The Cost of Everything & the Value of Nothing: the Need for Social Return on Investment (SROI) & Unified Commissioning
The purpose of this briefing is to
- Introduce SROI and describe the context in which it is meant to operate
- Discuss whether SROI fits with the way in which public & non-statutory funding is currently administered
- Identify the likely changes in commissioning structures that will impact on how SROI works
- Explore how a pragmatic approach to SROI might help with funding and assist in changing the way commissioners work and organise themselves
- Identifiy how organisations providing services to people with additional needs need to adjust their approach and describes how Support Solutions UK can help them do so
Providers of services to people with additional needs seek funding from statutory and non-statutory sources in order to deliver the services they provide. Increasingly, such providers are being asked to “add value” (beyond the price of the services they provide for the funding they seek) and to demonstrate how they have done so.
In theory this is no bad thing and it should be an opportunity for providers to show both the financial and the non-financial benefits that accrue from the services they provide.
After all many organisations provide preventative services for people with additional needs and these have a major and positive impact in both social and financial terms. For example, a provider working with people who have issues with drugs will routinely achieve the following things (and more) in addition to the direct services it provides to the people it works with:
- Reduce emergency/non-elective admissions to hospital
- Reduce pressure on and costs to the ambulance service and paramedics
- Relieve pressure on GP services
- Reduce acquisitive crime
- Reduce antisocial behaviour
- Reduce the number of people involved in sex work
- Impact positively on the “black market” in drugs and stolen goods
- Help with community cohesion
- Reduce reoffending
- Reduce pressure on prisons
- Reduce costs to and operational pressure on the Police
- Reduce costs to and operational pressure on the courts system
- Reduce the incidence of HIV and Hepatitis C transmission
- Reduce deaths and trauma associated with overdoses
- Increase the number of people who can engage with education, training and work
This is by no means an exhaustive list, far from it. Providers will, or should, be able to add greatly to it and to express their own outcomes in terms of both social and financial benefit. I have focussed on some of the additional value that organisations working with people who have drugs issues can and do bring.
Who does your organisation work with? Think about the wider social and financial benefits you bring (or could bring with an evolved service model) and, if you haven’t already done so, scope them out by way of a list or a diagram.
This is important as, amongst other things, provider organisations are told that they should be producing what are known as Social Return on Investment (SROI) models to demonstrate to funders and the community at large the benefits that accrue from investment in their services.
What Is Social Return On Investment (SROI)?
This brief YouTube video from the Dame Kelly Holmes Trust gives a really good overview of how SROI works.
There are quite a few SROI models in development and use at the moment. The SROI Network has identified 7 social accounting principles that should underpin what it sees as a credible SROI methodology/model.
My colleague Abimbola (Bimi) Duro-David has produced a more detailed description of SROI methodologies and how they work in her technical briefing, which you can read here.
But therein lies the problem. The SROI Network and SROI principles seem to focus on social value as the priority – and this is quite correct from a philosophical point of view. However, within the UK at least, the focus of statutory sector funders is on cost before value. We have a series of cash-limited budgets/pots of money: the NHS/CCGs, adult social care, children and young peoples’ services, criminal justice, Supporting People to name but a few. All of these budget pots seem to be permanently under cost-pressure, are expensive to manage and seem to spend a lot of time competing with each other to NOT fund services for various reasons. These reasons include insufficient budget and ever more restrictive eligibility criteria meaning that preventative services are often deprioritised in favour of emergency interventions, which arguably and ironically could have been avoided through investment in prevention.
This is less the case with non-statutory funders, for example, The Big Lottery Fund for which SROI methodologies are no less important.
If a provider develops an SROI model that focuses on wider social value (see bulleted list above) and then approaches a potential commissioner the likelihood is that the commissioner in question is only going to be interested in whether the service proposition impacts positively on “their” budget. Wider social value and any associated cost savings there may be are typically spread far wider than that: if a commissioner or other funder is concerned only with cost savings to “their” budget then the SROI model in question may fall on deaf ears.
What we need then is a paradigm shift from a focus on cost to a focus on value. The question should be not “how much does it cost?” but “how much value, both social and financial, does it generate?” Preventative services are fundamentally cost-effective and socially valuable. Failing to invest in prevention inevitable leads to avoidable human suffering and hugely increased spending on emergency interventions that are avoidable.
The primary reason for a failure to focus on value and to invest in prevention seems to us to be an unshakeable preoccupation at statutory sector level with the management of cost-limited and compartmentalised budgets on the one hand, and the absence of unified commissioning infrastructure on the other. In general non-statutory funders do not find themselves constrained by this kind of problem and may therefore build wider social value into their considerations as part of any funding application process.
There are of course exceptions to both of these rules but as things stand, presenting a well-researched and comprehensive SROI model to a single commissioner that has responsibility for a single budget, or series of ring-fenced budgets, often just won’t cut the mustard. They won’t usually be interested in what positive social impact or financial benefit you derive to “someone else’s” budget; what they’ll be most interested in is the cost-benefit to “their” budget.
So what do we do? Firstly we have to acknowledge that the predominant commissioning model is based on cost not value and on cash-limited ring-fenced pots, however dysfunctional and expensive that may be.
Secondly, we have to acknowledge that the predominant commissioning model is segmented not unified and that the combination of this fact and the fact that cost is prioritised over value makes a nonsense of SROI models in their “pure form”.
That said I do believe that there is a slow but inexorable shift in the direction of value and away from cost and towards more integrated and unified commissioning. The SROI idea is developing strongly and the infrastructure at commissioning level needs to catch up with it.
The UK Government and devolved Governments see segmented commissioning as too expensive and if the intellectual argument for unified commissioning hasn’t historically been strong enough to break the competing vested interests within the statutory sector commissioning infrastructure as a whole, which keeps it segmented, then the financial crash of 2008 and its associated impact on public sector finances has been.
Recent developments such as the devolution of health and social care responsibility to the local statutory sector in Greater Manchester as described in this Kings Fund blog post is an example of this. Devolved national parliaments in the Northern Ireland, Scotland and Wales (but rather curiously not England) also provide the potential to change commissioning infrastructure, especially if further powers are devolved, so that the current system of cash-limited pots that compete with each other to NOT fund preventative and other services for people with additional needs can be dispensed with in favour of a system that unifies budgets and commissioning systems. Unified commissioning can better reflect the totality of peoples’ needs, not just their housing needs, or their support needs, or their social care needs or their personal care or medical needs in isolation from each other. Unified commissioning can also be freed to focus on the social and financial value of a service model, not just its cost, provided that the financial value exceeds the cost, which in the case of preventative services is pretty well universally the case.
So we have a system that is at the very beginning of a transition. Provider organisations and many non-statutory funders, in general terms at least, do understand that preventative services save money and achieve a wide range of other direct and indirect outcomes. It’s probably the case that statutory commissioners do too but they are too often systematically constrained by the need to focus on cost: the management of ring-fenced, cash-limited budgets.
We need to attenuate our approach to current conditions. When we talk to provider clients about SROI many of them understandably bemoan the mismatch between SROI principles and methodologies on the one hand, and the operational imperatives of many commissioners on the other.
We can’t force square pegs into round holes so we need to approach the issue pragmatically. We should still produce SROI models based on the SROI Network’s 7 principles, the first of which is “Involve Stakeholders”. A very significant stakeholder, albeit not the only one, is the commissioner (or commissioners) you’re going to ask for funding from. It may well be that the conversation you have with commissioners revolves around cost-benefit more than social value whilst their focus is on the management of cost. It is important to involve them in the methodology to calculate cost-benefit to the budget they manage. It is no less important to identify wider social value even if it doesn’t impact on the management of their budget.
As the paradigm shifts it is important to use SROI as a means of encouraging a shift from a focus on cost to a focus on value. A move to unified commissioning will inevitably enable a sharper focus on value. Those of us who have been involved in housing, support and social care for any length of time will know that unified commissioning has been a Holy Grail for time immemorial, but that it only really happens in a piecemeal fashion if it happens at all.
In working with statutory sector commissioners providers should:
- Identify the outcomes (direct and indirect) that your services achieve and the commissioners/budgets upon which they impact positively
- Research the strategic outcomes that commissioners have identified as important to them
- Analyse how you can achieve those outcomes through your existing service models or adjusted/new service models
- Identify useful outcomes that commissioners may not have included
- Identify third party funding streams that support your service model and “subsidise” costs to commissioners, for example, enhanced Housing Benefit and non-statutory grant funding
- Produce a simplified SROI/cost-benefit analysis to demonstrate your idea
- Having strategically identified relevant commissioners, be very persistent and network strategically in communicating your idea and the associated simplified SROI model/cost-benefit analysis to those commissioners
- Try and achieve an agreement for a pilot scheme and work with the commissioners in the methodology for assessing the success of the pilot in advance of starting it
- Remember that the future direction is for non-statutory agencies to take on a deeper and wider role in support and social care in addition to housing
- Evolve, Remodel and Diversify service models
Can We Help You?
For organisations seeking public money SROI is a really important methodology going forwards but it doesn’t yet fit with the “cost rather than value” approach that characterises much public sector commissioning.
Support Solutions UK can help your organisation to understand and navigate statutory sector commissioning infrastructure (and non-statutory grant-making bodies) during a time of change and to understand how SROI works and needs to be adapted to fit with where commissioners and funders find themselves now in a changing environment.
We can develop SROI approaches and methodologies for you but we’d rather do so with you. We’ve always been enablers and facilitators; it’s more cost-effective and empowering.
We provide training events for single organisations and groups of organisations on SROI in a time of change.
We support organisations to obtain funding for existing and new/revised services by helping them to examine and understand local conditions such that a properly attenuated SROI approach can be developed.
Please contact Michael Patterson (email@example.com) or Abimbola Duro-David (firstname.lastname@example.org) to learn more.
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