Measuring Making a Difference

Measuring making a difference:

an introduction to social impact measurement

www.seee.co.uk

This booklet was commissioned by Social Enterprise East of England (SEEE) on behalf of a Capacity Builders project called Information, Networking and Influence. It was researched and written by Helen Fitzhugh and Nicky Stevenson from The Guild.

SEEE is a membership and networking organisation for social enterprises and development agencies. We also have a strategic influence on national, regional and local policy relating to social enterprise. Our primary aim is to support and promote the social enterprise sector in the East of England.

Social enterprises are businesses that have social or environmental objectives; they reinvest their surpluses into the business or the wider community. They are organisations interested in overcoming social injustice or exclusion and contributing to society.

Contents

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What is social impact measurement?

What is this booklet about?

SROI - Social Return on Investment Social audit What social enterprises say What procurement officers say Messages for Social Enterprises Messages for procurement officers in the public sector Further information Glossary

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Forward

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ocial enterprises provide a different way to do business. Through trading and reinvestment of surpluses, all social enterprises aim to have a positive impact on the people or the environment they were formed to support.

If you get the chance to speak with service users, trainees, employees or those who have come into contact with social enterprise in some way, you hear countless stories of how social enterprises have changed lives. Yet, there are still people who have never heard of, or only vaguely understand what social enterprises can offer. While powerful individual stories can go a long way to showing what social enterprises can do, the ongoing drive towards evidence-based practice provides us with a valuable opportunity to explore robust ways of proving impact and improving our own activities, for the benefit of all who work with us. The various methods of doing this are referred to collectively as social impact measurement.

Social Enterprise East of England has made a timely contribution to the development of this approach by commissioning this introduction to the subject, summarising the processes involved in social impact measurement that have been in constant development over the past decade. I am therefore pleased to introduce this up-to-date booklet, which introduces the ideas behind measuring impact, explains key words and provides insight into social enterprises and public procurement specialists’ opinions of this developing area. I hope it will stimulate debate and inspire people to find out more.

Claire Dove

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What is social impact measurement?

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ocial impact measurement is the process of trying to provide evidence that your organisation - whether it is a social enterprise, voluntary or community organisation or traditional business - is doing something that provides a real and tangible benefit to other people or the environment.

How do you do it?

There are many different ways of carrying out social impact measurement depending on what you want to measure and in what detail. However, in general the process will follow some or all of the following stages: •

Deciding what you want to measure and how much time, money and commitment you can put into it

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Clearly stating what your organisation does and the ways you expect this to have a social impact

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Talking to all sorts of people who have a connection to your organisation, including staff, service users, funders and contract holders (collectively known as stakeholders) about what you do and how it brings about change

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Collecting existing data or designing new ways to collect data – you could use, e.g. numbers you already collect for a funder, a questionnaire, interviews

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Reporting on what you have found and using the report to learn and improve

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Embedding this process into regular business practice

There are many different tools and models which help people to conduct social impact measurement. For a good list, look at the back of the report ‘Social Accounting Pilot Final Report’ on the website of Cambridge-based ‘Social Enterprise People’ – www.thesocialenterprisepeople.co.uk

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What is this booklet about?

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his booklet provides a very basic introduction to how it can be proved that an organisation helps people or the environment. It also talks about whether this kind of evidence is useful when organisations such as social enterprises want to sell goods and services to organisations in the public sector - for example local councils or health trusts.

All social enterprises aim to have a social benefit - that’s part of what it means to be a social enterprise. The other part of being a social enterprise is making money through trading to use in a way that furthers that social benefit.

(Further definitions for words and phrases in black can be found in the glossary at the back of this booklet)

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P

eople who work in social enterprises every day may be able to see with their own eyes the real and tangible benefits created by the work their organisation does. But there are two reasons why it might be a good idea to try to measure the extent of this social benefit in more detail: a) A move towards measuring social benefit can help you to build on the things you are doing well and to learn from the challenges you have faced. This feeds into good business practice and means the organisation will learn and improve.

There are many different ways to measure social impact - just two of which are covered in this booklet (SROI and Social Audit). If you would like to find out more, at the back of this booklet there is a list of places to look for more detail.

b) There are market opportunities out there for social enterprises, but the people who buy on behalf of the public sector don’t always know what a social enterprise is or what it does.

Just as financial accounts prove the viability of a business, social impact measurement can show a robust and rigorous approach to providing community or environmental benefits, which can help you to win contracts and other business

Taking on social impact measurement may seem like a lot to do, especially for a small organisation. There is no one right way to do social impact measurement - any move towards it must be appropriate for the size and goals of your organisation. There are some models which are currently better known than others, but the more you know the more you can decide what you want to make of them.

“Small organisations need to work out what’s best for them, what fits into their usual business practice.”*

*manager of a social enterprise using their own process for social impact measurement

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Social Return on Investment S

ocial Return on Investment (commonly known as SROI) is a way of measuring social impact and then describing it in terms of money.

The idea is that for every £1 that is ‘invested’ (either through grants, contracts or sales) you are able to work out how many pounds of social value that £1 creates.

The key points are: •

Talking to stakeholders

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Constructing a theory of change - that is to say, setting down clearly what you do already, what changes this makes and how that affects people’s lives (or the environment)

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Looking at how this change could be expressed and then finding a way to describe this using a proxy value – a way to describe it as if it had a financial value to a person, funder or the state

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Comparing the financial value of creating social change to the initial investment to find a ratio (e.g. £1 investment to £3.50 social value)

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oth the UK and Scottish devolved Governments have shown interest in SROI. They have recently funded projects to help standardise the way it is done and to provide clearer guidance to people on appropriate proxy values. One of the outcomes of this work is a guide to using SROI (2009).

A couple of good things about SROI

A couple of things to take into consideration

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An SROI ratio is a very clear, simple way to show that your organisation produces a social benefit

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People, especially buyers, are used to talking about money.

By using that same language to describe social value you are making sure that you are talking to people in a language they understand

Although the SROI guides are available to download in full, they are detailed documents which some might find hard to follow without training

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SROI practitioner training currently takes 2 days and carries a cost which varies depending on what sort of organisation you are from

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The process of SROI, if done well, can help an organisation improve

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The SROI process has been used successfully during a project by the New Economics Foundation (NEF) in London to make sure that social value as well as financial value is taken into account in public sector commissioning and procurement

The ratio at the end of SROI should not be used as a comparison of social value between organisations.

The process is different in each case. This might be a problem because the ratio looks so easy to compare if you don’t know how it was reached.

For more information look on the web for: The SROI Network and NEF (see contact list on page 18)

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Social audit S

ocial audit, or ‘Social accounting and audit’ in its longer form, is a long- established process of gathering information about performance against social, environmental and economic objectives. The thing that makes social audit different from other types of social impact measurement is the emphasis on the audit element – that is to say making sure that any social accounting work you do is then audited by an independent panel with at least one trained audit professional.

The stages set out by the Social Audit Network can be summarised as: • Getting ready... (making sure everyone in your organisational is involved) •

Social, environmental and economic planning (talking about the organisation’s mission, aims and objectives)

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Social, environmental and economic accounting (consultation and gathering data)

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Social environmental and economic audit (getting a panel together of audit professionals and other interested organisations to make sure the process has been robust

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he recent rise of SROI as a means of measuring social value has caused some people to ask which is better – SROI or social audit.

However, people who carry out both of these types of assessment see a lot in common between them and see that they are not mutually exclusive.

The principles of each have a lot in common and some have suggested that while social accounting and audit is a wider framework to be followed, SROI is just one particular way of using the information found during that accounting process.

A couple of good things about Social Audit

A couple of things to take into consideration

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It is a long-established process

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Having an independent panel at the end of the process helps to make sure that the social accounting process has been robust and rigorous.

The process of having a professional to conduct an audit does carry a cost which varies according to the circumstance

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Historically, the social accounting and audit process was developed for larger organisations

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There is some concern that other social impact measurement methods will by pass social accounting and audit if people follow new trends in ways of measuring

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The accounting process does not segregate social, environmental or economic value but presents them all together, which means the accounting process represents the complexity of a social enterprise in its entirety.

For more information look on the Web for the Social Audit Network (see contact list on page 18)

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What social enterprises say: W

e spoke to a small group of social enterprise managers and staff to see what they thought of social impact measurement and the chances of it being useful when selling their products and services..

“It’s a complete mystery! We don’t do it and we’re not aware of the techniques.”

“We don’t get grants so it’s not so important to us to prove to anyone... we make enough to keep going.”

“We’d like to move forward with this [measuring social impact], as a CIC, in the regulations we have to submit a record of our social outcomes every year.”

“We’ve come across people who just don’t want to know [about our social benefit]” “You have to find time for it, that’s all there is to it. You can’t have the blinkers on today and tomorrow.”

“I’ve had a procurement officer say to me ‘You’re just a family company with good intentions’! – People just don’t have a clue what’s going on in social enterprise.”

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“We keep it very simple, monitoring on a regular basis.”

“These packages are very expensive. Small organisations need to work out what is best for them, what fits into their usual business practice” “The thing is being able to prove! You need ways of demonstrating.” “[when we did the social impact measurement] we were able to put in concrete form, available to everyone, what we’d been saying to people all along” “[the process] was only minimally disruptive.”

“Doing it does take a heck of a lot of money. We do spend a lot of time navel-gazing and we need to get on and do it.”

“We did it to prove what we said was actually the case”

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What procurement officers say: “The implications of social impact measurement for me are – what can I do as a custodian of the public purse to maximise benefits?”

“We could hear how your organisation is supporting the community – but it would be hard to make that a condition.”

“We have no strategic approach to that [receiving information about social impact measurement]”

“We need to show impartiality – is producing a social impact actually relevant to providing a specific service?”

“The difficulty in procurement is being bound by many conflicting pressures.”

“There is definitely a role for this [social impact measurement] in our type of procurement because we feel it will provide value.” .

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“We want to start the debate locally – is there a better way to assess value in the procurement process?”

“You can ask people in presentations about social benefit – it can be quite woolly. We want to see a methodology that is more quantifiable for reliability and impartiality.”

“There is a risk in attaching numbers which are too mechanistic, applying notional figures [in a social impact measurement situation].”

“SROI goes over my head. I don’t know a great deal about social audit.”

“It would completely depend on what procurement officers are looking for at the time. If it [social impact] is not what they are looking for [showing social impact] will not have any value.”

“It’s difficult unless it’s mandated from the centre” .

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Messages for Social Enterprises •

It is good business practice to look at what you do and how it brings about change. This will help you to learn and improve.

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No one model of social impact measurement is right for everyone.

The more informed you are, the better you can decide whether you want to take on board some or all of certain methods that are most appropriate for you

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You don’t have to go from nothing to doing everything – why not try measuring a small area of your activity?

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Proving your social impact may hold more relevance to those organisations that are applying for funding or are trying to contract with the public sector. Social enterprises which are sustainable through selling directly to the public may not feel the need so strongly.

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Be aware that the government agenda may result in one tool being promoted above others

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It is clear that many public sector procurement officers at the moment are not fully aware of social enterprise or social impact measurement.

Until strategic corporate decisions are made in these organisations, it may be hard for you to influence procurement officers directly by evidencing social impact

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However, just as financial accounts show the viability of a business, well documented and evidenced social impact measurement can show a buyer that you are professional, organised and seeking to improve your performance in the same kind of way as a quality mark

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Messages for procurement officers in the public sector •

Any business can perform social impact measurement, not just social enterprises

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A lot of work goes into social impact measurement. Even if your procurement process is not looking directly at the social impact, the fact that an organisation has conducted such a process shows that they are professional, committed and trying to give you real evidence of what they do – think of it as providing a kind of quality assurance

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There are lots of ways of measuring social impact. If you want to look at social impact in the procurement process, make sure that you let organisations evidence the social impact in the way that is most appropriate for them but still meets your requirements

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A lot of procurement officers are worried that looking at social impact might damage the fairness and impartiality of the bid process.

However, substantial legal briefings have already been produced to show when and how it is possible to take such things into consideration (see the guide to publications at the end of this booklet)

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If you would like to find out more, please see the following: The SROI Network: http://www.sroi-uk.org/ Social Audit Network website: http://www.socialauditnetwork.org.uk Measuring Value: A Guide to Social Return on Investment (SROI) 2nd Ed. (2008) New Economics Foundation, London Available to download from: http://www.neweconomics.org/ NEF Proving and improving website: http://www.proveandimprove.org/ Social Accounting Pilot Final Report / Social accounting overview and materials (2006 / 07) Social Enterprise People, Cambridge Available to download from: http://www.thesocialenterprisepeople.co.uk/ (the list of different types of social impact measurement is in Appendix 1 of this document) Social Enterprise and the Public Sector – A practical guide to law and policy, produced

by Anthony Collins Solicitors, Mutual Advantage and SEEM. Available to download from: http://www.seem.uk.net/Templates/Internal.asp?NodeID=90734 The CJC Guide to buying from the Third Sector, CIPFA – can be purchased from CIPFA: www.cipfa.org.uk/shop

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Glossary CIC – Community Interest Company – a relatively new type of limited company which operates for the benefit of the community rather than for the personal gain of those involved – for more see www.cicregulator.gov.uk Community of place - The people who live in one particular area, whether that is a housing estate, a village, a town or a county Community of interest - A group of people who have something in common. This could, for example, be people who are struggling with their finances, people who live with a certain illness or disability or simply a group of like-minded small business people who want to group together in a co-op for mutual benefit Proxy – a proxy is in its widest sense something which stands in for something else. In the case of using financial proxies in SROI, it is assigning a financial value to something in approximation of the kind of value it could have – for instance the value of giving up smoking could be approximated to the financial savings experienced by the new non-smoker themselves or the cost of reduced health care Social Audit – for further details see page 8 Social benefit - in this booklet this stands as a short way of saying that social well-being is being increased in a community of place or a community of interest, or that environmental benefits are being produced for the area, region or indeed the world as a whole Social Enterprise – An organisation which reinvests the profits or surpluses it makes through trading activity in order to fulfil a social purpose. There is no one particular legal structure or form for a social enterprise. Social enterprises can for example include mutuals, co-operatives, Social Firms, CICs, housing associations, development trusts, companies limited by guarantee, community enterprises and certain community and voluntary organisations that trade Social Firm – A particular type of social enterprise that seeks to create employment opportunities for people who might struggle to find work in mainstream labour markets SROI – Social Return on investment – for further details see page 6 Stakeholder – anyone who influences or is influenced by a project or organisation. This can include the service users, employees, funders, contract holders, other family members and more.

Theory of change – a theory of change is a systematic description of how an activity is intended to change things for a particular group. It helps people to set out the assumptions they are making when they say a particular activity will benefit a particular set of people, for example when organisations receiving public funding ask recipients to show what difference the funding has made.

Trading – in this report, trading is widely defined as selling products and / or services in exchange for money. An organisation may provide services under contract to a public body which would still constitute trading (this is different to a grant, which is a single payment for the organisations’ activities).

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