In today’s funding climate, where donors and policy makers are increasingly looking to get the maximum benefit from their grants and allocated resources, it has become essential for the human services sector to develop an investment mindset that demonstrates some level of social return on investment to keep and attract new donors and stakeholders. Ultimately, we must be prepared to grapple with the assertion that every service model has, by definition, an SROI – it’s just a question of whether the return lies on the positive or negative side of the balance sheet.
Social Return on Investment (SROI) is a means by which we can translate the value of our work into dollars saved, dollars generated or costs avoided. In the world of human services, a social return on investment often appears in the form of tax payer money not spent on an individual who avoided reincarceration or ending up in a homeless shelter or emergency room for the night. A great example of this is the nationally recognized work of the Nurse Family Partnership (NFP). Through independent SROI analysis, NFP has demonstrated a ROI of more than $20,000 per participant after accounting for program costs, and a $5.70 return for every dollar invested in NFP, with most savings accruing to government through reduced use of public benefits. This is but one of a growing number of high-performing agencies who are distinguishing themselves among their peers in a new and rigorous way.
SROI can also be framed as benefits accrued made available as a by-product of improved condition. In this way a GED program might point to the enhanced earning power of a graduate which increases the tax base and/or the economic activity in the community where that graduate lives. BUILD Chicago is a gang intervention program that has been recognized as a promising practice by OJJDP, and was actually one of five required interventions for public agencies to meet eligibility for a recent OJJDP grant. Using Census data, BUILD attributes an increase in lifetime earnings potential to youth who leave a life of violence, gangs and crime and go on to complete college of $1.1 million dollars. BUILD effectively delivers an exit strategy from gang violence that opens the door for this economic engine to start revving.
These are compelling examples that demonstrate the financial equivalent of service delivery to external stakeholders. But, as exciting as this message can be, the true power of SROI analysis isn’t harnessed until human services use it as a performance management exercise.
In a performance management context, pursuit of SROI becomes a “callisthenic” that serves to limber and loosen our minds so that we have both the flexible problem-solving and the relentless stamina to convert data into intelligence. This is a practice common in virtually any marketplace – regardless of the bottom line. Even if the ROI numbers themselves are incomplete or not compelling, the process of correlating services provided with the impact of those services helps us align our costs/efforts (both real cost of effort and opportunity cost) with our benefits (outcomes). For all of its flaws and pimply-faced immaturity, results from SROI analysis can be used to help develop a common vernacular that facilitates performance management. SROI results can empower staff to participate in progressive analysis and program managers to measure and compare program performance, to identify areas that need improving and to eliminate programs that are ineffective or demonstrate insufficient impact given their costs. The pursuit of SROI informs the practice of data-informed decision making. By extension, this practice can yield impressive results. For example, by making data-informed adjustments to their notification call program, the Baltimore County Local Management Board decreased failure to appear rates by 70%, significantly decreasing secure detention admissions and their associated costs and further boosting the SROI of their Disproportionate Minority Contact (DMC) intervention. While the exact dollar amounts are debatable, the SROI framework for driving to and validating this impact is not.
Translating the value of human service work into costs saved or income generated is, admittedly, one of MANY (not the only) tools for demonstrating and communicating impact. In today’s increasingly competitive landscape, it is a tool which demands competence and proficiency and should be ignored at our own risk. Movement toward SROI analysis is an exciting step for a sector that has, until recently, argued that it is unique in all the world. We know it to be a self-deluding assertion that defies measurement and intelligent engagement. While achieving cost efficiency and effectiveness in the human services sector is still beyond most of our reach, I look forward to learning from those who have lead the way and expect to meet many organizations in the public and private sectors whose SROI leadership will be on display at the upcoming APHSA National Policy Forum.