Outcomes, Impact & How to Track Them

By Lawson F. Knight,

iiCredit Wind River Development Fund

Goals

•  Introductions •  Background of Social Return on

Investment (SROI) •  Linking SROI and Program

Evaluation •  Model CDFI SROI •  Developing SROI for your CDFI •  Getting to a defensible result •  Your next steps

About Us

Wind  River  Development  Fund  is  a  private,  nonprofit  community  development  corpora4on  and  federally  cer4fied  Community  Development  Financial  Ins4tu4on  that  seeks  to  s4mulate  economic  development  on  and  near  the  Wind  River  Indian  Reserva4on.  

iiCredit  is  a  cloud-­‐based  CDFI  opera4ng  system  built  on  the  force.com  platorm.  Built  as  an  earned-­‐income  strategy  of  Wind  River  Development  Fund  (WRDF).  WRDF  is  iiCredit's  first  user.  The  applica4on  was  built  with  the  prac4cal  goal  of  moving  the  en4re  Enterprise  Stack,  from  data-­‐storage  to  e-­‐mail,  to  the  cloud.  

CDFI Service Delivery Model

Par4cipant  Recruitment  &  Intake  

Life  &  Financial  Skills  Development  

• One-­‐on-­‐One  Assistance  • Workshops  &  Training  

Capital  Access  

• Lending  Capital  • Asset  Building  (Matching  Funds)  

Stability,  Reten4on  &  Community  and  personal  

growth  

• Less  Poverty  • More  Prosperity  

ROI

•  Return on Investment. What does that mean?

•  How much do I get back for what I spent?

•  For Instance:

–  My CDFI lends $10,000 for 60 months to a local business at 8% •  Financial benefit? •  Investment?

–  For every $100 invested in this business, my CDFI receives nearly a $22 return.

Financial Benefit Cost of Investment

ROI =

•  Why ROI is insufficient for CDFIs •  What are CDFI topline outcomes?

Social Return on Investment

Topline  Outcome  

Client  Changes   Societal  Changes  

Improved  Financial  Capabili4es  

Capital  

More  income  taxes  More  sales  tax  

Self-­‐  sufficiency  

Fewer  people  reliant  on  public  benefits  

Capacity  Less  likely  to  return  to  old  habits  

Fewer  people:  Usurious  financial  instruments    

CONTRIBUTIONS  

SAVINGS  

SROI

•  Translate ROI to SROI:

•  Clearly state your assumptions •  Use and document research to cite your analysis

Financial Benefit Cost of Investment

SROI = SOCIAL

Societal Contributions + Savings Cost of Investment

=

A primer on SROI

•  SROI was first developed in 1997 by Roberts Enterprise Development Fund (REDF) to analyze the impact of seven nonprofit organizations in San Francisco

•  These nonprofit organizations were running 23 social purpose enterprises—a proving ground for business/financial concept like ROI to be adapted as a program tool

•  SROI grew from there: –  Methodology paper released in 2001 –  Framework document launched in 2005 –  Guide to SROI analysis published in 2006 –  DIY Guide released in 2007 –  SROI Network formed in 2008 –  Since then, affiliated SROI Networks in Japan, Sweden,

Australia, the Netherlands, and the UK. SROI guides published in French, Korean, and Chinese.

What is program evaluation?

•  Program evaluation is gathering information about (some aspect of) a program in order to make necessary decisions about the program.

•  There’s lots of kinds of evaluation: – Needs Assessment – Process evaluation

•  Pareto Principle

Why is it helpful?

•  Helps you understand the impact of your work

•  Validates what we’re doing & how we’re doing

•  Provides evidence for public, promotion, funders and duplication

CDFI Sample SROI

What values does a CDFI create for Society? Social Impact:

Annualized Contributions to Society $

Income Taxes Paid, Social Security, Sales Tax Dollars Spent

Annualized Savings to Society + $

Total One-Year Social Impact $ Determining the Social Return on Investment:

Present Value of Social Investments (Over Five Years)

$

CDFI One-year Program Cost / $

Social Return on Investment

%

Sample CDFI Title Slide

Societal Contributions

Annualized Contributions to Society

Topline Outcome: # of quality, permanent employment jobs created

Total Annualized Income

       Job  #1  Wages  and  Benefits  +    Job  #2  Wages  and  Benefits  +  Job  #3  Wages  and  Benefits  +  .  .  .  All  jobs  created  ________________________  TOTAL  INCOME  

2014 Income Tax Rates Income Tax Contributions

Federal    15.0%  +  Social  Security  6.2%  

21.2%  

TOTAL  INCOME    x  21.2%  

Societal  Contribu4on  

Sample CDFI Title Slide

Societal Savings

Annualized Savings to Society

Topline Outcome: XX working in quality, permanent employment in 2014 •  Y were receiving Food Stamps at program entry

Total Annualized Food Stamps Payouts

$252 avg per month x 12 months per year

x Y recipients $ Food Stamps savings

•  Temporary Assistance to Needy Families (TANF) and Unemployment savings are calculated in the same way –  Based on real data collected during program intake –  Knowledge that payouts stop when individual is on the job

Understanding Outcome Estimation (EITC participation in WY)

=Income due to intervention"

Your topline outcome group"

Research expected rate of participation (7 of 10, 70%)"

Calculate your org’s rate of participation"(9 of 10, 90%)"

Take the difference (2), and research/calculate cost of participation per person"

x Proceeds from " participation"

The Final Calculation

•  1 = One Year Program Cost •  2 = Contributions to Society + Savings to Society

–  Take one-year results and project out for as many years your enterprise is comfortable.

–  Three to five years is typical due to uncertainty beyond. Five years is typical for startup financial projections.

–  For each year the projection extends, discount the social benefit to account for inflation and risk. •  30-year bond rate or CPI •  Risk factor is an internal, defensible election like 5% (or more)

SROI = Social Financial Benefit2

Investment1

Where do you go from here

1.  Do your quick wins first.

2.  Be as much of a “Data Geek” as you like. Go as far as your interest, resources and ability to sustain assessment over time.

3.  This can be heady stuff. Make it thoughtful, defensible and approachable. Don’t be arrogant.

4.  Be informed and humble.

5.  Move the conversation from grants to investment.

Grow in your capacity Level  1   Level  2   Level  3   Level  4  

Enterprise  Social  Outcome  Measurement  

Neither  inputs/ac4vi4es  or  social  impact  of  enterprise  are  measured  

Enterprise's  social  inputs  and  ac4vi4es  measured  (e.g.  #  of  employees;  #  of  trainings  held);  data  collected  ad  hoc  from  various  sources  

In  addi4on  to  inputs  and  ac4vi4es,  social  outputs  measured  (e.g.  income  or  housing  status  of  employees);    some  data  collec4on  systems  exist  but  not  necessarily  coordinated;  data  some4mes  used  to  refine  enterprise  service  delivery  

Comprehensive,  coordinated  data  collec4on  and  tracking  system  used  to  track  both  outputs  and  outcomes  (e.g.  %  decrease  in  substance  abuse)  over  4me;  data  trends  analyzed  and  used  to  refine  enterprise  service  delivery  

From  REDF's  capacity  assessment  tool    

Resources •  Lingane, A. & Olsen, S. (2003). Guidelines for social return

on investment. Working Paper Series, Center for Responsible Business, UC Berkeley. Retrieved from http://escholarship.org/uc/item/6xp540hs

•  McNamara, C. A Basic Guide to Program Evaluation. Authenticity Consulting, LLC. Retrieved from http://www.tgci.com/sites/default/files/pdf/A%20Basic%20Guide%20to%20Program%20Evaluation_0.pdf

•  SROI Network. SROI: A History. Retrieved from http://www.thesroinetwork.org/what-is-sroi/a-history-of-sroi

Lawson F. Knight iiCredit Development Wind River Development Fund lawson@wrdf.org (307) 828-1618

Arum Kone Chief Technology Officer & Data Scientist Wind River Development Fund arumkone@wrdf.org

Brett White Executive Director Wind River Development Fund brettwhite@wrdf.org