Measuring the benefits of collaboration
How to measure the impact that charities and social enterprises have on their communities is a hotly debated topic. CAN Mezzanine, a UK-based social enterprise that provides office space for third sector organizations, has been using SROI (social return on investment) tools to measure the social value created for the charities and social enterprises that rent its central London office buildings, particularly the benefits of collaboration.
CAN is a charity that helps social enterprises and charities to scale up their business and maximize their social impact. Its own social enterprise, CAN Mezzanine, provides high-quality, flexible office space in three central London office buildings for around 122 charities and social enterprises.
Feedback from our latest customer satisfaction survey (March 2010) gave us evidence of the ‘added value’ experienced by our customers. Cost savings, flexibility and the provision of back-office facilities were not the only factors. People stressed the opportunities for networking and collaboration resulting from working in an open-plan space alongside other like-minded charities and social enterprises, with free access to meeting and conference facilities. We found that almost 70 per cent of organizations are collaborating on projects (either to save costs or to generate revenue) or sharing resources, around 90 per cent are interacting with each other in other ways and two have formally merged.
The challenge for us was to quantify the social return on investment (SROI) of CAN Mezzanine – what made it different from any other working environment. A key objective was to place a value on collaboration resulting from the community of social interest.
The definition of SROI offered by New Philanthropy Capital (NPC), one of CAN’s customers, is ‘a framework for measuring social value’ and ‘a type of economic analysis rooted in cost-benefit analysis’. NPC believes that the potential benefits of SROI as a management tool are not being exploited enough[1] – something that we concur with. SROI can place a financial value on impact, expressed as a ratio. (Example: ‘For every £1 spent, charity X generates £1.50 of social value’.) But it can also provide evidence to show where impact is greatest – a more qualitative outcome.
Calculating the SROI
Calculating the SROI involves listening to stakeholders, identifying the outcomes that are important to them and then, if possible, putting a financial value on these outcomes. Stakeholder engagement was a key element of our research. Following the SROI principle of ‘understand what changes’, we wanted to find out whether being part of the CAN community made a difference.
We contacted a representative sample of 13 charities and social enterprises, with a total of around 190 desks, based at two of our London office buildings. These organizations were then divided into three sub-groups – those with more than 19 desks (such as the Expert Patient Programme and New Philanthropy Capital), those with between six and 19 desks (such as Charity Bank and Employability Forum) and those with five or fewer desks (such as Pump Aid), which accounted for about 30 per cent of the desk space at CAN Mezzanine. This latter group includes charities from around the UK that need a London base or occasional ‘hot desks’ as well as fledgling charities and start-ups. We invited these organizations to complete a questionnaire. Follow-up interviews were conducted to provide more qualitative information.
Responses were expressed as outputs, outcomes and impacts. Examples of outputs were the office space itself, meeting rooms and opportunities for networking. Outcomes included the value placed on these facilities – notably increased flexibility, team morale and the opportunity to forge business relationships with others. Translated into impact, this was expressed as ‘greater organizational effectiveness’, ‘saved costs’ (New Philanthropy Capital) and ‘being able to reach more beneficiaries quicker and more efficiently’ (Pump Aid).
One of the important principles of SROI is ‘do not overclaim’. So, to ensure that outcomes were really a result of being part of CAN Mezzanine, the team asked for data to establish attribution, deadweights and displacements. These set out to ascertain whether the changes cited by customers were a consequence of being part of the CAN community or would have happened anyway in a different office environment. Most of the organizations involved in the follow-up interviews attributed between 25 and 50 per cent of changes to CAN Mezzanine.
Quantifying the results
This enabled us to quantify the SROI. The baseline or proxy was the cost of renting a desk space, which was £3,995 a year. This includes free access to meeting rooms and a range of additional services such as back-office support. We factored in the costs of office space provided by competitors. When quantified, the average social value per organization gained from being part of the CAN Mezzanine community was calculated as £1.30 over and above the commercial value of the office space, for every £1 invested. This adds up to a total social and economic value created by CAN Mezzanine of £3.27 million against an investment of £2.52 million.
Of this £3.27 million, we estimate that £723,000 is the value placed by CAN customers on collaboration. This figure was calculated by stripping out of the impact map anything not related to collaboration, and leaving in only the two outcomes related to collaboration – namely collaborating to save costs and collaborating to generate revenue. The impact (or value) of this outcome was modelled for the population to be £723,000. This means, effectively, that charities and social enterprises have been able to deliver more services to front-line beneficiaries.
One particularly interesting finding emerged. The ‘added value’ varied according to the size of the organization, with the greatest benefit expressed by the smallest organizations (with five or fewer desks). The perceived reason for this is that larger organizations tend to interact with fellow staff and have better access to resources internally. In contrast, people working in smaller organizations who might otherwise be working in relative isolation (or possibly from home) stressed the huge benefits of being located in a building alongside other like-minded organizations. Some examples of how this works were picked up in the latest customer satisfaction survey. Three domestic violence charities, for instance, all based in the same building, have submitted joint bids for funding and joint responses to consultations, and represented each other at meetings. Another cluster of charities in the museums, archives and collections sector are working together in similar ways.
Next step: relationship mapping
This research is constantly developing and we are refining the methodology. Discussions are taking place with a number of organizations on a relationship mapping tool that will analyse the interconnecting relationships in more depth. In our case, we would define relationship mapping as a method of visualizing, describing and analysing the different types of relationships between our customers, and we would like to establish a dynamic visual relationship map to represent this. We are also investigating how best to use the Social Evaluator tool (www.socialevaluator.eu), an online SROI package that has been developed in the Netherlands and should enable us to complete SROI studies for our community and network at a reduced cost.
This was not an easy project, as we set out to measure the outcomes that were important to our customers, not those that are easy to measure. The project also took us longer than expected. However, we would encourage other organizations to engage in this process as it really helped us to gain a much clearer understanding of what our customers value and will help us, as we further develop our model and systems, to more accurately measure social impact in the future.
1 www.philanthropycapital.org/publications/improving_the_sector/charity_an...
Richard Kennedy is Head of Social Investment at CAN and a director of the Social Return on Investment Network (www.thesroinetwork.org). Email r.kennedy@can-online.org.uk
