For sports organisations, the value extends beyond its financial bottom line. Sports organisations, while providing entertainment and fostering a love for the game, also play a significant role in society. They contribute to social development, environmental well-being, and economic growth. However, attracting corporate and government support for these broader social goals can be challenging. This is where Social Return on Investment (SROI) emerges as a powerful tool.
What is SROI?
SROI is a comprehensive framework that measures the social, environmental, and economic value created by a project, program, or organisation. It goes beyond traditional financial returns and considers the broader impact on stakeholders and communities. This impact can be expressed in monetary terms, allowing for a clearer understanding of the project’s overall value proposition.
How Does SROI Work?
SROI follows a six-step process:
- Define the Scope: This involves outlining the project’s goals, target beneficiaries, and activities.
- Identify Stakeholders: Consider everyone impacted by the project, including participants, volunteers, the community, and funding bodies.
- Measure Outcomes: Develop methods to quantify the project’s social, environmental, and economic benefits. This might involve surveys, data analysis, or case studies.
- Valuation: Assign monetary values to the measured outcomes. This step requires careful consideration and may involve stakeholder input and established valuation methods.
- Calculate the SROI Ratio: This is the core metric, calculated by dividing the total social value (benefits in monetary terms) by the total investment cost. A positive SROI ratio indicates that the project generates a return on social investment.
- Reporting & Communication: Clearly communicate the SROI findings and the project’s impact to stakeholders and potential funders.
Benefits of SROI for Sports Organisations
- Stronger Funding Applications: SROI reports provide compelling evidence of a project’s social impact, strengthening funding applications for corporations and government grants. This data-driven approach demonstrates the project’s value beyond just winning games.
- Enhanced Stakeholder Engagement: The SROI process encourages stakeholder participation in defining goals and measuring outcomes, fostering a sense of shared purpose and collaboration.
- Strategic Decision Making: SROI analysis allows sports organisations to identify the areas of greatest social impact and optimise their programs to maximise positive outcomes. This data-driven approach can inform strategic decision-making for long-term impact.
- Improved Reputation & Credibility: Quantifying social impact builds trust and strengthens the organisation’s reputation as a responsible community player. This can attract sponsorships, partnerships, and volunteer support.
- Attracting Socially Conscious Investors: Corporations with strong environmental, social, and governance (ESG) commitments are increasingly looking to invest in projects that generate positive social returns. SROI reports cater to this growing trend.
Examples of Applying SROI in Sports
- Youth Development Programs:
- Impact: Improved educational attainment, healthier lifestyles, and enhanced social skills among program participants.
- Data Collection: Track program participants’ academic performance, participation in healthy activities, and leadership roles within the program. Compare these metrics to a control group or historical data.
- Valuation Methods:
- Human Capital Approach: Estimate the increased future earnings potential due to improved education.
- Cost-of-Illness Avoided: Quantify the potential healthcare cost savings associated with healthier lifestyles.
- Volunteer Value: Assign a monetary value to the volunteer hours contributed by coaches and mentors.
Example Report:
A youth basketball program demonstrates through SROI analysis that participants show a 10% increase in academic performance compared to a control group. Using average salary data for college graduates, this translates to a potential lifetime earning increase of $100,000 per participant. Additionally, the program reduces healthcare costs by $500 per participant annually due to increased physical activity. Combining these benefits with the value of volunteer coaching hours, the program generates a positive SROI of 5:1, indicating that for every $1 invested, the program creates $5 of social value.
- Community Outreach Initiatives:
- Impact: Economic development through volunteer efforts and infrastructure upgrades.
- Data Collection: Track the volunteer hours dedicated to community projects and the estimated value of their contributions. Analyse the economic impact of infrastructure projects, such as increased property values or job creation.
- Valuation Methods:
- Market Rate for Volunteer Work: Assign the average hourly wage for similar skilled work to volunteer hours contributed.
- Property Value Increase: Analyse the change in property values surrounding a new sports facility built through community outreach.
- Job Creation: Estimate the number of jobs created due to infrastructure projects or increased tourism associated with sporting events.
Example Report:
A football club launches a program where volunteers renovate a local community centre. The SROI analysis calculates the value of volunteer hours at $20 per hour, totaling $20,000. Additionally, the program leads to a 5% increase in property values in the surrounding area, translating to a total economic benefit of $1 million. The SROI ratio for this program is 51:1, demonstrating a significant social return on investment for the club’s community outreach efforts.
- Environmental Sustainability Efforts:
- Impact: Reduced water and energy consumption at stadiums, leading to environmental and financial benefits.
- Data Collection: Track water and energy usage before and after implementing sustainable practices. Analyse the cost savings associated with reduced consumption.
- Valuation Methods:
- Cost Savings Approach: Calculate the financial benefit of reduced water and energy bills.
- Carbon Footprint Reduction: Estimate the amount of carbon emissions avoided through sustainability efforts and assign a value based on carbon offset programs.
Example Report:
A sports stadium implements water-saving measures in its restrooms, resulting in a 20% reduction in water usage. The SROI analysis calculates a cost saving of $50,000 annually on water bills. Additionally, the stadium reduces its carbon footprint by 100 tons per year, which translates to a value of $2,000 based on a carbon offset program. The combined financial benefits generate an SROI of 2.1:1, demonstrating the positive impact of sustainable practices on both the environment and the stadium’s finances.
- Diversity & Inclusion Programs:
- Impact: Increased access to sports participation for underrepresented groups, leading to a more engaged and supportive community.
- Data Collection: Track the number of participants from diverse backgrounds within the organisation’s programs and at sporting events. Measure fan engagement metrics, such as attendance and merchandise sales.
- Valuation Methods:
- Market Research: Analyse the potential revenue increase associated with a more diverse fan base through market research studies.
- Social Impact Bonds: Utilise established social impact bond frameworks that assign values to improved social cohesion and community engagement.
Example Report:
A basketball league implements a program to attract girls from underserved communities. The SROI analysis reveals a 20% increase in female participation within the league. Market research suggests that a more diverse fan base could lead to a 10% increase in ticket sales and merchandise revenue. Assigning a value based on a social impact bond framework for improved community engagement, the program demonstrates a positive SROI of 3:1.
Looking for a real life example? Check out ‘ The Social Return on Investment of Structured Sports Participation in Western Australia which seeks to measure the economic and social benefits realised from organised, club-based sports across the State.
Implementing SROI in Your Organisation
- Start with a Pilot Project: Implement SROI for a specific initiative within your organisation to gain experience and gather data.
- Seek Expert Guidance: Several organisations and consultants specialise in SROI applications. Partnering with them can ensure a smooth and accurate measurement process.
- Engage Stakeholders: Involve stakeholders throughout the SROI process. Their input will enhance the data collection and strengthen the final report.
- Focus on Transparency: Clearly communicate the methodology and assumptions used in the SROI assessment. This builds trust with funders and stakeholders.
Challenges of SROI: Assigning Value to Social Outcomes
While a powerful framework for sports organisations to showcase their broader impact, it does have some challenges that need to be considered. One of the key challenges associated with SROI is assigning a monetary value to social outcomes. Unlike financial returns, the benefits of social programs can be more intangible and subjective. Here are some specific examples of these challenges and how to address them:
Challenge 1: Selecting the Right Valuation Method
There are various methods for valuing social outcomes, but choosing the most appropriate one can be tricky.
- Market Proxy Method: This assigns a value based on the cost of achieving a similar outcome through paid services. For example, valuing improved health outcomes might involve referencing average healthcare costs avoided. However, this method might not fully capture the long-term benefits or the specific context of the program.
- Willingness to Pay Approach: This estimates how much individuals would be willing to pay for the social outcome. While surveys can be used, it can be difficult to accurately assess hypothetical willingness to pay.
Example: A sports program improves social skills in participants. It’s challenging to find a direct market price for “improved social skills.” While training programs exist, they might not perfectly reflect the specific skills developed through sports participation.
Solution:
- Stakeholder Involvement: Engage participants, volunteers, and community members in discussions about the value of program outcomes. This can help identify the most relevant valuation methods and ensure the assigned values resonate with stakeholders.
Challenge 2: Long-Term Impact
Many social outcomes, like improved education or healthier lifestyles, have long-term effects that unfold over years. Capturing these benefits within a single SROI measurement can be difficult.
Example: A youth basketball program might show positive academic performance in the short term. However, the full impact on future earning potential might only be realised years later after participants graduate.
Solution:
- Projecting Future Benefits: Use established economic models to project the long-term financial benefits of social outcomes. This might involve estimating future earnings increases based on improved education or healthcare cost savings due to healthier lifestyles.
- Multi-year SROI Assessments: Consider conducting SROI assessments periodically to track the evolving impact of a program over time. This can provide a more complete picture of the long-term social return on investment.
Challenge 3: Attributing Impact
Social programs often operate within complex environments. Isolating the specific impact of a sports organisation’s program from other external factors can be challenging.
Example: A football club’s community outreach program might coincide with a broader economic development initiative in the neighbourhood. It can be difficult to definitively attribute the rise in property values solely to the club’s program.
Solution:
- Control Groups: Whenever possible, utilise control groups that are not exposed to the program but share similar characteristics. By comparing outcomes between the program participants and the control group, you can isolate the program’s specific impact.
- Baseline Data: Establish baseline data on relevant social indicators before the program begins. This provides a starting point for measuring the program’s effectiveness and attributing any positive changes to its initiatives.
Conclusion
SROI is a powerful tool that allows sports organisations to move beyond traditional metrics and demonstrate their broader societal impact. By quantifying their social return on investment, sports organisations can effectively communicate their value proposition to potential investors. This data-driven approach can unlock new funding opportunities, strengthen stakeholder relationships, and ultimately amplify the positive social impact of sports in communities around the world.
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