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
Stakehol
der
Input
Activity
Output
Outcome
Outcome
indicator/proxy
Participa
nts
(32)
Skills
Time
Trained in
computer
recycling
IT skill set
No. of recycled
computers
Increased selfconfidence
Improved mental
health
Sustainable
employment
Improved life
stability
# gaining
employment and
average wage
earned (£13,500)
-ATTRIBUTION
-DEADWEIGHT
Local
governm
ent
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
costs
Improved 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
nef (the new economics foundation)
Impact map
Stakeholders
Local
Authoriti
es
Households
in need
Volunteers
Needs
Divert waste
from landfill
Low cost
furniture
Activities
Outputs
Reuse and
recycling
bulky
waste
Waste diverted
from
landfill
Savings to LAs (*)
Reduced
environmental
impact
Contribution to council
targets
Furnished
homes:
cost
savings
Reduced debt
Increased well-being
Increased community
cohesion
Improved skills
and
employabili
ty
Increased selfesteem
and
confidence
Improved well-being
Employment
Reintergration with
family and
community
2
nd
hand
furniture
showroo
m
Training /
Training and
Personal
supervisi
developmen
on
t meaningful Learning
use of time
new
skills
Working as a
part of a
team
Outcomes
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:
Carbon savings
Reduced env. impacts landfill
Savings to families in need
Improved human capital
Benefits to individuals
nef (the new economics foundation)
£ 3,600
£ 1,413
£ 750
£ 138,705
£ 132,000
£ 24,750
Stage 3: calculation
Benefits to Local Authorities
Benefits to Local citizens and communities
Wider benefits (national and global citizens)
£69,600
£164,205
£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
SROI
£1.61 per public £ invested
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
Public
service
contracts
nef (the new economics foundation)
Social
enterprises,
third sector
orgs
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)
Sustainable Commissioning
outcomes framework
Commissioner &
service user
priorities
1.
Activity
2.
Output
Community strategy
& Corporate
priorities
3.
4.
Service level
outcomes
Camden
Community
outcomes
–social
–economic
–environment
National
outcome
frameworks
nef (the new economics foundation)
5.
Value
–Quantitative
–Qualitative
–Monetizeable
Where value
accrues:
- To Service
- Camden wide
- central
government
Day Care Services pilot
Procurement
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 tender
process
• 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)
nef (the new economics foundation)