1. Introduction

Digital transformation typically involves the innovative application of a new or existing technology to improve or create a process, product, or experience. In the business world this increased digital access and engagement is primarily for increasing profits. However, in the case of a not-for-profit organisation, it is much more likely to be aligned to reductions in costs, diversifying income streams, or widening participation. The benefits and returns are therefore not directly linked to income and so assessing the wider social value becomes important when seeking support from trustees or other stakeholders.

Increasing digital access will require an investment of time and resources to gain the benefits of increased audience reach and wider participation. But how do you make this a priority in your heritage organisation and how do you establish if it is worth the investment?

Research by the MIT Centre for Information Systems Research (CISR) and Vanson Bourne found that, on average, organisations expected to see a return on investment of 17% as a result of their digital transformation efforts. They established that typically these organisations would realise a 10% reduction in costs and an 11% increase in productivity.

While cost reduction is an important motive to digitally transform what you do, some of the biggest improvements are often found in audience engagement. A survey from Harvard Business Review in 2017 saw ‘improved customer service and experience’ and ‘increased insight into customer needs and expectations’ as the two most significant returns.

Being able to identify these potential benefits and returns is an important way of establishing and maintaining digital access as a priority area for your heritage organisation. But any potential benefits have to be grounded in your specific context and so you and your team need to establish what these look like for you.

While the benefits are clear from research, it is not just about making the case for improved digital access to your director or trustees. Your staff and volunteers need to be on board, and the wider benefits need to be relevant to your specific context. You can assess and communicate these wider social benefits (or social returns) through a social return on investment approach.

2. Social return on investment (SROI) for digital

In this guide, our expert Dr Patrick Glen from the University of Leeds, explores SROI as a useful approach to identifying the wider impacts and benefits of digital transformation efforts. Social return on investment measures change through an approach grounded in the people and organisations involved.

To establish the case for investing in improved digital access, start with your motivation. An SROI approach can be used to help you explore this in more detail. What do you want to achieve with this digital transformation?

First you need to capture this in a single objective and explain why this is important to you. Perhaps your audience base needs greater support to engage with your improved digital tools? Perhaps your volunteers need to be able to access online resources more effectively?

Points to consider:

1. What success will look like for your organisation

2. What metrics might help you to measure progress.

Many charities and not-for-profit organisations carry out a social return on investment analysis to quantify the wider impacts of their work. They may communicate the results in terms of the ‘SROI ratio’, which is the social value that an organisation generates for every £1 of funding or investment.

SROI measures the efficiency of an organisation in achieving its social objectives by dividing monetized social value (output) by the investments made (input).

Quote by Neilsen et al, 2020, Wiley Online Library

3. Calculating your SROI

There are typically two types of SROI. Evaluative, which is conducted retrospectively and is used to explore outcomes that have already taken place and Forecast which aims to estimate the amount of social value that will be created.

Whichever approach you take, there are typically six stages to the SROI process:

1. Scope and identify stakeholders

Establish what your SROI analysis will cover and who will be involved. In the case of digital access, you might focus on:

• efforts to improve the access to information that you offer online
• the investment in website redesign
• the organisation of volunteer digital heritage champions
• plans to provide access in the community to computers to improve the digital capabilities of ‘hard-to-reach’ groups.

Whatever the focus, it is important to consider what you are trying to achieve and with whom.

2. Map outcomes

By engaging with stakeholders, you can develop an understanding of impact, describing the relationship between inputs, outputs and outcomes. What do you hope will be the immediate effects of your initiatives? Are there wider impacts and benefits which may ripple out from these in the longer term?

3. Valuing outcomes

This stage involves collecting data to help track if outcomes have happened and what is the value of them. Advice on how to value outcomes is outlined in the section below entitled ‘Valuing outcomes’.

4. Establishing impact

Having collected evidence on outcomes and placing a financial value on them, you should decide which are your main impacts. What are the real success stories that have occurred due to your organisation’s work?

5. Calculating SROI

You then need to add up all the benefits and subtract any costs as a result of the initial investment.

6. Reporting and embedding

The last step involves sharing findings with stakeholders and embedding any good outcomes.

Throughout the process, keep to the key principles of SROI:

• Involve stakeholders
• Understand what changes
• Value the things that matter
• Only include what is material
• Do not over-claim
• Be transparent
• Verify the result.

Valuing outcomes

The monetary returns for increasing digital access are not always directly measurable and so valuing your efforts to support this can be difficult. For this reason, SROI is a valuable approach but does require you to consider what monetary proxies could be used for the work you do.

There are four key methods to do this:

1. Stated preference and contingent valuation – with this approach you directly ask relevant beneficiaries how one outcome is valued in relation to something else, e.g. how much would you pay to have, or to avoid, something?

2. Revealed preference – this approach requires you to ask people to think of an equivalent service or event and then you can infer value from this comparison, e.g. how valuable is easier web access to you? If you are now informed about and able to attend this organisation’s events, are they more or less fun and rewarding than an alternative paid-for activity?

3. Travel cost/time value – this approach explores how much time people are willing to invest or how far they are willing to travel to access a similar service or experience. You can infer value from the travel costs of people’s valuation of their own time.

4. Hedonic pricing – with this method you break down a service or offer into its constituent parts and place a value on each part.

Calculating a SROI ratio

After all the possible outcomes valued and added together this is divided by the value of the inputs and investments to give you a SROI ratio.

SROI ratio = Present value / Value of inputs

If you are making a case to support your initiatives to a funder, then forecasting the potential social return on investment can be a valuable way of grounding digital access efforts in their wider tangible impacts on communities.

4. Digital transformation planning

The SROI Network have a useful guide to work through to help understand the social returns and wider value of impacts that your organisation seeks to create. Download The Guide to Social Return on Investment (PDF file, 3.60MB).

Some key questions to ask when planning digital transformation are:

1. Which stakeholders will be most impacted by our digital transformation efforts?

Consider how you are financing this, and who the beneficiaries are.

2. What are they key outcomes of digital transformation for your organisation?

Think about what you might be able to do differently. Who benefits from this and how?

3. What indicators might you use?

How would you measure if the benefits have been realised? Can they be observed and quantified?

4. Are there proxies you might use?

Are you able to value the benefits using some kind of proxy measure?

For example, the following table drawn from the Guide to Social Return on Investment outlines some possible stakeholders and ways to value their engagement with your organisation:

Exploring how others have used SROI techniques, in the Further Resources section below, will help you decide if it is the right approach for you. Talk to others and find out how they have implemented this in practice. Local charitable organisations may have valuable insights and will share the same stakeholders and beneficiaries as your own organisation.

Further resources

You may find these sources of information useful as you undertake your own SROI:

• Download ‘The social return on investment analysis’ by Clyde Muirshiel Park (PDF file, 884kb)
• Article from the Social School for Entrepreneurs (March 2021): What is the social value of heritage – and how do we measure this?
• Guidance from The Heritage Fund on how to evaluate your National Lottery-funded project

More help here

Persuading your stakeholders of the value of digital change

Any kind of organisational change can be challenging. This guide provides a useful framework for understanding how to communicate with and involve staff and volunteers in addressing the need for digital change in heritage organisations.

 

Except where noted and excluding company and organisation logos this work is shared under a Creative Commons Attribution 4.0 (CC BY 4.0) Licence

Please attribute as: "How a social return on investment analysis can help you to establish the case for improving digital access (2022) by Dr Patrick Glen supported by The National Lottery Heritage Fund, licensed under CC BY 4.0