Philanthropy
SRI Briefing: Monetising Good/Good Monetisation

Two things seem to be happening at the same time: organisations are looking for ways to attach social value to their market pro-file; people are developing a more joined-up way of thinking about what they and what their investments are up to.
Two things seem to be happening at the same time: organisations
are looking for ways to attach social value to their market
pro-file; people are developing a more joined-up way of thinking
about what they and what their investments are up to. The result is a renewed pressure upon information —
its supply, its consumption, its transparency, and perhaps most
importantly, its transferability. People from either side want to
know more about what is going on, and how to stitch it all
together. Traditionally the market, or more properly, the “money
market”, has been able to generate decisions and manage
transactions based upon the chief criteria of financial value.
Range of relevance and ease of quantification has made this a
powerful tool for expressing core data in succinct figures.
However, financial information frequently fails to tell the
larger story, and even the larger financial impacts, of any
individual investment opportunity. The shortcomings of this
become apparent when considered against the backdrop of
globalisation, which has on the one hand raised concerns about
global terrorism and global warming, but on the other, has
increased the reach of our curiosity, and allowed us to connect
distant things much faster. Larger stories are becoming much more
important, and if raw financial information is not providing
them, then there is a growing gap for a newer source. The problem
with the kinds of alternative data which more socially minded
organisations (i.e. organisations which have significant outcomes
which are not expressed through traditional accounting) tend to
produce is twofold. Firstly, they are often lengthy and involved,
which for the purposes of comparison is a major disadvantage.
Secondly, the focus is generally on unquantified outcomes (social
or environmental good), which are hard to integrate with other
forms of data, and thus hinder the attempt to build an “overall
picture” which might replace the purely financial one. This is
frustrating for investors and organisations alike, especially
considering how frequently social or environmental projects
produce very real cost benefits which aren’t making their way
into simple bottom lines. Take for example a recycling scheme
which provides jobs for the long-term unemployed: investment is
paid back not only through the sale of recycled products but also
in terms of the welfare savings made. Of the two, only the first
enters into a straight financial analysis. (Compare this example
with that of Walmart in the US, which has been criticised for
relying on part-time staff who are kept on state-funded Medicaid.
While the company achieves significant savings, these costs do
still have to be paid, not least by investors through tax on
their seemingly admirable returns.) Research into the principles
of Social Return on Investment (SROI) has sought to address
precisely this gap. The 2006 Guide to SROI Analysis puts forward
a methodology for converting intangible descriptions of benefits
into genuine research and a credible system of monetisation —
i.e. a way to assess the complete range of an organisation’s
outcomes and relate them in financial terms. The immediate goal
is to provide the investor with what is so crucially lacking at
the moment — a way to talk about not only the direct monetary
return on an investment, but its blended return.