1. October 2003 SEEP Annual Meeting Measuring Social Return For Social Enterprise

2. SEEP Annual Meeting October 2003 2 Double Bottom Line Financial Sustainability Social Impact Measures social and economic objectives

3. SEEP Annual Meeting October 2003 3 Objectives are Aligned Vision Social Impact Objectives Social Impact Objectives Sustainability Objectives Sustainability Objectives Mission

4. SEEP Annual Meeting October 2003 4 Objective Examples  Social Impact Scale  Services rendered  Clients served Jobs created Client income New tax revenue Public assistance saving  Sustainability (Enterprise Performance) Operating efficiency Net profit/loss Donor dependency Sales volume Gross margin

5. SEEP Annual Meeting October 2003 5 Measuring Social Objectives  Select impact measurements early and do a baseline study.  Build information system to collect and measure impact  Collect anecdotes evidencing hard-to- measure social impact.  Budget for social impact monitoring.  Social impact measures depend on the mission.

6. SEEP Annual Meeting October 2003 6  Financial sustainability objectives are easier to set and quantify, than social objectives  Business issues can overwhelm social objectives.  Insufficient funds, inadequate, time skills/systems to measure social impact.  Unaccustomed to measuring social returns in “business” terms. Measurement Challenges

7. SEEP Annual Meeting October 2003 7 Social Impact and Social Return  Social impact - measures qualitative and quantitative social impact based on social objective and type of organization  Social Return on Investment (SROI) - measures the social value the social enterprise creates in financial terms as a ratio of the investment.  *Investor= donor, taxpayer, sponsor or private contributor.

8. SEEP Annual Meeting October 2003 8  Investment-oriented View grants and subsidies as investments in relation to the overall capital structure of the social enterprise.  “Double-bottom line" value proposition A successful SE business model must balance social purpose and enterprise value creation.  Practical Tool To be effective, SROI must be designed to inform the work of practitioners over time: ongoing measurement and assessment tools are a critical element. SROI Framework

9. SEEP Annual Meeting October 2003 9 Understanding Value Creation

10. SEEP Annual Meeting October 2003 10 Understanding Value Creation (2)  Economic Value Traditional value creation in for-profit businesses (profit)  Social Value Traditional value creation in non-profit organizations, leading to improvements in the lives of individuals or society as a whole.  Socio-Economic Value Builds on the foundation of Economic Value by adding Social Value that can be quantified and expressed in economic terms (monetized), either as cost savings (e.g. reduced need for public assistance) or increased revenues (e.g. increased tax paid).  Unquantifiable Social Value Place SROI in larger context of value creation that include qualitative aspects not included in the SROI analysis (e.g. quality of life issues)

11. SEEP Annual Meeting October 2003 11 Measuring and Monetizing Value Excess Cash Generated, not including: Grants and Subsidies Expenses directly associated with social mission = Enterprise Value Blended Value Monetized Social Impact - Expenses directly associated with social mission = Social Value (Remove Long-Term Debt)

12. SEEP Annual Meeting October 2003 12 Blended Value Economic Social Value

13. SEEP Annual Meeting October 2003 13 SROI Examples  Job created =cost savings on public assistance  Fair wages = increase in taxable income  Income-generated by enterprise = savings to donor  Enterprise profit = investment $ for other social programs

14. SEEP Annual Meeting October 2003 14 Examples of SROI formulas Economic impact = Public assistance savings + earned income Program costs Return to tax payers = Reduced government funding + increased tax payments Program costs Program impact= Total employees Total target employees

15. SEEP Annual Meeting October 2003 15 For More Information…  Roberts Enterprise Development Fund www.redf.org  Blended Value Map www.blendedvalue.org  National Social Venture Competition (www.socialvc.net)  International Finance Corporation (www.ifc.org)