681_SROITheoryMIX

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Social Return on Investment : 

Social Return on Investment SEEP Annual Meeting October 2003

Concepts and Constructs for Getting to SROI : 

Concepts and Constructs for Getting to SROI What is a Value Proposition? What is a Social Bottom Line? How do you construct a Social Bottom Line? What is a Blended Value Proposition? What is a Double Bottom Line? The Blended Value Proposition and the Social Return on Investment

The Value Proposition : 

The Value Proposition A clear articulation of the purpose of your enterprise – Mission ……strengthened by a clear articulation of the value to clients that your services will create

What is a Social Bottom Line? : 

What is a Social Bottom Line? The impact of operations on key stakeholders tied to your enterprise Types of Impact Stakeholders

Constructing a Social Bottom Line : 

Constructing a Social Bottom Line Identify which stakeholders and what impacts are central to understanding whether you are meeting your value proposition Setup the tools and systems that will generate information on the relationship between those stakeholders and impacts

Two General Directions : 

Two General Directions Valuation of outputs Validation of internal processes

Valuation of Outputs : 

Valuation of Outputs Impact on clients – improvements in their well-being/welfare Impact on society – mitigation of negative effects on environment, improvements in civic life, contributions to the public purse

Examples : 

Examples Impact on Clients Calvert SROI Calculator estimates that for a certain amount of money invested over a certain amount of years in a particular country or region, a certain number of jobs will be created Freedom from Hunger estimates that for a given level of investment, a certain number of lives can be saved through reductions in chronic hunger and malnutrition Impact on Society The Deutsche Bank estimates that by changing certain business practices it will consume less paper in a year equivalent to 100 mature trees Citigroup estimates that its employees will contribute millions in taxes Tools include cost-benefit analysis, cost-effectiveness analysis and normally build on some form of impact evaluation or assessment

Validation of internal processes : 

Validation of internal processes Client relations – client satisfaction Relationships with suppliers and distributors Internal staff relationships and HR policies Tools include items such as Balanced Scorecards

Combination of internal validation and external valuation : 

Combination of internal validation and external valuation Process which looks at both internal processes and external impacts example: The Global Reporting Initiative

Blended Value Proposition : 

Blended Value Proposition Adding the net financial return to the enterprise with the determined net value of your social bottom line

Slide 12: 

Positive Financial Return Negative Social Return Positive Financial Return Positive Social Return Negative Financial Return Negative Social Return Negative Financial Return Positive Social Return Financial Bottom Line Social Bottom Line Double Bottom Line

Social Return on Investment : 

Social Return on Investment Is the blended value of the net financial return and the net social value divided by the investment costs over that period

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