Measuring Social Enterprise: A Resource Book for Social Enterprise Performance Measurement - Institute for Social Entrepreneurship in Asia

Edited by Marie Lisa M. Dacanay
with a Foreword by Mechai Viravaidya

About the Book

The idea for a resource book on social enterprise performance measures arose from a need expressed by development organizations to have user-friendly tools for assessing the outcomes and impacts of enterprises with a social purpose.

Seeking to balance financial sustainability with development objectives, these ‘social enterprises’ deal with ‘multiple bottom lines’. In addition to the financial bottom line, the development bottom lines may be about improving the quality of life of a marginalized sector or community, achieving environmental sustainability, contributing to cultural integrity or making a difference in terms of gender equality.

This resource book highlights two tools for social enterprise performance measurement. One is Development Indexing (DI), a tool which has found credence at the macro level – specifically the now well-known Human Development Index – and is starting to be used by some development organizations, including social enterprises, at the micro level. The other is the Social Return on Investment (SROI) approach, which has gained acceptance in other continents specially in developed market economies, but is just being introduced in the developing economy context in Asia . The cases featured in this book may be the first systematic effort to apply SROI in the Philippines.

This project directly sprang from an initiative of Oikocredit Southeast Asia to work with the Institute for Social Entrepreneurship in Asia (ISEA) to train the former’s partners in the on tools for aiding social performance assessment. The course, held in the Philippines on May 19 – 23, 2008, aimed to train facilitators who would lead the process of undertaking social performance assessment (SPA) using the SROI methodology and DI as measurement tools in their respective social enterprises and social enterprise resource institutions.

In line with the development of materials for the training, Oikocredit commissioned the conduct of four case studies exploring the application of said tools in the work of selected partner organizations. Post-training, Oikocredit and ISEA agreed to develop a resource book that will introduce the tools to a wider audience, using the case studies to show how the tools can be applied in different types of social enterprises.

This resource book is composed of the following chapters:

Chapter I, The Challenge of Social Enterprise Performance Measurement, introduces social performance measurement as a key challenge facing social enterprises, providing the context for appreciating the value addition of development indexing (DI) and Social Return on Investment (SROI) as tools . It looks into the phenomenon of the flowering of social enterprises, defines and contrasts a social enterprise with a traditional business enterprise, and describes the state and challenge of performance measurement among social enterprises. The section on performance measurement among social enterprises is focused on practices among three segments of social enterprises in the , where the cases featured in this book belong: microfinance institutions, fair trade organizations and cooperatives.
Chapter II Development Indexing in Social Enterprises, introduces a tool for quantifying qualitative outcomes of development interventions, and for measuring the level of transformation among relevant stakeholders assisted by a social enterprise or resource institution. The chapter describes the roots and rationale of development indexing, cites cases where a form of development indexing has been used or initiated in the Philippine setting and draws insights on the range of uses and applications based on these cases. The chapter also provides guidelines for evolving a development index and explores prospects for its use among social enterprises.
Chapter III introduces Social Return on Investment (SROI), an approach which seeks to quantify the social costs and benefits, including what may be otherwise considered as intangible benefits, that a social enterprise generates. More than a computation of value, the SROI approach is characterized by the chapter’s author as a “framework to structure thinking and understanding”, emphasizing the importance of defining the stakeholders, theory of change and target outcomes as basic to the eventual valuation and monetization, or putting an equivalent monetary value on costs and benefits. The chapter traces the evolution of the methodology, leads the reader through the series of steps in SROI analysis, and cites examples of SROI research in the developing world.
Chapter IV features the first of the four cases featured in this book, Alter Trade Group: Creating a Development Index for Partner People’s Organizations. The case illustrates the process of formulation, and potential use of an index to track the progress of people’s organizations composed of sugar farmers and banana growers, the primary stakeholders of the Alter Trade Group (ATG). ATG is a group of four organizations engaged in fair trade, the promotion of organic farming, and community development. The development index evolved included five elements: organizational cohesion and development, capacity to engage the market, income diversification among members, contribution to community and sector development and financial growth and sustainability. The case is both a stand-alone illustration of the application of development indexing, and a companion piece to the next case which shows an application of the SROI approach.
Chapter V, Alter Trade Group: Application of the Social Return on Investment, describes an effort to apply SROI analysis to the group’s interventions, zeroing in on ATG’s impacts on its partner people’s organizations and their members. The case studies the costs and benefits of ATG’s interventions with respect to its partner sugar and banana farmers in Negros Island , their provincial base. Beyond more tangible impacts like increased income for stakeholders, the case looks at how outcomes like improved knowledge and skills at the group and individual level, and enhanced self-esteem may be valued and monetized. It also showed how the earlier case on development indexing aided the process of valuation and monetization of the costs and benefits related to improved knowledge and skills of the farmers at the group or organizational level.
Chapter VI, A SROI Case Study of the National Federation of Cooperatives of Persons with Disability applies SROI analysis among persons with disability (PWDs) and other stakeholders involved in the organization’s main project: the production and marketing of school chairs. The case explored valuation and monetization of both financial and non-financial outcomes and impacts across various stakeholder groups. These included income for the federation, increased incomes for participating persons with disabilities (PWDs), savings for the government in procuring cheaper and more durable school chairs as well as enhanced self-worth and image/ role in the community of PWDs.
Chapter VII features the last of the four cases, SROI in Negros Women for Tomorrow Foundation (NWTF). NWTF is a micro-finance institution that helps some 80,000 poor women in 10 provinces through credit assistance. The case demonstrates how the issue of attribution is addressed by SROI analysis. The resulting SROI story provided a nuanced analysis of the income impacts among various segments of NWTF’s clientele. SROI is also shown as a useful tool complementing other tools/ measures used by the organization in assessing the impact of its micro-finance operations. Specifically, this case illustrates the potential complementation of the SROI with a form of development index that is already being used by the NWTF, the Progress out of Poverty Index.
Finally, the concluding chapter on Insights and Challenges synthesizes what can be learned from the case studies in terms of what DI and SROI can offer as tools in aiding social performance management. It also synthesizes the more important issues, concerns, and constraints in the use of Development Indexing and the SROI approach, and provides perspectives in appreciating their value added, exploiting their power as tools and managing the challenges that may be in their adoption.

This resource book is primarily meant for social enterprise practitioners and resource institutions who are in search of tools for developing performance measures in aid of strategic and operational management. It is intended to be a useful addition to the evolving body of knowledge on social entrepreneurship, dedicated to growing the social enterprise sector in the region.

But while the resource book is primarily for practitioners of social entrepreneurship, it is hoped that advocates and other actors such as government and non-government organizations engaged in enterprise development, multilateral development agencies, funding institutions, academe and even private corporations or entrepreneurs interested in measuring their social outcomes and impacts, could benefit from the publication.

Marie Lisa M. Dacanay
Project Director
ISEA-Oikocredit Project on Social Performance Assessment

MEASURING SOCIAL ENTERPRISE may be purchased from the ISEA office at P500.00 per copy (exclusive of mailing cost). International purchases may be made at USD15.00 per copy (exclusive of mailing cost).

ISEA and Oikocredit members/partners are entitled to a 20% discount beyond their pre-arranged complimentary copies. A discount of 10% shall be given to students and groups purchasing 5 or more copies.

Payments may be made in cash, check or money transfer to ISEA, Bank of the Philippine Islands (BPI) PhP Current Account No. 0421-0740-54 or USD Savings Account No.0424-0514-38. Purchases shall be delivered upon confirmation of the receipt of funds (inclusive of mailing costs).

Orders and inquiries may be made at secretariat@isea-group.net and at +63916-5464870 (text or call, look for Dolly Marcial)

About the Authors

Marie Lisa M. Dacanay is president of the Institute for Social Entrepreneurship in Asia (ISEA). She is visiting fellow at the Ateneo School of Government (ASoG), Ateneo de Manila University, in the Philippines, where she is leading curriculum development for a Master in Public Management major in Social Entrepreneurship Program, expected to be launched jointly by ASoG and ISEA in 2010.

From 2001 to 2007, Lisa was associate professor and program director of the Social and Development Entrepreneurship Program under the Asian Center for Entrepreneurship in the Asian Institute of Management.

During that period, she mentored social entrepreneurs and development managers enrolled under the Master in Entrepreneurship for Social and Development Entrepreneurs (MESODEV), and taught social entrepreneurship and development management courses under AIM’s Center for Development Management and Graduate School of Business. She also led research projects on social entrepreneurship, including one covering 13 social enterprise cases in the Philippines, India, Thailand, and Indonesia. These case studies were published in a book entitled Creating a Space in the Market: Social Enterprise Stories in Asia (2004), of which she was principal author and editor.

Earlier, Lisa was project leader and editor of Pathways: In Search of Exemplary Practices on Environment and Sustainable Development in Asia (1999), a research book project of the Conference of Asian Foundations and Organizations (CAFO) covering seven countries in Asia.

She is also the author of “Social Entrepreneurship: An Asian Perspective,” a chapter in a book entitled International Perspectives on Social Entrepreneurship, recently published by Palgrave Macmillan (2009).

Lisa has more than 25 years of experience in development management and consulting, social entrepreneurship, and international development cooperation in the Asian region. She holds a Master in Development Management (With Distinction) from the Asian Institute of Management (1996) and received a Bachelor of Science (Statistics) from the University of the Philippines (1983). She is currently enrolled in the PhD Programme in Business Economics at the Copenhagen Business School in Denmark.

Peter Scholten is the co-founder of Scholten&Franssen, an international consultancy to support social entrepreneurship, bridging the gap between non-profit and for-profit organizations. Scholten&Franssen stimulates social entrepreneurship through consultancy and training. Its fields of expertise include business planning, social investing, performance measurement, and earned income strategies. Its clients include major for-profits, smaller non-profits, and investors and foundations.

In Europe as well as in developing countries, Peter is a specialist in the social return on investment (SROI) methodology and has published three books on SROI. Together with his business partner Boris Franssen, he published a Guidebook on Social Entrepreneurship. Peter is chair of the European Venture Philantrophy Association’s Social Impact and Performance Measurement Group, is associated with the Nijenrode Business School, and is one of the initiators of the SROI-web tool Social Evaluator (www.socialevaluator.eu). Before starting his own consultancy, he had been working for 25 years with many social enterprises in the Netherlands.

Peter received his MBA from the Rotterdam School of Management and studied in the United States (Atlanta and Harvard).

Chona Sebastian is a former senior researcher and research program manager at the Asian Institute of Management. She has since become an independent consultant, conducting research studies for private entities, non-government organizations, government agencies, and academic institutions. Several of her over 100 case studies, teaching guides, and industry studies are included in books and journals. Her special interests include Strategy Management, Human Resource Management, Financial Management, and Microfinance.

She’s currently a lecturer on Methods of Research of the Ateneo Graduate School of Business, and a certified facilitator for Social Performance Management of Microfinance Institutions of the Microfinance Council of the Philippines.

Chona is a cum laude graduate of the University of the Philippines, where she obtained her Bachelor of Science in Business Economics in 1991 and her Master in Business Administration in 1999.

Meldy Pelejo has been involved in social performance management since 2006. She has conducted and managed impact assessment studies, including client exit surveys. As a research associate of the Asian Institute of Management Microfinance Management Office (AIM-MMPO), she carried out client profile studies and wrote case studies and papers on such topics as social performance management systems, social enterprises, business development services, and the management information systems (MIS) of MFIs for the Asian Institute of Management Microfinance in MBA Program. Prior to this, she worked for about nine years for an NGO working towards people’s development and promoting values formation.

She currently coordinates the implementation of the Progress out of Poverty Index (PPI) tool in microfinance institutions and cooperatives that are program partners of the Oikocredit Ecumenical Development Society. She is also a consultant to the Goldman Sachs’ 10,000 Women project of the University of Asia and the Pacific, in collaboration with the IESE Business School in Barcelona, Spain. She also does freelance writing for other NGOs and for Aceprensa, a Spanish web newsmagazine.

Meldy obtained her bachelor’s degree in Mass Communication from the University of the Philippines, Diliman, and holds a master’s degree in Communication Studies from Dublin City University in Ireland.

Rosalinda Roy has more than 20 years of experience in development work, enterprise/business development, and entrepreneurship education. She had a 13-year stint with the Philippine Rural Reconstruction Movement, one of the largest primary non-government organizations in the Philippines, which is engaged in livelihood/enterprise development for poverty alleviation, environmental protection, delivery of basic social services, and community organizing and empowerment. She headed the Field Operations Department for four years and was director for Technical Services for two years prior to her retirement from the institution.

Since 2004, Rosalinda—known to one and all by her nickname Baby—has been involved in various consultancy engagements, including coordination of two cycles of the Development Marketplace program initiated by World Bank Philippines, a search for innovative ideas to address development challenges. She was also drillmaster for the Master in Entrepreneurship for Social and Development Entrepreneurs program of the Asian Institute of Management. Most recently, she helped set up the Institute for Social Entrepreneurship in Asia (ISEA), as project manager for ISEA’s initial phase.

Baby holds a master’s degree in Business Administration and a bachelor’s degree in Business Economics from the University of the Philippines. She is now based in the United States.

Mechai Viravaidya is a prominent social entrepreneur in Southeast Asia, and is the founder and board chairperson of the Population and Community Development Association (which uses the abbreviation PDA), known for successfully implementing countrywide health and rural development programs in Thailand.

Dr. Viravaidya first established PDA in 1974 as a family planning organization involved in non-traditional educational campaigns and distribution of contraceptives. This resulted in the annual population growth rate in Thailand declining from 3.4 percent in 1974 to 0.5 percent in 2005. He was also instrumental in the fight against HIV/AIDS, beginning in the early 1990s. Within 10 years, new HIV infections had declined 90 percent in Thailand. After the devastating 2004 tsunami, he launched reconstruction initiatives focused on the social and economic livelihoods of those affected. Most recently, he has focused on rural development by empowering the poor through an initiative known as the Village Development Partnership.

He has been the recipient of several awards, including the 1997 United Nations Population Award (UNPA) and the 1994 Ramon Magsaysay Award for Public Service. More recently, he was awarded the Gates Award for Global Health (2007), as well as the Skoll Award for Social Entrepreneurship (2008).

Dr. Viravaidya obtained a Bachelor of Commerce degree from Melbourne University and has received several honorary doctorate degrees from prominent universities in Thailand and Australia.

Tor G. Gull, who has a wide-ranging background in Third World finance, has been the managing director of Oikocredit International since 2001.
In his previous position as senior vice-president of Leonia Bank in Helsinki, he was responsible for Export and Project Finance to developing countries. He also worked in the bank’s Hong Kong branch as manager of its Asian portfolio.

Prior to this, Tor G. Gull worked in Tanzania and Kenya, developing small-scale businesses in rural areas with the Nordic Project for Cooperative Development (DANIDA).
His professional expertise is complemented by a Masters in Accounting from the Swedish School of Economics in Helsinki and an MBA from the Helsinki School of Economics/University of South Carolina.

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