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Social Enterprise Accounting - Case 12.1 - Using SROI to Support Tendering and Bidding

Social Enterprise Accounting - Case 12.1 - Using SROI to Support Tendering and Bidding

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Published by Rory Ridley Duff
Social enterprise teaching case on SROI accounting practice.
Social enterprise teaching case on SROI accounting practice.

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Published by: Rory Ridley Duff on Dec 17, 2010
Copyright:Attribution No Derivatives


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 Social Enterprise: Case Studies in Social Accounting
Rory Ridley-Duff and Charlotte Williams, 2010Creative Commons 3.0, Attribution No Derivatives 
Case 12.1
Using SROI to Support Tendering and Bidding
 In this case, we explore the experience of a charity CEO (Charlotte Williams) who considered usinga social return on investment (SROI) analysis to assist in bidding for contracts. This case illustratesthat there are various issues that need addressing when commissioning / learning about newaccounting techniques, and that consultants are not always familiar with them.
In late 2009, Charlotte Williams, the CEO of Station House Community Association near Rotherhamin South Yorkshire, started to learn about social return on investment (SROI). This accountingtechnique claims to identify the value added by social enterprises by allowing beneficiaries toidentify the monetary value of 
social goods
they have received. Often, social goods do not have anidentifiable market value and remain unrecognised and unreported. By asking recipients how theirlives have changed, and how this affects their financial well-being, not only are the non-marketvalues created by social enterprises identified, the people who receive them determine their valueand thereby influence the allocation of economic resources.SROI was developed with the support of the Roberts Enterprise Development Fund in the US, andwas adapted by the New Economics Foundation (nef) for use in the UK. In the last five years,interest amongst ethical investors and public sector commissioners has increased because SROIoffers a way for them to establish the social value (public savings) triggered by their investments.Charlotte became interested in SROI for two reasons. Firstly, she wanted to pioneer new ways toconvince people of the value of work undertaken by Station House (and other members of the socialenterprise network that she helped to organise). Secondly, she wanted to bid to the ReachingCommunities fund of the Big Lottery (a UK lottery that channels money to
„good causes‟
). SROI,on paper, offers organisations a new way to understand
they create value, and report this in theform of a ratio (e.g. £2 value created for each £1 of investment, or 2:1). As a registered charity, thiswould help the Big Lottery bid and also assist with Charity Law (SORP) reporting.
Finding a Consultant
Charlotte knew that she did not have the necessary skills to do an SROI analysis so she agreed withher trustees that Station House should commission a consultant. At this time, Charlotte did not fullyunderstand the work involved in undertaking an SROI analysis but she did understand tenderingprocesses. She obtained the names of six organisations that specialised in evaluation studies fromthe website of the National Association of Community and Voluntary Action (NACVA) and invitedthem to tender for the work.
Charlotte received two offers: one came in a „shiny‟ pack and the other 
was in the form of a hand written letter. She
went for the „shiny‟
offer.Charlotte was quoted £4,000 for a project that would last 10-12 weeks and paid half of this inadvance. Initially, things started well with a flurry of e-mails on scoping the project. Then Charlottewas perplexed when the consultant did not seem to understand the basics of SROI. So, she directedthem to an appropriate website. By week 22, Charlotte was
in receipt of a „first draft‟ report, which
contained lots of spelling mistakes. It provided some insights, but the bases of the calculations werequestionable.
The initial report was of „
as it strongly suggested that Station House was providing good
value for money. Fortunately, Charlotte had an opportunity to „work shadow‟ a Senior Project
Officer at the Department for Communities and Local Government. Upon discussing the SROIreport, the senior project officer indicated that it did not match the expectations of her department

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