1. ©2004 Social Venture Technology & Consulting (SVT). All rights reserved. SROI : : An Overview Workshop on Social Impact Measurement Social-Impact International Hyderabad, March 12-13, 2007 Sara Olsen Social Venture Technology Group

2. ©2006-2007 Social Venture Technology Group. All rights reserved. Social Return on Investment Agenda: Importance Method Example Future ImportanceMethodExampleFuture

3. ©2006-2007 Social Venture Technology Group. All rights reserved. Trillion US$ (2004 dollars) Gross World Product, 1950-2004 ImportanceMethodExampleFuture

4. ©2006-2007 Social Venture Technology Group. All rights reserved. The world was simpler

5. ©2006-2007 Social Venture Technology Group. All rights reserved. Now it’s complex ©2005 SVT Consulting. All rights reserved.

6. ©2006-2007 Social Venture Technology Group. All rights reserved. “Perfect information”

7. ©2006-2007 Social Venture Technology Group. All rights reserved. Brief history of valuation 1400AD2000ADfutureprehistory INTUITION financial accounting environmental and social accounting SYSTEMS STORIES

8. ©2006-2007 Social Venture Technology Group. All rights reserved. Capital markets see a fraction Cosmic rays Gamma rays X-raysUltravioletVisible light InfraredHeatRadio waves …of the value that is there

9. ©2006-2007 Social Venture Technology Group. All rights reserved. The result YOU can’t get the money you need

10. ©2006-2007 Social Venture Technology Group. All rights reserved. So how can we… …measure the full value ecosystem? …use this information to make strategic management decisions? …enable investors/funders to see the full value? ImportanceMethodExampleFuture

11. ©2006-2007 Social Venture Technology Group. All rights reserved. Social Return on Investment Definition: “The non-financial value created by an organization relative to the investment required.” “SROI” ImportanceMethodExampleFuture

12. ©2006-2007 Social Venture Technology Group. All rights reserved. Goals of SROI Analysis Align investment with value Assess actual value created Inform management decisions Help you maintain the integrity of your work! ImportanceMethodExampleFuture

13. ©2006-2007 Social Venture Technology Group. All rights reserved. Social Return on Investment | Method | ImportanceMethodExampleFuture

14. ©2006-2007 Social Venture Technology Group. All rights reserved. EASYHARD Sales revenue Capital assets Investment returns Dividends Etc. Life Freedom Dignity Happiness Etc. Goodwill Insurance Depreciation Liability Projected revenues Emission credits Income changes Education access Earnings potential Technology benefits Etc. Health Safety Biodiversity Clean air Safe water Education results Political stability Cultural Advancement Etc. TYPE ITYPE IITYPE IIITYPE IV Quantifiability : : Visibility ImportanceExampleFutureMethod

15. ©2006-2007 Social Venture Technology Group. All rights reserved. Types of Information about Value Five basic ways of articulating value: Financial (accounting: cash in, cash/work out) Monetizable (translating non-financial value into monetary equivalent) Quantitative (numbers: size, magnitude or degree) Qualitative (description: kind, type, or direction) Narrative (storytelling) ImportanceExampleFutureMethod

16. ©2006-2007 Social Venture Technology Group. All rights reserved. …SROI Analysis Framework 1.Define goals, audiences and scope 2.Map the impact value chain 3.Decide on metrics, datapoints and sources of information; develop work plan and assign roles 4.Collect data 5.Conduct analysis –Monetise indicators of outcome –Analyse income and expenditure –Calculate social return ratios –Develop quantitative, qualitative, narrative summaries 6.Develop report 7.Track information going forward ImportanceExampleFutureMethod

17. ©2006-2007 Social Venture Technology Group. All rights reserved. Synthesis of Many Approaches…

18. ©2006-2007 Social Venture Technology Group. All rights reserved. Builds on existing frameworks InputsActivitiesOutputsOutcomes What is put into the venture Venture’s primary activities Results that can be measured Changes to social systems Goal Alignment Activity and goal adjustment ImportanceExampleFutureMethod

19. ©2006-2007 Social Venture Technology Group. All rights reserved. Impact = differential change InputsActivitiesOutputsOutcomes What is put into the venture Venture’s primary activities Results that can be measured Changes to social systems Goal Alignment Activity and goal adjustment What would have happened anyway Essential! = IMPACT - ImportanceExampleFutureMethod

20. ©2006-2007 Social Venture Technology Group. All rights reserved. InputsActivitiesOutputsOutcomes Technical inputs- i.e. Systems Training Coaching Facilitating Technical / Functional support Etc. Primary activities conducted in the consultancy –business planning, board expansion, accounting systems, process design Results that can be measured i.e. product developed in consultancy: bplan, strategic plan Capitalization strategy New financial management Changes to Organization (minus) Goal Alignment Adjust activities and goals to outcomes Consulting may enter a new phase or execution may continue by org. What would have happened anyway = IMPACT -

21. ©2006-2007 Social Venture Technology Group. All rights reserved. Description: social enterprise that develops community-based, integrated waste management microenterprises in Peru Goals: in business to create more than financial value-- wants to restore the environment, improve peoples’ health and cultivate community-based economic development Example: Ciudad Saludable ImportanceMethodExampleFuture

22. ©2006-2007 Social Venture Technology Group. All rights reserved. What’s the value proposition? Financial value proposition –$$$$ revenue –$$ Costs Non-financial value proposition –Outputs/measurable indicators: #s of customers served with waste collection tons of garbage recycled # jobs created # people trained, etc…. –Outcomes/results: Less disease, fewer deaths, healthier people, less domestic violence, sense of pride and dignity Cleaner water, restored fish populations & biodiversity Fewer lost work days due to illness, lower health expenses, greater incomes and economic security ImportanceMethodExampleFuture

23. ©2006-2007 Social Venture Technology Group. All rights reserved. CS’s operations overall are big  15 environmental waste management micro-enterprises have been created that generate permanent employment for 180 people in 35 cities in the country and benefit 3 million inhabitants. These include: plant nurseries, humus plants and compost (organic fertilizer, recycled paper and sanitary landfills. It is important to note that all of the microenterprise employees receive income between 1.5 and 2 times the minimum wage (between $180-$260) Furthermore, they receive benefits such as health, pension, vacation and worker’s compensation for the time they have worked.  We have supported and consolidated the organization of informal recyclers. (Association of Independent Environmental Workers for the Recuperation of Solid Waste, 800 workers)  We have carried out large cultural campaigns for environmental sanitation with the participation of school children, teachers and parents.  We have trained authorities and public workers in 43 municipalities on the integrated management of solid waste, and in agreement with the Catholic University (Lima) we have developed a Post-graduate Program. In this Program we have trained 58 new local authorities of municipalities and teachers of other universities and private sector technicians of many cities of Peru. And now we are beginning a new edition of the Post- graduate Program with Catholic University, improving the previous edition since we added a new module on management of industrial and dangerous waste.  Raising public awareness on environmental and health issues: over 6,000,000 people reached  Transforming the organic waste into compost. More than 200,000 pounds processed and sold  Collaborated on the formulation of the Peruvian General Law on Solid Waste and the Regulation of this Law  Promoted the recognition of recyclers as part of the official waste management system: Began the official registration of micro-enterprises.  In agreement with the National Council of the Environment (CONAM) we elaborated a National Plan of Solid Waste Management. The first in all of Peru.  In collaboration with the Ministry of Health, the National Council of the Environment and the Pan-American Organization of Health we are organizing the establishment of the "Roundtable of National Dialogue on Sanitation"

24. ©2006-2007 Social Venture Technology Group. All rights reserved. Many possible impacts Economic Development –Jobs created that would not otherwise have been –Businesses created directly and indirectly –Wages earned above what would have been earned otherwise –Number of people who move out of poverty –Contribution to GDP Health: –Lives saved due to avoided infections of hepatitis, HIV –Lives saved due to avoided diarrhea –Domestic violence incidents avoided –Instances of illness, birth defects –Healthcare costs avoided Environment –Biodiversity not killed off –Toxic emissions not released into residential areas by waste –Trees not destroyed to create paper replaced by recycling –CO2 consumed by trees not destroyed Education –People trained who would not otherwise have been –Increase in earning potential of these people due to education –Increase in empowerment Well being –Increase in reported self-esteem –Increase in aesthetic quality of life

25. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case Breaking Down the SROI ImportanceMethodExampleFuture

26. ©2006-2007 Social Venture Technology Group. All rights reserved. Outputs Together we brainstormed all the potential impacts that result from CS’s work, and what CS wanted to measure. CS already counted a few outputs: the number of jobs created, the revenues from customer fees, and the amount of garbage collected. We identified a number of additional outputs and outcomes that it would be important to measure. OutcomesMonetization- Base case Ex: Ciudad Saludable SROI Analysis ImportanceMethodExampleFuture Measurable results of daily activities Changes in the world related to those outputs

27. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomes Internal data collection took place: staff microentrepreneurs local health authorities Research of “proxy studies” also took place: disease and death caused by exposure to garbage in similar regions costs of waste management if provided by the government in similar regions environmental impacts of pollution and waste Monetization- Base case Ex: Ciudad Saludable SROI Analysis ImportanceMethodExampleFuture

28. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case CS assumed “what would have happened otherwise” (if CS did not exist): what microentrepreneurs & CS staff would have earned what the incidence of children’s deaths from diarrhea in the region would be what it would cost for the government to collect the garbage instead of CS where the garbage would be if not collected by CS Ex: Cuidad Saludable SROI Analysis ImportanceMethodExampleFuture

29. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomes SVT monetized a subset of CS’s impacts using the dollar value of: The increase in microentrepreneurs’ earnings The relative savings to taxpayers of having CS do the waste management rather than the municipal government These values were calculated relative to the investment required to create them. Monetization- Base case Ex: Ciudad Saludable SROI Analysis ImportanceMethodExampleFuture

30. ©2006-2007 Social Venture Technology Group. All rights reserved. Selection from SROI Analysis

31. ©2006-2007 Social Venture Technology Group. All rights reserved.  15 environmental waste management micro-enterprises have been created that generate permanent employment for 180 people in 35 cities in the country and benefit 3 million inhabitants. These include: plant nurseries, humus plants and compost (organic fertilizer, recycled paper and sanitary landfills. It is important to note that all of the microenterprise employees receive income between 1.5 and 2 times the minimum wage (between $180-$260) Furthermore, they receive benefits such as health, pension, vacation and worker’s compensation for the time they have worked.  We have supported and consolidated the organization of informal recyclers. (Association of Independent Environmental Workers for the Recuperation of Solid Waste, 800 workers)  We have carried out large cultural campaigns for environmental sanitation with the participation of school children, teachers and parents.  We have trained authorities and public workers in 43 municipalities on the integrated management of solid waste, and in agreement with the Catholic University (Lima) we have developed a Post-graduate Program. In this Program we have trained 58 new local authorities of municipalities and teachers of other universities and private sector technicians of many cities of Peru. And now we are beginning a new edition of the Post- graduate Program with Catholic University, improving the previous edition since we added a new module on management of industrial and dangerous waste.  Raising public awareness on environmental and health issues: over 6,000,000 people reached  Transforming the organic waste into compost. More than 200,000 pounds processed and sold  Collaborated on the formulation of the Peruvian General Law on Solid Waste and the Regulation of this Law  Promoted the recognition of recyclers as part of the official waste management system: Began the official registration of micro-enterprises.  In agreement with the National Council of the Environment (CONAM) we elaborated a National Plan of Solid Waste Management. The first in all of Peru.  In collaboration with the Ministry of Health, the National Council of the Environment and the Pan-American Organization of Health we are organizing the establishment of the "Roundtable of National Dialogue on Sanitation" First analysis covers part of the organization

32. ©2006-2007 Social Venture Technology Group. All rights reserved. Impacts included in first analysis Community Economic Development –Jobs created that would not otherwise have been –Businesses created directly and indirectly –Wages earned above what would have been earned otherwise –Number of people who move out of poverty –Contribution to GDP Health: –Lives saved due to avoided infections of hepatitis, HIV –Lives saved due to avoided diarrhea of children under 5 –Domestic violence incidents avoided –Instances of illness, birth defects –Healthcare costs avoided Environment –Biodiversity not killed off –Toxic emissions not released into residential areas by waste –Trees not destroyed to create paper replaced by recycling –CO2 consumed by trees not destroyed Education –People trained who would not otherwise have been –Increase in earning potential of these people due to education –Increase in empowerment Well being –Increase in reported self-esteem –Increase in aesthetic quality of life

33. ©2006-2007 Social Venture Technology Group. All rights reserved. Impact Analysis is a Process Source: Social Impact Assessment Project, Will Rosenzweig, Cathy Clark, David Long, Sara Olsen and the Rockefeller Foundation, copyright 2003. The “Stages of Impact Assessment” CS before CS after SROI Analysis

34. ©2006-2007 Social Venture Technology Group. All rights reserved. Reporting: show fuller spectrum of value monetized value qualitative value quantified value financial value narrative value ImportanceMethodExampleFuture

35. ©2006-2007 Social Venture Technology Group. All rights reserved. Results: Connect with Diverse Audiences Internal Management Financial Monetizable Quantitative Qualitative Narrative Investor 1Investor 2 ImportanceMethodExampleFuture

36. ©2006-2007 Social Venture Technology Group. All rights reserved. Current Evolution SROI Analysis “types” emerge that reflect different geographies, industries, missions Greater comparability and credibility “Portfolio analysis” becoming possible ImportanceMethodExampleFuture

37. ©2006-2007 Social Venture Technology Group. All rights reserved. Innovation in Capital Markets New financial instruments that tap wider range of capital sources –Packard & Sustainable Fisheries Fund –Developing World Markets & microfinance securitization –Sierra Gorda “gourmet package” New classes of investors emerge –“Portfolio of investors” concept “Social asset” trading (like carbon markets)? ImportanceMethodExampleFuture

38. ©2006-2007 Social Venture Technology Group. All rights reserved. Future See and communicate value Optimize the work Achieve “network effect” Move money to good! ImportanceMethodExampleFuture

39. ©2006-2007 Social Venture Technology Group. All rights reserved. Sara Olsen sara@svtgroup.net Contact us

40. ©2006-2007 Social Venture Technology Group. All rights reserved. Additional Slides

41. ©2006-2007 Social Venture Technology Group. All rights reserved. Outputs Mobius projected the amount of chemicals not consumed, extra energy required, and avoided waste OutcomesMonetization- Base case Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

42. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case ©2002 Mobius Technologies and SVT Consulting. All rights reserved. From Mobius Technologies’ SROI Analysis, 2002 Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

43. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomes SVT analyst quantified emission, effluent and waste associated with chemical production based on existing studies by APME and Mobius industry knowledge Monetization- Base case Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

44. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case Data from APME lifecycle analysis Builds on Mobius and APME data From Mobius SROI Analysis, ©2002 Mobius Technologies and SVT Consulting. All rights reserved. Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

45. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case Mobius assumed customers would not reuse scrap since there was no other technology to enable this, so they sell it for carpet backing, then it goes to landfill or incineration Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

46. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomes SVT monetized a subset of Mobius impacts using the dollar value of CO2, SOx and NOx emissions credits obtained from Cantor Fitzgerald Monetization- Base case Ex: Mobius Technologies SROI Analysis ImportanceExampleFutureMethod

47. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization- Base case ©2002 Mobius Technologies and SVT Consulting. All rights reserved. Ex: Mobius Technologies SROI Analysis Values in this analysis were derived from ERC markets, tipping fees ImportanceExampleFutureMethod

48. ©2006-2007 Social Venture Technology Group. All rights reserved. OutputsOutcomesMonetization ©2002 Mobius Technologies and SVT Consulting. All rights reserved. Ex: Mobius Technologies SROI Analysis - Base case ImportanceExampleFutureMethod

49. ©2006-2007 Social Venture Technology Group. All rights reserved. Research Roles OutputsOutcomes Results that can be measured in operations Changes to social systems Tracked regularly NGO, Investor, Funder Periodic Need data from researchers and other stakeholders ImportanceExampleFutureMethod

50. ©2006-2007 Social Venture Technology Group. All rights reserved. Principles 1.Useful 2.Feasible 3.Credible : : Rigorous : : Replicable : : Transparent : : Avoids misuse 4.Integrative : : Open source ImportanceExampleFutureMethod