Social Return on Investment

1
Social Return on Investment

• SEEP Annual Meeting
• October 2003

2
Concepts and Constructs for Getting to SROI

• What is a Value Proposition?
• What is a Social Bottom Line?
• How do you construct a Social Bottom Line?
• What is a Blended Value Proposition?
• What is a Double Bottom Line?
• The Blended Value Proposition and the Social
  Return on Investment

3
The Value Proposition

• A clear articulation of the purpose of your
  enterprise Mission
• strengthened by a clear articulation of the
  value to clients that your services will create

4
What is a Social Bottom Line?
Stakeholders
Types of Impact

• The impact of operations on key stakeholders tied
  to your enterprise

5
Constructing a Social Bottom Line

• Identify which stakeholders and what impacts are
  central to understanding whether you are meeting
  your value proposition
• Setup the tools and systems that will generate
  information on the relationship between those
  stakeholders and impacts

6
Two General Directions

• Valuation of outputs
• Validation of internal processes

7
Valuation of Outputs

• Impact on clients improvements in their
  well-being/welfare
• Impact on society mitigation of negative
  effects on environment, improvements in civic
  life, contributions to the public purse

8
Examples

• Impact on Clients
• Calvert SROI Calculator estimates that for a
  certain amount of money invested over a certain
  amount of years in a particular country or
  region, a certain number of jobs will be created
• Freedom from Hunger estimates that for a given
  level of investment, a certain number of lives
  can be saved through reductions in chronic hunger
  and malnutrition

• Impact on Society
• The Deutsche Bank estimates that by changing
  certain business practices it will consume less
  paper in a year equivalent to 100 mature trees
• Citigroup estimates that its employees will
  contribute millions in taxes

Tools include cost-benefit analysis,
cost-effectiveness analysis and normally build on
some form of impact evaluation or assessment
9
Validation of internal processes

• Client relations client satisfaction
• Relationships with suppliers and distributors
• Internal staff relationships and HR policies

Tools include items such as Balanced Scorecards
10
Combination of internal validation and external
valuation

• Process which looks at both internal processes
  and external impacts
• example The Global Reporting Initiative

11
Blended Value Proposition

• Adding the net financial return to the enterprise
  with the determined net value of your social
  bottom line

12
Double Bottom Line
Positive Financial Return Negative Social Return
Positive Financial Return Positive Social Return
Social Bottom Line
Financial Bottom Line
Negative Financial Return Positive Social Return
Negative Financial Return Negative Social Return
13
Social Return on Investment

• Is the blended value of the net financial return
  and the net social value divided by the
  investment costs over that period