I think social impact investments become more and more important as philanthropists are more concerned about how effectively their money is being spent, not just philanthropists, investors of all kinds, ethical investors and so on. And in a way it's similar to what's happened in the corporate sector, we're taking the message from corporates about being careful about assessing the performance and that also influences the way in which we operate to meet our goals. If we know how we're doing, we can operate to our goals more effectively. So there's been a growing interest in different methodologies to measure social impact and at the moment I don't think any of them are perfect. They all have lots of defects. But it's a growing field and there's a growing interest in methodologies for doing so. Social return on investment is one of those methodologies. It's a stakeholder methodology where you try to assess the social value in relation to all the stakeholders that have a involvement of some kind in the organization of interest, the social enterprise of interest. So you begin by thinking, what is it that stakeholder wants to get from this social enterprise? What are their objectives? And what kind of outcomes does that stakeholder get? So you noticed the word outcome. We've moved from the idea of an output which might be for a work integration social enterprise, the number of people who get skills and what those skills are. We've moved to outcomes where what we are looking at is 12 months down the line, how many of them are in employment? How many of them are still in employment? So outcomes is what the big focusing is on. So we have the outcomes which the stakeholders are interested in. We then need to determine the indicators in order to get to those outcomes. So a simple indicator would be the number of people still in employment after they've gone through a work integration program. We have an indicator for each of the groups involved. And then we gather information to assess the achievement towards that indication by the particular social enterprise. The next bit is also a rather tricky step. We then have to calculate what is a proxy financial measure for that indicator achievement? And so in the case of somebody that maybe was a homeless person and has gone through a work integration program and is now working. They might visit the hospitals less. They might have been on medication for mental health problems and so on. So we assess a reduction in the use of mental health services. And that will give us some outcome, some financial measure to assess the outcome for the health service. We also assess for example, in terms of employment what the tax take would be. So there will be tax advantages for a great number of people who remain in employment. We then assess that and sum it, but we also have to take into account three other dimensions. So what would've happened anyway? So a certain proportion of people would have got a job anyways, so we need to take that off the calculation. We also need to assess displacement. Displacement is when someone gets in employment but they push somebody else out of employment. And we also need to assess attribution. So attribution is: how much of the outcome can we put down to the activities of the social enterprise? Or was there some other agent that was also working with this homeless person or this person that's in employment that also needs some attribution of the benefits that are being gained by that social enterprise's activities? We then assess that all and we come up with a figure. And that figure represents the amount of return for a certain specific amount that was invested originally by that organization. And that gives a ratio, and that ratio then becomes something that is promoted by the organization. If it's a good ratio they promote it very widely. It's not a marvelous technique because it's being criticized on a number of grounds. What is the comparability between other organizations doing something similar? Do all the social return on investments use the same indicators if they're in the same field? How can we ensure that there is a comparability between the different social return on investments for similar sectors? There is a lot of assumptions that we make in developing a monetization of an outcome. And some of those may be valid, some of them may not be. So you may say, well it looks like we're saving on the health service. Because mental health people are going there less, mental health, people with mental health problems are going there less. But you’re not going to close down a whole hospital and the doctors and staff are still going to be there working. So there probably needs to be more effort put into the marginal returns of those reductions rather than just claiming the whole of the reduction in terms of the cost of medical staff and so on. So it's not rocket science. It's still got a long way to go. But at the moment it's one of the best techniques that we've got.
