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 is reproduced from an unpublished SROI analysis conducted by myself, of the ONTX Chat and Text Program at Distress Centre Durham.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:

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:

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.

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:

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.)