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Using Social Return on Investment (SROI) to purchase public benefit: the case of waste management

Using Social Return on Investment (SROI) to purchase public benefit: the case of waste management. Eva Neitzert Aniol Esteban nef (the new economics foundation). NEF. Independent ‘think-and-do’ tank concerned with promoting innovative solutions to promote economic well-being

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Using Social Return on Investment (SROI) to purchase public benefit: the case of waste management

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  1. Using Social Return on Investment (SROI) to purchase public benefit: the case of waste management Eva Neitzert Aniol Esteban nef (the new economics foundation)

  2. 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

  3. 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

  4. 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

  5. Doing an SROI

  6. 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.

  7. 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

  8. Impact map

  9. 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

  10. 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

  11. 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)

  12. 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

  13. 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

  14. £ 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

  15. Seeing half the picture Social enterprises, third sector orgs

  16. Seeing the full picture Social enterprises, third sector orgs Public service contracts

  17. The problem • Efficiency agenda • Focus on cash-able savings • Service specifications focus on: • Activities • Outcomes • Unit cost becomes driving force

  18. Commissioner & service user priorities Community strategy & Corporate priorities National outcome frameworks Sustainable Commissioning outcomes framework

  19. Day Care Services pilot

  20. 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…

  21. So …

  22. Further information • eva.neitzert@neweconomics.org • www.neweconomics.org.uk Measuring Value: A guide to Social Return on Investment (2008)

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