How co-operatives are using SROI

Sustainable Enterprise Strategies

Sustainable Enterprise Strategies (SES) is a Sunderland-based social enterprise working to tackle poverty and inequality by helping people set up social enterprises and co-operatives. Over the past 20 years SES has been using Social Accounting & Audit (SAA) methodologies to measure the impact of its activities upon individuals, groups and communities.

“We found it a very effective tool in demonstrating impact in addition to identifying USPs, hidden talents and new ventures within SES,” said Mark Heskett-Saddington, who looks after operations and strategy. SES was using elements of Social Return on Investment such as maps and associate proxy indicators, he added.

“These only provide a partial insight with regard to social and economic impact – very difficult to compare an apple and a pear via a financial ratio. This is the reason why we advocate social accounting as the most appropriate method for co-ops and social enterprises – the approach is coming back into fashion again within government sources, which is good to see.”

Using SROI methodology, SES has calculated the financial impact of its business start-up activities for 2010-2012. It estimated a financial return worth £5.36 for every £1 invested. Adding these together suggests that we might need to deduct up to 30% from the initial estimate of total economic impact.

Between 2010 and 2012, SES enterprise activities created 492 new traditional businesses, employing 599 people, and with a combined projected turnover that can be estimated at £9.6m.

During 2011-12, 82% of these business starts were by clients who had been previously unemployed/jobless.

Furthermore, in October 2011 SES hosted a SAA SROI focus group to explore the value and impact of SES business start support. All 15 traditional business start beneficiaries (both pre start and trading) who attended the event reported that they gained positive change experience ranging from increased confidence, skills, independence, pride, being more social, more options and reduction in fear of unknown.

SES was awarded Impact Leader status in the Impact category of the RBS SE100 Index 2011 for its work in developing Social Accounting and SROI methodologies.

Nundah Community Enterprises Cooperative

Nundah Community Enterprises Cooperative (NCEC) provides work for people with intellectual disabilities who were unemployed long term. Winner of an Australian Social Enterprise Award, NCEC runs two social enterprises, a parks maintenance service and a café and catering business called Espresso Train, with a collective turnover of A$350,000 a year. Employees are members of the co-op, which functions on the principle of one member/one vote.

In 2011 the co-op commissioned a consulting firm to undertake an assessment of the enterprise using SROI methodology. Eight stakeholder groups were identified as material for this analysis. For each of these, their objectives, inputs and outcomes were determined and described.

The study found the aggregate value of the changes created through working at NCEC works out as an average of over $17k per employee. The SROI ratio indicates that for every $1 of investment in NCEC, $3.31 of value is created. Another finding was that 49% of the value created is directly for the primary beneficiaries (disadvantaged employees).

NCEC coordinator Richard Warner said that, as a small co-op, NCEC had some reservations about the SROI method, which they found “quite expensive”. However, after securing a grant from the government they were able to commission the research increase their business capability and focus on research.

The qualitative story and programme logic of SROI were consistent with their experience, added Mr Warner, who found that the measurement has been useful particularly in terms of quantifying the worth of contracts tendered socially.

“I was very happy with the qualitative story and program logic the SROI reported,” he said. “it was consistent with our experience and it was great to hear the voice of the workers as heard from an outsider’s perspective.

“I learned from the process the value of measurement in tracking performance and explaining it to others – and also the value of an external review every couple of years as it can throw up new insights.

“However, we developed a much simpler method of collecting quantitative and qualitative data. Basic information – such as hours of work generated, dollars paid to members, longevity of employment of members, percentage of income derived from trade – is very easy to measure. It’s also easy to conduct a qualitative survey of members annually. And this is useful in terms of promoting your social impact as well as self-evaluating.

“The full SROI process is much too bulky and costly to maintain yourself and that is another of its deficits.”