1. finance

How to Measure the Impact
of Social Banking and
Social Finance?
Dr. Olaf Weber
Export Development
Canada Chair in
Environmental Finance
Content
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What is Social Finance?
Background
How to measure the impacts?
Examples
Financial Returns and Social Returns
are a Trade-Off
vs.
Social Finance creates a blended
return
The influence of Investments on CO2
Emissions
CO2
CO2
Bank
CO2
Office
Inve
s
tmen
t
1:50
Goal of Social Banking
•  Using financial products and services to
create a positive impact on the society and
the enviroment
Blended Return:
Social Impact and Financial
Return go Hand in Hand
•  Maximizing both financial and social return
on investment
•  Social and financial return on investment
are not a trade off but can be positively
correlated
Emerson, J. (2003). The Blended Value
Proposition: Integrating social and financial
returns. California Management Review, 45(4),
35-51.
Maximal
financial return
No financial
return
No
consideration
Main focus
Example
•  Reduction of 3'092 t CO2 emissions per year
compared with conventional energy production
by loans to renewable energy projects
•  Investing $ 100’000 in renewable energy bonds
reduces 7.5 t of CO2 emissions and creates a
financial return
Why Social Banking?
•  In contrast to philanthropy social sanking
sroducts and services foster the costeffectiveness of social and environmental
projects
–  Social Capital Partners
–  Watch: http://www.youtube.com/watch?v=JHyxbSg3wLY
•  Many investors need a financial return
•  Mutual respect
–  Acknowledgement of the abilities
of borrowers
–  Integration into economic processes
Components of Impact
Measurement
•  Impact
–  Strong vs. weak social or
environmental impact
•  Financial Return
–  High vs. negative
•  Risk
–  High vs. low
Benefits of Impact
Measurement
•  Management
–  Efficient planning
–  Effective controlling of target achievement
•  Understanding the benefits of social banking
•  Communication
–  Stakeholder oriented communication
•  Improved perception of the social and
environmental impact of social banking
Social Return on Investment
(SROI) as a Method to
Measure the Impact
•  Understanding and managing the social,
economic and environmental outcomes of
a project, organisation or policy
Seven Principles of SROI
1.  Stakeholder Involvement
–  Communicate with stakeholders to understand how
social finance create an impact
2.  Understand what kind of impact should be
achieved
–  Values, objectives, targets, visions and missions
3.  Value the things that matter
–  Use financial indicators to measure the impacts
related to the investments
Seven Principles of SROI
4.  Include only what is material
–  Measure evidence based
5.  No over-claiming
–  Use appropriate benchmarks, targets and standards
6.  Be transparent
–  Demonstrate the way how you measure the impact
7.  Verify results
–  Independent verification
Concepts
•  Inputs
–  Which and how many resources (capital) have we used?
•  Outputs
–  What are the results of the investment ?
–  Number of training programs, renewable energy in kW/h
•  Outcomes
–  Which changes coluld be realized?
–  Increase on income for the poors, CO2 reduction,
amount of drinking water available
•  Impact
–  Outcome minus change without social finance
Examples
•  Sarona
–  www.saronafund.com
•  Social Capital Partners: Cook Studio
–  http://www.socialcapitalpartners.ca/portfolio/sroi-reports
•  Impact Reporting and Investment
Standards
–  http://iris.thegiin.org/
SARONA
SROI Report Card: Year End 2006
Cook Studio: Social Mission Overview
Goals
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Provide job skills training
and employment
placement to people with
employment barriers
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Help participants at end
of employment
placement to career
ladder internally, access
mainstream job market
or access formal
education/training
system
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Actively participate in the
revitalization of
Vancouver’s Downtown
Eastside (DTES)
Methods
• Operate two employment
training programs
(disadvantaged youth and long
term unemployed)
Success Metrics
• At least 75% of youth secure
employment and/or go back to
school at end of 6 month
employment training program
• Hire locally from DTES
• Train people in an environment
that supports the “whole”
person while providing high
quality food product and service
to customers
•  Establish partnerships in the
food service industry for trainee
practicums and next step
employment
• Hire past trainees into Cook
Studio as full time employees
•  Where possible source food
product from local suppliers
•  At least 65% of long term
unemployed are able to
become independent of
income assistance at end of 6
month employment training
program
•  At least 50% of Cook Studio’s
employees are hired from
training programs and DTES
• Source approximately 30% of
food product and supplies from
local DTES suppliers for Cook
Studio operations
SROI Report Card: Year End 2006
Enterprise: Cook Studio Food Services
Location: Vancouver, British Columbia
Financial Performance
Social Return On Investment
Total Sales Revenue:
$1,404,342
Average Change in Societal Contribution (Target
Employees):
$8,604
$80,000
Annual Number of TE Trainees that completed program and
Target Hires:
61
Number of Target Employees in Sample Group:
21
Current Year Cost Savings to Society:
$524,844
Current Year SROI
79%
Societal Payback Period:
1.3 years
Total Grants, Gifts and Subsidies (GGS):
Total Government Service Contracts
/Social Support Infrastructure:
Total Sales,GGS and Government Contracts:
$498,495
$1,982,837
Total Operating Profit (Loss)
$(90,000)
Total Investment:
$668,495.00
Overview of Business
  Incorporated in 1990 in North Vancouver and relocated to Downtown Eastside
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Date of Inception: 1990
(DTES) in 2000
Since 1990, created employment opportunities for more than 1200 disadvantaged,
multi-barriered lower mainland residents
Three distinct operations – full service café; commissary kitchen and catering; contract
food services
Grew revenues by 76% (compared to 04/05)
2005 – won contract to operate all food and beverage operations at Edgewater Casino
as part of the Vancouver Agreement
2006 – won contract to operate Vancouver Olympic Organizing Committee food
services contract as part of the Vancouver Agreement
Currently purchase over $500,000 per year in supplies and products from small DTES
business
Sustainable Livelihoods Outcomes (sample group)
•  73% of long term unemployed trainee group receiving government income assistance
during the training program were able to secure jobs at end of program and get off
social assistance
•  Cook Studio’s open, friendly and supportive organizational culture enables trainees to
develop confidence in themselves and their ability to establish a career track
•  The routine of the training program, the rotation structure of diverse food preparation
stations and different service environments enabled people to learn what particular
areas they are most interested in developing re: career laddering in the food service
industry
Overview of Target Participant Group (sample group)
•  95% unemployed – 52% long term unemployed; 34% disadvantaged youth;
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14% local DTES recruitment
57% receiving government financial assistance at start of training program
Average age: 31
57% Caucasian; 29% Metis/Aboriginal; 10% Asian; 4% Spanish
57% female
14% single parent households with 1 or more children
57% completed high school
Employment Outcomes (sample group)
•  Currently employ approximately 100 people, 45 of whom are Downtown
Eastside residents or graduates of Cook Studio training programs
•  Target employees currently paid approximately $1 million a year in wages plus
Medical Service Plan and a comprehensive long-term disability and dental
insurance plan
•  72% of trainees went onto second stage employment (sample group)
•  38% secured job at Cook Studio and 62% went onto outside
employers
•  85% secured full time jobs and 15% secured part time jobs
•  100% second stage employment secured in food service industry
•  14% recruited locally from DTES
•  $9.73 – average wage for next job
Impact Reporting and
Investment Standards
Discussion
•  Was ist the benefit of commercial social
finance compared to grants and
donations?
•  What is the benefit of measuring the
impact of social finance?
•  What are the challenges of measuring the
impact of social finance?