purpose Index of Return
6. Blended Index of Return
Return
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REDF SROI: Measuring Return Example
In 1999-2000, Rubicon Landscape Services achieved gross sales of $3.9 million and employed 52 target employees.
Enterprise sales were expected to increase to $7.8 million by 2004 in order to employ a projected 78 to 140 target employees.
Rubicon Landscape Services is a social purpose enterprise fully owned and operated by Rubicon Programs, Inc. a nonprofit community development corporation based in Richmond, California. The enterprise provides grounds maintenance and landscape installation services to large-scale residential, commercial and institutional properties throughout the San Francisco Bay Area and employs disabled or economically challenged individuals.
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“Unfortunately, as many organizations wrestle with how to calculate their social return on investment (SROI), some in the field are starting to question whether the methodology is too costly and complex to be meaningfully used to evaluate nonprofit effectiveness.”*
Beyond SROI
* Mark Kramer, “Measuring Innovation: Evaluation in the Field of Social Entrepreneurship,” Foundation Strategy Group, April 2005. On page 22, an interview with Jed Emerson highlights some of the challenges that organizations have had in calculating SROI.
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Multitude of systems Multiple Metrics
(Source: Rockefeller Foundation (2008)
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Current Leading Metrics
SROI SROI
BACO Ratio
Benefit-Cost Ratio
Expected Return
Cost per Impact
Portfolio AssessmentsFoundation Investment Bubble Chart
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Acumen Robin Hood CHIP
Nature of org
Venture philanthropy fund
Foundation Resource center for
philanthropists
Nature of activity
Invest in both for profit and non-for profits
Give grants to nonprofits in NYC
Develop guidance for philanthropists
Tool BACO (Best Available Charitable Option)
Benefit cost ratio Cost per impact
Metrics Examples
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BACO (Acumen Fund)
Cost Analysis Nonprofit For-profit
Total Cost $390,000 $455,000
Expected Financial Return
$0 $422,500
Total Output (Bed Nets)
97,825 2,000,000
Total Social Impact (person years of malaria protection)
464,286 or $0.839/person year
2,000,000 or $0.016/person year
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Robin Hood Foundation
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Center For High Impact Philanthropy
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Strengths and Limitations of SROI
+
• Brings objective, quantitative metric
• Forces focus • Enables comparison of
programs • Fosters investment mentality
–
• Allure of false precision • Resource intensive • Does not fully capture the
complexities on the ground • Not all benefits or costs are
easily monetized, counted