Social Return on Investment Toolkit

Social Return on Investment Toolkit How to Guide

Version 1 January 2015 Social Return on Investment Toolkit How To Guide

Contents Page

Background – about the Toolkit 2 What is Social Return on Investment? 2 How do you measure Social Returns? 2 The development of Social Returns – VERSO & the Bristol Accord 3 Bringing it all together – what the Toolkit provides 3 Gathering your evidence – before you begin… 4

Using the Toolkit – a step by step guide 5 Tab 1 Summary 5 Tab 2 Inputs 5 Tab 3 Outputs 6 Tab 4 Calcs 7 Tab 5 Glossary 7 Tab 6 About Me 7

Visualisation – drawing your SRO 10

Using your results 11

Frequently asked questions 12 Sources of further information and help 13

Glossary 15

Appendix 1 – Outcomes Table 17

2 Background – about the Toolkit

This Toolkit has been prepared as part of an EU funded Interreg Project called VERSO.

VERSO (Volunteers for European Employment) is a knowledge-sharing project set up in response to rising unemployment across the European Union. It aims to change negative attitudes sometimes associated with volunteering. By bringing together different partners from several EU countries, VERSO aims to find new approaches to help get people into employment through voluntary work.

What is Social Return on Investment?

Social Return on Investment is a means of measuring the outcomes achieved by a project. Measuring the cost of an activity is straightforward, measuring the outputs of a project, for example the number of jobs created, is relatively straightforward. Giving a value to the benefits, which a project provides, for example increasing the entrepreneurial activity in an area, is difficult. Social Return on Investment does this.

Social Return on Investment produces a description of how a project creates value and a ratio that states how much social value (in £/€) is created for every £1/€ of investment.

The use of this technique is important for VERSO. It helps us communicate the wider value to society of each project involving volunteers. The approach we have taken through our toolkit also enables a volunteer involved with a project to set out the learning they have achieved from their involvement with it. This helps to demonstrate how their personal development has evolved through the project.

How do you measure Social Returns?

The traditional process of social return on investment involves 6 stages:

1. Identifying the social returns delivered by the project and the geographical area they cover. 2. Working with people who have been involved to make sure the assumptions which have been made are agreed by everyone. 3. Evidencing the outcomes and giving them a value 4. Taking account of things which might affect the intensity of the project outcomes – asking for example which of the project outcomes would have happened anyway? 5. Calculating the Social Return on Investment through dividing the value given to the outcomes by the cost of delivering them 6. Reporting the findings

3 The further development of Social Returns – VERSO & the Bristol Accord

The approach set out above has been developed further to give a wider context for the outcomes of a project. This development uses the eight indicators of a sustainable community produced by the UK Government in 2003/2004 and is known as The Bristol Accord. This enables outcomes to be grouped in a way, which helps with comparison on more than simple monetary terms. The model for the assessment of sustainable communities is set out in the diagram below:

In addition to assessing the contribution of an outcome to a community, VERSO is interested in charting the benefit to an individual through involvement in a project. This Toolkit provides an opportunity for each volunteer to chart their personal development arising from their involvement in the project. It does this by linking their personal learning to the outcomes achieved by the project.

Bringing it all together – what the Toolkit provides

This Toolkit provides an approach to identifying social return on investment which sets out:  The monetary value of the outcome.  The contribution of the outcome to the sustainability of the community.

4  The contribution of the outcome to the personal learning of individual participants in the project.

Gathering your evidence, before you begin…

It is very useful to set up your management and administration systems, in terms of the evidence you collect, to enable you to undertake an SROI assessment. This isn’t complicated or onerous; it is however best done before a project starts. This avoids having to retro-fit the evidence around the SROI process.

All you need to know is:  The cost (in cash and kind) of the project.  The number of units delivered in terms of the outcome proxies which are relevant to your project (these are identified in the Outputs section of the toolkit below).  The duration of the project.

5 Using the Toolkit – a step by step guide

This Toolkit has been developed in a simple spreadsheet format.

It has six tabs:

Tab 1: Summary

This brings together the calculations from the input and output spreadsheets. You do not need to take any action to generate this. An example of what it looks like is set out below:

Tab 2: Inputs

The inputs page allows you to set out the costs of the project. This is important for developing the calculation of the SROI you have achieved. It has the headings set out below:

You need to enter the following information underneath each column:

Column 1- Input Costs Description: Provide a short description of costs – for example: rent, purchase of equipment, travel costs - Put one cost per row.

Column 2 - Input Costs Category: Indicate whether each cost is in money or based on an input from other sources (such as donated time). If the cost is in money ignore column 3 and enter the amount in column 4. Where the cost is based on “Other” go to column 3 and choose the relevant value associated with it.

Column 3 - Choice where input is “Other”: You are offered the options set out below, tick the one that best fits and enter the value in column 4:

6 Column 4 - Value [£]: Where you have monetary costs on a row simply enter them here. Where you have identified a category from “Other” simply enter the unit cost identified from the drop down box (e.g. “Advice- £40/hr).

Column 5 - Volume [no]: Where you have identified a monetary value on a particular line enter 1 in this column. Where you have identified an “Other” value enter the number. Where this is equipment or borrowing it will just be 1, but for other hourly costs it needs to be the number of hours.

Column 6 - Duration [Years]: Set out here the number of years you expect the project to deliver outcomes for.

Column 7 - Value [£]: The spreadsheet will work out the gross value of the costs of the project for you.

Column 8 - NPV: Where the project runs for more than one year, the spreadsheet will show in this column the overall cost of the project taking account of the impact of inflation in future years. This value is called the Net Present Value.

Tab 3: Outputs

The outputs page enables you to identify a value for each output arising from the project. It has the headings set out below:

You need to enter the following information in each column:

Column 1 - Output Description: Insert a simple description on each line for each thing you feel your project has achieved as an output.

Column 2 - Outcome: Choose an outcome from the following list which best describes the output you have put in column 1. There are 40 options (see Appendix 1 for more information). You need to hover over the list and click on your choice. You can select one outcome per output specified in column 1. The box once you have chosen your outcome look like this:

7 Column 3 - Bristol Accord Impact Area: The spreadsheet will automatically choose the sustainability impact arising from your outcome in column 2.

Column 4 - Proxy for Impact: The spreadsheet will automatically choose the proxy measure which can be used to quantify the outcome you have specified in column 2.

Column 5 - Value: The spreadsheet will automatically choose the value linked to the outcome you have selected in column 2.

Column 6 - Unit: The spreadsheet automatically selects the unit of measurement linked to the value in column 5 arising from the outcome you have selected in column 2.

Column 7- Volume [No]: Consider carefully how many of the units specified in column 6 will be delivered each year by your project. Enter this number in column 7.

Column 8 - Duration [Years]: Specify the number of years the project will run for.

Column 9 - Value [£]: The spreadsheet will automatically work out the value of the outcome you have specified in column 2 based on the information contained in columns 3-8.

Columns 10 – 13: A number of factors can lessen the impact of an outcome. Those that concern us are set out in columns 10-13. They are:  Leakage: the proportion of the outcome that does not benefit the area we are concerned with.  Deadweight: the proportion of the outcome that would have happened without the project.  Attribution: the proportion of the outcome that might be claimed by other organisations/actors.  Drop Off: the reduction of achievement of outcomes over time. You need to choose a percentage to represent each of these factors. Where you do not believe the factor concerned is relevant leave the column blank.

Column 14 - Net Value: The spreadsheet will calculate the net value of the outcome you have specified in column 2 taking account of the mitigating factors in columns 10 -13.

Column 15 - NPV: The spreadsheet will calculate the Net Present Value (taking account of the impact of inflation) of the net value in Column 14.

Column 16 - SROI: The spreadsheet will calculate the SROI by bringing together the costs set out in Tab 2 with the outputs in Tab 3. It will summarise this information on Tab 1.

8 Tab 4: Calcs

This Tab contains the formulae used by the spreadsheet. Please do not change anything here.

Tab 5: Glossary

This tab contains a more detailed explanation of the 40 outcome areas offered. You should use it when choosing the outcome at tab 2 to make sure you have identified the best fit between the list of outcomes and your project outcome. For more information please refer to Appendix 1.

Tab 6: About Me

This Tab enables you to set out your involvement and/or for others to set out their involvement in your project. A screenshot of it is set out above.

The first 5 areas to answer [name, length of time involved with the project, from, to, hours per week] are quite straightforward.

In terms of a Description of the achievements through the project – choose the outcomes specified in Tab 3.

In terms of Learning outcomes from the project for me – cross reference the options offered in the drop down box with the list of 40 outcomes by clicking on the number of the learning outcome that corresponds to the number of the outcome in the description of achievement box above. In the example above: Description of Achievement is 1 “Improved well-being through development of cultural, recreational and sports facilities” and the learning outcome which corresponds with it is 1 “Engaging effectively with people”.

9 If the outcome was “2. Improved social capital, community ties and strengthened civic engagement through greater use of community space” you would choose learning outcome 2 – “Understanding the motivations and context of other organisations.”

Evidence of things I learnt in this area and Additional comments provide an opportunity for you to make your personal statement about what you personally achieved in relation to the overall project, please try and do this with reference to the learning outcomes. You can also use this space to embed video, personal diaries, photographs and other social media relating to your experience of participating in the project.

10 Visualisation – drawing your SROI

Showing the impact of your SROI is a powerful means of communicating it. The following example is a visualisation of a SROI undertaken by an organisation that works with voluntary and community groups and communities to maximise their effectiveness and efficiency:

In the example above, the Input Costs are specified to the far left of the diagram. The name of the project and SROI achieved are set out in the middle. The relevant sustainable communities indicators from the Bristol Accord/Egan Wheel are to the immediate right of the project name; the outcomes arising from them follow in the next column; followed by the proxy and unit of measurement for each outcome. Finally the value of each proxy along with any factors which lessen its impact are shown in the last column. The summation of all the outcome values, taking account of these factors and net present value is then shown at the bottom of the Bristol Accord/Egan Wheel indicators.

There are a number of mind mapping packages that can help you produce a similar diagram. Some are more suited to Apple systems and others more suited to Microsoft systems; some packages are free to download and use whilst others may charge.

11 Using Your Results

The VERSO SROI toolkit operates at a number of levels:

Project design – by thinking through the outcomes you seek to achieve and using the tool to consider the evidence you need to collect, the toolkit will help you test your proposed approach and how its contribution to: the sustainability of an area, its direct benefit to a community and its direct benefit to an individual can be evidenced. When an SROI is completed, it provides very helpful learning (particularly in the consideration of any unforeseen outcomes) to support the development of projects/activities in the future.

Project outcomes – using the tool gives a monetary value to the outcomes achieved by your project, showing the full range of impacts you have achieved rather than just the outputs from the project.

Comparison – the SROI process gives you a means of comparing (in relative terms) the value of your project’s achievements and benchmarking them against the results of other projects with an SROI assessment. If you are a funder, the use of SROI will enable you to build up a bank of data over time, which demonstrates the generic characteristics of certain types of projects in terms of SROI. For example capital investment in community buildings will have a longer duration in terms of impact because of the physical manifestation of the investment than many revenue projects where the impact will only be linked to the beneficiaries for the duration of the funding itself. Projects which deliver outcomes in terms of expensive public service activities for example health and crime have a relatively higher SROI than those which cover less expensive areas of public activity.

Engagement – by involving those who have benefitted from the project in assessing its outcomes, particularly in terms of any initially unforeseen or unexpected outcomes, the SROI process helps draw those who have benefitted from a project into the broader process of assessing its outcomes. This can also help them think about and evidence their personal development. We have built a particular “About Me” feature into the VERSO toolkit to maximise this aspect of the SROI process.

12 Frequently Asked Questions

Why are there blank rows in the spreadsheet? This simply provides space for you to add as many as outcomes (1 per row) as you wish.

Why does an error ‘#DIV/O!’ come up on some cells? Ignore this it simply arises from the unused rows in the spreadsheet.

My project lasted less than 12 months, can I use the Tool? Yes as long as you are able to set out your costs – any project with a duration of less than one year can still be assessed using the tool. Where prompted in the spreadsheet to enter a number of years simply enter 1.

My project was supported by more than one funder – can I break the cash figures down to input an amount (£) per funder? The spreadsheet shows the overall social return on investment of a project taking account of all costs and all outcomes. You can either enter the funding from each individual funder on a separate row or add it all up and enter it in one row. Where you have received “in-kind” funding such as volunteer time or equipment you can identify a value for this from the drop down in the spreadsheet and enter it on a separate row as an additional value.

Why does the SROI vary between capital and revenue projects? The SROI process does not differentiate between capital and revenue projects. It calculates the social return on investment of a project irrespective of its character. We do set out some considerations of the relative impact different types of projects in the using your results section of the toolkit.

What about the negative impacts of a project, how can these be captured? The toolkit already allows you to identify the impact of leakage, deadweight, attribution and drop off. You can also enter negative values in those cells where you specify volumes if you wish to show a negative impact.

What can I do to help me think about SROI and using this Tool before my project starts? It is very useful to set up your management and administration systems, in terms of the evidence you collect, to enable you to undertake an SROI assessment. This isn’t complicated or onerous; it is however best done before a project starts. This avoids having to retro-fit the evidence around the SROI process. As indicated earlier on in the toolkit you need to know: the cost (in cash and kind) of the project, the number of units delivered in terms of the outcome proxies that are relevant to your project and the duration of the project. Setting the evidence collection approach up before the project starts, is also very useful for reviewing your proposed delivery approach and ensuing you have a robust and fit for purpose way forward.

13 Sources of further information and help

Bristol Accord / Egan Wheel http://www.eib.org/attachments/jessica_bristol_accord_sustainable_communiti es.pdf This document was published in 2005 and sets out the background and purpose of the Bristol Accord – eight characteristics of a sustainable community: a set of principles common to all Member States in seeking to create sustainable communities across Europe.

Cabinet Office – a Guide to SROI http://www.bond.org.uk/data/files/Cabinet_office_A_guide_to_Social_Return_on _Investment.pdf A Guide developed by the New Economics Foundation & the SROI Network and published by the Cabinet Office. The document has been written for people who want to measure and analyse the social, environmental and economic value being generated by their activities or by the activities they are funding or commissioning. It provides a step by step Guide of how to undertake a SROI analysis as part of efforts to standardise practice and provide more clarity on the use of SROI.

New Economics Foundation: Social Return on Investment http://www.neweconomics.org/issues/entry/social-return-on-investment NEF is an independent think tank promoting social, economic and environmental justice. Its web page on SROI includes links to facts, blog posts and publications setting out alternative tools to measure social and environmental impacts.

Proving and Improving http://www.proveandimprove.org/ This website is for charities, the voluntary sector and organisations that support socially enterprising activity. It contains a range of resources to help organisations prove and improve their quality and impact. The list of Tools includes a description of SROI; its benefits and limitations; the resources needed and third sector examples.

SROI Network / Social Value UK http://www.thesroinetwork.org/ The SROI Network promotes the use and development of the Social Return on Investment methodology internationally, encouraging a community of practice along the way. The SROI Network is a membership organisation and a company limited by guarantee. The website contains a range of case studies; information about SROI has helped other organisations and publications (what is SROI and how to undertake SROI analysis).

The Global VALUE Exchange http://www.globalvaluexchange.org/ An open source database of Values, Outcomes, Indicators and Stakeholders. The Exchange provides a free platform for information about SROI to be shared, enabling consistency and transparency in measuring social and environmental

14 values. The website includes: a chain of events feature which allows the user to develop theories of change of link outcomes to other outcomes; outcomes matrix which allows the user to see which outcomes are being used by which organisation; and links to research. Users of the site are also able to interact with the information – they can comment, rate and say how they use the existing entries.

Third Sector Research Centre (TSRC) http://www.birmingham.ac.uk/generic/tsrc/index.aspx The Centre is part of the University of Birmingham and aims to explore the key issues affecting charities and voluntary organisations, community groups, social enterprises, cooperatives and mutuals. The Centre’s research includes briefing and working papers and a presentation on SROI.

Volunteers for European Employment (VERSO) http://www2.eastriding.gov.uk/living/community-groups-and- volunteering/verso/?locale=en VERSO is a Pan-European knowledge-sharing initiative set up to combat the rising figures of unemployment across the European Union and change negative attitudes sometimes associated with volunteering. By bringing together different partners from several EU countries, VERSO aims to find new and innovative approaches to help get people into employment through voluntary work. The outputs of and news about the initiative – including the development of this Toolkit – are signposted from the site.

15 Glossary

Adequate Resources: whether you have adequate resources for the evaluation depends upon how much work you have to do and how many person-hours you have available.

Activity: ‘activity’ is used in this document for the project, programme or activity that you are evaluating.

Attribution: an assessment of how much of the outcome was caused by the contribution of other organisations or people.

Beneficiary /Beneficiaries: those individuals, groups or organisations – whether targeted or not - benefitting from project or activities funded by an organisation.

Bristol Accord / Egan Wheel: In 2003 Sir John Egan was commissioned to undertake an assessment of the factors required to deliver sustainable communities. He identified 8 key indicators which form a useful basis on which to consider the relative sustainability of places. These indicators were set out in ‘The Egan Wheel’, published in 2004.

Checking: using a variety of sources or team members to triangulate and validate the data you have collected and its analysis.

Complexity: the complexity of your evaluation largely depends upon the number of outputs and the variety of types of stakeholder. It will also depend on whether you are evaluating your whole project or one activity within it.

Cost / Cost Allocation: the costs of or expenditure to activities related to a given project or programme.

Deadweight: the amount of outcome that would have happened even if the activity had not taken place.

Discounting: the process by which future financial costs and benefits are recalculated to present day values.

Displacement: how much of the outcome has displaced other outcomes.

Distance Travelled: the progress that a beneficiary makes towards an outcome.

Drop Off: the deterioration of an outcome over time.

Duration: how long (in years) an outcome lasts after the project intervention, such as length of time a participant remains in a new job.

Financial Value: the financial surplus generated by an organisation in the course of its activities and/or project. Impact: ‘any effects arising from an intervention. This includes immediate short-term outcomes as well as broader and longer–term effects. These can be positive or negative, planned or unforeseen’.

Impact Table: a table that captures how an activity makes a difference: that is how it uses its resources to provide activities that then lead to particular outcomes for different stakeholders.

Income: an organisation’s financial income from donations, contracts, grants or sales. 16 Inputs: the contribution made by each stakeholder that are necessary for the activity to happen.

Leakage: the proportion of outputs that benefit those outside the project/organisation’s intended target area or group.

Monetise: to assign a financial value to something.

Net Present Value: the value in today’s currency of money that is expected in the future minus the investment required to generate the activity.

Outcome: the outcome is effect of the activity. In the above example it might be improved confidence and employability amongst the young people. Outcomes can be short or long term and can be positive or negative. Some may be unintended.

Outcomes Map: a structured explanation of the processes and actions whereby the outcomes of the activity have come about for the various stakeholders.

Output: the output is the immediate result of your activity. For example, it might be 10 sessions of a training course for unemployed young people.

Output Indicator: a well-defined measure of an outcome.

Payback Period: the time (in months or years) for the value of the impact to exceed the investment.

Proxy: an approximation of value where an exact measure is impossible to obtain.

Result: the output, outcome or impact (intended or unintended, positive or negative) of an intervention.

Scope: the activities, timescales and type of SROI analysis.

Social Return Ratio: Total present value of the impact divided by total investment.

Stakeholders: the stakeholders are all the people affected by the process and the outcomes. They are likely to include volunteers as well as the beneficiaries of the volunteering.

Sustainability: the likelihood that the positive effects of an intervention (such as assets, skills, facilities or improved services) will persist for an extended period after the intervention ends.

17 Appendix 1: Outcomes Table

The first column of the Table takes each of the 8 indicators of sustainable communities developed by the Bristol Accord/Egan Wheel. For each indicator, five outcomes have been developed using research and policy insights from Professor Paul Courtney (University of Gloucestershire) and practitioner experience provided by Rose Regeneration. The Glossary Tab in the spreadsheet provides detailed information about the source for each outcome. Bristol Accord / Egan Wheel Outcome Sustainable Communities Indicator Active, inclusive and safe Improved well-being through development of cultural, recreational and sports facilities Improved social capital, community ties and strengthened civic engagement through greater use of community space Improved social inclusion and access to community resources Increased volunteering and potential for greater community participation and development Reduced social isolation for community members Well Run Improved capacity for local solutions to local problems Improved trust, relationship building and group participation Strengthened public and civic engagement Improved efficiency and dynamism of community and voluntary sector Improved leadership and agency for individuals in the community Environment Carbon reduction through sustainable behaviours and increase in green space Improved water and soil quality Improved flood management Increased aesthetic and cultural value of physical environment Improved resource efficiency adoption of renewable energy in business sector Well Designed and built Improved protection, management and conservation of historic resources Increased or improved open green spaces and recreational infrastructure Improved access and affordability to quality housing Reduction in crime and the perception of crime Improved resilience of natural and man-made structures against disasters Well Connected Increased use of public transport and reduced dependence on private cars Improved community health and service provision Improved health and well-being for local residents Improved access to regional, national and international communications networks Improved access to public, private and consumer services for local residents

18 Fair for Everyone Increased living conditions and welfare for local citizens Improved links and synergies between neighbouring and global communities Increased empathy and understanding Improved ability to affect local change Improved life satisfaction Thriving Increase in the creation of new micro-enterprises Increase in entrepreneurship and innovation Increased employability of local people Development of local capacity in value added Skills development and improvement for residents and workers (Including migrant workers) Well Served More substantive links between organisations and service providers Greater sense of cohesion and cooperation across different sectors Improved performance of local schools and educational institutions Improved family and children's services Improved access to public, private and consumer services for local residents