using social return on investment (sroi) to purchase public benefit: the case of waste management

nef (the new economics foundation)

Using Social Return on Investment (SROI) to purchase public benefit: the

case of waste management

Eva Neitzert

Aniol Esteban



NEF

• Independent ‘think-and-do’ tank concerned with promoting innovative solutions to promote economic well-being– Environmental sustainability– Social justice– Well-being

• Long-standing relationship to third sector– e.g. Social Enterprise Partnership, Performance Hub,

Social Enterprise Ambassadors Evaluation etc. • Measurement matters

– Tool development - Social Return on Investment (SROI) and LM3


Why SROI?

• Valuing mission-driven organisations• Captures social value by translating outcomes

into financial values• SROI Ratio = [value of benefits]

[value of investments]eg. Ratio of 2:1 means that for every £1 invested in organisation £2 of social value are generated

• Social includes the environmental and economic = triple bottom line


More than a ratio…

• Participative framework for finding out about how an organisation creates value

• 4-stage process– Stage 1: Boundary setting, stakeholder

engagement and impact mapping– Stage 2: Data collection– Stage 3: Modelling and calculation– Stage 4: Reporting and embedding


Doing an SROI Stakeholder

Input Activity Output Outcome Outcome indicator/proxy

Participants(32)

SkillsTime

Trained in computer recycling

IT skill setNo. of recycled computers

Increased self-confidenceImproved mental healthSustainable employmentImproved life stability

# gaining employment and average wage earned (£13,500)

-ATTRIBUTION-DEADWEIGHT

Local government

Not applicable

Not applicable No. of computers recycled and diverted from landfill

Reduced landfill expenditure Improved local environment,

# of tonnes diverted/ cost per tonne (£39)DEADWEIGHT

National Health Service

Not applicable

Not applicable Prolonged support for participants, improved skills for participants

Reduction in care costsImproved mental health of participants

Reduction in use of mental health services – unit cost of in-patient mental health care (£20,500)


Case-study…

• Social enterprise that provides bulky waste collection in Lancashire

• Context: ongoing research on benefits of TSOs in waste management activities

• Contract with council to collect domestic bulky waste

• Organisation reuses / recycles materials, trains disadvantaged people and sources goods to poor families.


Stage 1…

• Boundary setting: local (area in which contract is developed) / beyond local

• Stakeholder engagement: limited // only interviews with organisation and LA’s

• Impact mapping based on interviews

Impact mapStakeholders Needs Activities Outputs Outcomes

Local Authoriti

es

Divert waste from landfill

Reuse and recycling bulky waste

Waste diverted from landfill

Savings to LAs (*)Reduced

environmental impact

Contribution to council targets

Households in need

Low cost furniture

2nd hand furniture showroom

Furnished homes:

cost savings

Reduced debtIncreased well-being Increased community

cohesion

VolunteersTraining /

Personal development meaningful use of time

Training and supervision

Learning new skills

Working as a part of a team

Improved skills and

employability

Increased self-esteem

and confidence

Improved well-beingEmployment

Reintergration with family and community


Stage 2: data collected

150 tones diverted from landfill

90 volunteers, 67 obtained qualifications, and 11 got a job after one year

5,436 people assisted in 2007 - £260k estimated savings compared to the cost of buying second hand good

250k Money spent locally


Stage 3: calculation

Avoided landfill tax: £ 3,600

Carbon savings £ 1,413

Reduced env. impacts landfill £ 750

Savings to families in need £ 138,705

Improved human capital £ 132,000

Benefits to individuals £ 24,750


Stage 3: calculation

Benefits to Local Authorities £69,600

Benefits to Local citizens and communities £164,205

Wider benefits (national and global citizens) £67,413

Cost of scheme is covered with grants and with revenue from sales of reused material.

The total public investment in the Bulky Waste collection programme amounts to £185,000 (165k contract / 20k grants)


Stage 4:

Each public £ invested scheme has generated:

• £0.37 of added value to LA’s • £ 0.88 of added value to Local citizens and communities• £ 0.36 of added value to national and global citizens

Total £1.61 per public £ invested

SROI 1.61 : 1


Stage 4:

Previously council would pay £110,000 to take all bulky waste to landfill (no additional benefits created).

Value per additional investment of £56,710: • £1.23 to LA’s• £ 2.9 to local citizens and communities• £ 1.19 to national and global citizens

Total: £5.32 per additional public £ invested

SROI: 5.32 : 1


£ is only part of the story

(Non-monetised):

Increased environmental awareness. Reduced environmental impact at source, positive impact on local economy from 33 jobs supported by scheme and about £250,000 income spent locally. stronger community cohesion through integration of socially disadvantaged people with more than 600 people taking part in events, increased well-being to families, improved well-being to individuals volunteering, innovation, replication potential


Seeing half the picture

Social enterprises, third sector orgs


Seeing the full picture

Social enterprises, third sector orgs

Public service contracts


The problem

• Efficiency agenda– Focus on cash-able savings

• Service specifications focus on:– Activities– Outcomes

• Unit cost becomes driving force


1.

Activity

2.

Output

3.

Service level outcomes

4.

Camden Community outcomes

–social–economic–environment

5.

Value–Quantitative–Qualitative–Monetizeable

Where value accrues:- To Service- Camden wide- central government

Sustainable Commissioning outcomes framework

Community strategy & Corporate priorities

Commissioner & service user priorities

National outcome frameworks


Day Care Services pilotProcurement phase

Innovation

Service Specification - outcome focussed

- Added social, economic and environmental outcomes accompanying service outcomes- Co-production principles

Pre-Qualification Questionnaire

Made ‘consortium/partnership friendly’

Inserted Question on wider outcomes

Adjusted weighting accordingly

Tender Schedules Outcome framework part of ‘provider method statement’ in Schedule 1 (double weighted)

Further schedules outcome focussed

- Pricing schedule – need to level the playing field


Outcomes of the tenderprocess• Consortium of 3 medium-sized locally based 3rd sector

providers• Not cheapest• Commitments to:

– involve the wider community through use of volunteers– Co-production - peer led support and education initiatives and

time-banking – Bulk buying of catering supplies from local sources – Recycling, walking and cycling initiatives with service users and

staff

• Key point: This result was achieved not just because better skills of third sector providers, but because they could use them…


So …


Further information

•[email protected]

•www.neweconomics.org.uk

Measuring Value: A guide to Social Return on Investment (2008)

using social return on investment (sroi) to purchase public benefit: the case of waste management

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