The ambitions and challenges of
SROI
Funded by:
Hosted by:
Domenico Moro
Third Sector Research Centre
University of Birmingham
Outline:
1. The need in UK of a single recognise tool
to identify and value social and
environmental values;
2. SROI, framework, methodology and
purpose;
3. Implication and challenge of SROI
4. Conclusion
1) The need of a single tool
Trend for increased involvement of third sector in delivery of
public services
Social enterprises claimed to address social problems that
have proved beyond states and markets
Foundations are keen to understand where their donations
can achieve the highest social return
However:
– Little evidence to support claims that the third sector is better able
to deliver social outcomes
– There are no commonly accepted ways of measuring social
outcomes
– This makes it difficult for states and philanthropists to decide who
to allocate resources to
2) SROI, framework, methodology and purpose;
• What is SROI?
OTS (2007)
Logic
Ebrahim and Rangan
(2010)
2) SROI, framework, methodology and purpose;
• SROI is an adjusted cost benefit analysis
• It aims to highlight and strengthen social
and environmental values contributed by
third sector organisations
• … with the added value of enlightening and
educating organisations and stakeholders
• Stakeholder involvement is one distinctive
feature
Cost Benefit Analysis (CBA)
• Form of economic analysis to compare costs
and benefits, over time;
• Need to express cost and benefits in current
monetary terms;
– Tangible and intangible costs and benefit
• Methodologies often used to measure intangible
costs and benefits:
– Willingness to pay (or to accept = ‘compensation’)
– Contingent evaluation
– Revealed preferences
2) SROI, framework, methodology and purpose;
Ambitions
Measuring soft and hard outcomes
To develop consistency (while keeping flexibility)
For use by organisations, commissioners and
funders
Challenges
methodological and contextual
… general and inherent to social impact
measurement
… specific for SROI
2) SROI, framework, methodology and purpose;
As with CBA, SROI combines in the form of a
cash flow, the ratio of (discounted) costs and
benefits over a certain period of time;
• Both deal with tangible and intangible costs and
benefit
• Stakeholder consultation is distinctive to SROI
• SROI aims to combine methodological rigour with
an inclusive, democratic process
SROI vs CBA
• As with CBA, SROI combines in the form of a
cash flow, the ratio of (discounted) costs and
benefits over a certain period of time;
• In many SROI evaluations
– Many costs are tangible;
– Many “social” benefits are intangible (and are
often given high valuations, and hence a high
overall return);
Tangible vs Intangible
(from SROI guide 2009)
• Year 1 of Wheels to meals activity
Tangible
Intangible
TOTAL
Cost
£24,375
£18,000
£42,375
Benefits
£0
£82,508
£82,508
SROI and valuing intangible
social benefits
• Public spending figure as proxy for social
change such as;
– NHS average spending (costs)
– Criminal justice costs
– Unemployment benefits
• Do not represent any actual financial savings
(which would be closer to marginal rather
than average costs)
2) SROI, framework, methodology and purpose;
Valuing volunteering
• How is this valued? Minimum wage, average
wage, wage value equivalent to activity?
• An input or output or outcome?
• What are the opportunity costs?
– Organisations: recruitment and management of
volunteers
– For volunteers: time allocation between work,
leisure and volunteering
3) Implication and challenge of SROI
Deadweight, displacement, attribution, drop off
Framing impact in time and space:
- What happened without the program?
Deadweight
- Can others have been affected negatively?
Displacement
- What can be attributed to the program?
Attribution
-How long the outcome last
Drop off
3) Implication and challenge of SROI
• Temptation to use SROI for comparing
organisations despite warnings
– By organisations themselves – marketing
strategy
– By funders and commissioners
• Risk of how others interpret the findings
– Over-emphasis on the ratio
– Organisations feel exposed and vulnerable
3) Implication and challenge of SROI
• SROI process unaffordable for many
• Large number of SROIs completed have
been ‘pilot projects’
• Costs range from £4,000 for a limited
version, to hundreds of thousands of
pounds
• Costs high due to professionalisation of
process required to ensure quality
4)Conclusions
• The desire to promote SROI is understandable – if a single
tool could identify and value social outcomes this would
aid policy makers and those investing for social purpose;
• There is though no consensus as to what is meant by
‘social outcomes’, even less how to measure them;
• SROI is methodologically flawed;
• SROI is not able to meet the demands placed upon it. It
may be useful as in-house performance evaluation tool,
but cannot be used to compare organisations.