How to Perform Social Return on Investment

Introduction

Social Return on Investment (SROI) is a way of measuring the impact of projects or programs that is especially suited to the work that non-profits do. To see the difference, let’s move from a for-profit to a non-profit mindset. A for-profit’s return on investment (ROI) focuses on money only: for instance, $25,000 investment in supply chain management results in an additional $75,000 in revenue; this means the ROI is 3:1, or $50,000.

Because non-profits don’t often generate revenue, this measure is less useful. Instead, non-profits often track outcomes like the number of clients served. At the Distress Centre, we receive over 7500 calls a year and save approximately 35 lives through emergency intervention. These numbers are useful, but they don’t translate well into a per-dollar figure. For instance, on a budget of $260,000 (a rough estimate), we pay $35 per call, or $7,429 per emergency intervention.

Is $35 per call reasonable? It may appear to be too expensive. What about when we divert an individual from hospital, or prevent a suicide attempt in progress? We have no way to track the monetary benefits of these, until we use SROI.

How SROI Works

SROI works by assigning a monetary value to activities that until now could not be monetized. Some of these are easier to calculate because real dollars are involved (for instance, when you de-escalate someone and they don’t need to go to the hospital, you’ve saved the cost of the police/ambulance and the emergency room service), while some are more difficult (the increased quality of life that one gets from a conversation on a crisis line.)

Value is assigned by a variety of methods that try best to approximate the costs involved. These items that are used to approximate value are called “proxies”, and lists of proxies are available on SROI-related websites.

Performing SROI

SROI has six major steps:

  1. Establish the scope and identify stakeholders
  2. Mapping outcomes
  3. Demonstrating outcomes and giving them a value
  4. Establishing impact
  5. Calculating the SROI
  6. Reporting, using and embedding

These are reviewed in more detail below. The data (charts, financial proxies, explanations, etc.) is reproduced from an unpublished SROI analysis conducted by myself, of the ONTX Chat and Text Program at Distress Centre Durham.

Establish the Scope and Identify Stakeholders

Establishing the scope for an SROI analysis involves identifying the purpose, audience and focus of the analysis. 

The audience for this analysis includes the four pilot Centres, our funding partners (Trillium, United Way and Greenshield Canada) and other services interested in producing a similar analysis of their service. The focus will be on one year of outcomes data collected in the operation of the ONTX project.

Stakeholders, in the SROI methodology, are individuals who experience gains as a result of the service provided. These can be direct gains (such as the reduction in distress experienced by a visitor to the crisis chat service or the savings experienced by not having to use EMS resources transporting a suicidal person to hospital) or indirect gains (such as the career benefits experienced by a responder who delivers the service or the of improved relationships with friends and family visitors may experience.)

In order for stakeholders to be included in the analysis, they must be material – that is, they must experience a benefit as a result of the service.

Mapping Outcomes / The Theory of Change

A theory of change, also known as a logic model, is a cornerstone of the SROI methodology that describes how inputs (the funds and people used in direct service delivery) result in changes (outcomes) that can be quantified to value the service. An example logic model for the ONTX Chat and Text Program is listed below:

Stakeholder Intermediate Outcomes Final Outcome
Visitors
  • Decreased harmful intentions
  • Immediate crisis diffused
  • Decreased suicidal intent
Reduced likelihood of visitor attempting suicide
  • Improved self-esteem, self-control or confidence
  • Less distressed or anxious
  • Options explored
  • Action plan explored
Improved visitor coping skills
  • Decreased isolation and loneliness
  • Improved connectedness
  • Knowing a responder is there for them
Enhanced visitor belonging
Police / EMS
  • Less likely to require ambulance or police service because of a high-risk suicidal caller
Reduced use of 911
  • Fewer responses to suicide deaths because of Responder intervention
Reduced cost to 911/EMS
Medical System
  • Less instances of hospital admission because of self-harm/suicide attempts
Reduced use of public health system

Demonstrating Outcomes and Giving Them a Value

Each of the final outcomes from the chart above needs to be operationalized, which involves identifying concrete elements to suggest an outcome has or will occur. This allows an assignment of financial value to those outcomes in determining the SROI.

Each of the above outcomes requires a financial proxy, or a method of quantifying its value. Some financial proxies are simple unit costs, like the cost of deploying police and an ambulance to respond to a suicidal crisis, while others are more difficult to quantify.

In consultation with stakeholders, a review of the SROI literature (including with other crisis chat services), the following financial proxies were decided upon:

Final Outcome Financial Proxy Calculation (all figures in dollars unless noted) Value per Instance
Reduced Likelihood of Visitors Attempting Suicide One month of life, adjusted with the disability weight assigned to Suicide and Self Harm (Value of a Statistical Life Year (VSLY) / 12 months) x 0.64 weighting $6,900.49
Improved Visitors Coping Skills Cost of two visits to a family doctor/general practitioner 40 per visit x 2 $80
Enhanced Visitor Belonging One week of leisure for the median Canadian income 3922 (yearly leisure expenses) / 52 $75.42
Reduced Cost of 911/EMS Cost of ambulance response for a suicide attempt 600 $600
Reduced Cost of Police Response to Suicide Death Unit cost of two police officers and two paramedics responding for total of 5 hours at median wage 36.53 x 2 x 2 (Police)

25.81 x 2 x 1 (Paramedic)

$249.36
Reduced Use of Public Health System Cost of hospitalization for suicide attempt minus the average cost of an ED visit (998 x 7.74) – 267 – 249.36 $7,208.16

Establishing Impact

The SROI methodology involves totaling the number of outcomes (now quantified as dollar values) against the total cost of inputs required to operate the service. Inputs can include direct service, such as employees, technology costs, advertising and so on.

Because three of the four Centres did not receive funding to hire an independent staff person, a value of 25% on a salary of $40,000 was used. This provides an estimation of the dollar value.

Input Description Value ($)
Distress Centre Durham Staff (prorated to 8 mos.) $15,000 x 0.8333 = $12,500
ONTX Grant (pro-rated to 6 mos.) $257,700 / 4 = $64,425
Community Torchlight Staff (est.) $10,000
Distress Centre Toronto Staff (est.) $10,000
Spectra Helpline (est.) $10,000
Total Inputs $106,925

Number and Dollar Value of Final Outcomes

Based on one year of data (June 29 2015 to June 29 2016), we can see the following outcomes. Only the items directly from the call reports are reported below for this sample analysis. The other intermediate outcomes (such as Less likely to require ambulance or police service because of a high-risk suicidal caller) have been operationalized in the report but are not listed here for space and complexity reasons.

Reduced Likelihood of Visitor Attempting Suicide ($6900.49 x 1,190)

Decreased harmful intentions – 522
Immediate crisis diffused – 301
Decreased suicidal intent – 367

Improved Visitor Coping Skills ($80 x 3,794)

Improved self-esteem, self-control or confidence – 796
Less distressed or anxious – 1831
Action plan explored – 1167

Enhanced Visitor Belonging ($75.42 x 1473)

Decreased isolation and loneliness – 1473

Total

$6900.49 x 1,190
$80 x 3,794
$75.42 x 1473
= $8,626,196.76

Deadweight and Attribution

Next, we have to estimate deadweight and attribution. Deadweight is the percentage of the outcome that would have happened regardless of our involvement. For instance, if a visitor told us that if they couldn’t reach our service, they knew five others they could, it is unlikely that much of the outcome would be lost if they could not access the ONTX pilot.

We have decided to calculate deadweight as a 15% reduction in overall value for every resource a visitor could identify as an alternative to our service. Since the average was 2, we assume 30% in deadweight.

Attribution is the amount of the benefit that is attributed to other persons. Because our service is often the primary intervention we have limited attribution, so for this analysis we will not note any attribution.

This takes our benefit value of $8,626,196,76 and reduces it to $6,038,337.732.

Finishing our Calculation

We take our total benefits generated, divide them by the total cost of the input to find the SROI ratio.

$6,038,337.732 Total Benefit / $106,925 Total Inputs = SROI Ratio of $56.47

For every one dollar invested in the ONTX pilot there is a social benefit of $56.47.

Sensitivity Analysis

Sensitivity analysis is a way of repeating calculations to take into account higher or lower than expected figures. See the table below:

Final Outcome Low Financial Proxy Original Financial Proxy High Financial Proxy Low Value Moderate Value (used for analysis) High Value
Reduced Likelihood of Visitors Attempting Suicide One week of life, adjusted with the disability weight assigned to Suicide and Self Harm One month of life, adjusted with the disability weight assigned to Suicide and Self Harm Two months of life, adjusted with the disability weight assigned to Suicide and Self Harm 1,592.42 6,900.49 13,800.98
Improved Visitors Coping Skills Cost of one visits to a family doctor/general practitioner Cost of two visits to a family doctor/general practitioner Cost of four visits to a family doctor/general practitioner 40 80 160
Enhanced Visitor Belonging One day of leisure for the median Canadian income One week of leisure for the median Canadian income One month of leisure for the median Canadian income 10.75 75.42 301.68
Reduced Cost of 911/EMS N/A Cost of ambulance response for a suicide attempt N/A 600 600 600
Reduced Cost of Police Response to Suicide Death Unit cost of two police officers and two paramedics responding for total of 2 hours at median wage Unit cost of two police officers and two paramedics responding for total of 5 hours at median wage Unit cost of two police officers and two paramedics responding for total of 7 hours at median wage 99.74 249.36 349.10
Reduced Use of Public Health System Cost of hospitalization for 3 days minus the average cost of an ED visit Cost of hospitalization for suicide attempt minus the average cost of an ED visit Cost of hospitalization for 12 days minus the average cost of an ED visit 2,477.64 7,208.16 11,339.64

Based on the low and high values specified we have benefits as follows. The reason we multiply by 0.7 is our deadweight, estimated earlier.

Low
1,894,978.8 + 3200 + 15834.75 = 1,914,013.55 x 0.70 = 1,339,809.485

High
16,423,166.2 + 607,040 + 444,374.64 = 17,474,580.84 x 0.70 = 12,232,206.588

Returning to our original formula:

  • Low $1,339,809.485 Total Benefit / $106,925 Total Inputs = SROI Ratio of $12.53
  • Moderate (already calculated) $6,038,337.732 / $106,925 Total Inputs = SROI Ratio of $56.47
  • High $12,232,206.588 Total Benefit / $106,925 Total Inputs = SROI Ratio of $114.40

Therefore our SROI analysis ranges from $12.53 – 114.40. Given this wide range, it may be safer to use a value of +/- 15% of our middle value, or to explore more carefully the value of the Final Outcome Reduced Likelihood of Visitors Attempting Suicide (which is currently calculated in terms of months of life, adjusted with the disability weight assigned to Suicide and Self Harm.)

Cite this article as: MacDonald, D.K., (2016), "How to Perform Social Return on Investment," retrieved on November 15, 2019 from http://dustinkmacdonald.com/perform-social-return-investment/.
Facebooktwittergoogle_plusredditmailby feather

Leave a Reply

Your email address will not be published. Required fields are marked *