A Year of Uncertainty: Social Investment Reflections for 2024

A Year of Uncertainty: Social Investment Reflections for 2024. Person walking on tightrope towards a question mark

A lack of clarity around the future of social investment funding and mechanics has led to a significant amount of angst in the social services sector this year. 

Photo credit: Heather Joy Milne. Whakamanawa 2024 panel kōrerorero on social investment, featuring Sir Bill English, Nicola Nation (CEO Tumu Whakarae, Ākina), and Dr Craig Jones (Former Acting Chief Executive, Social Investment Agency).

Ākina Chief Executive Nicola Nation shared reflections from Whakamanawa 2024, that the front lines of social services are facing significant strain. The exhaustion is palpable, with many organisations operating on a shoestring budget.

Small amounts of uncertainty are manageable through resilience and flexibility - but too much is structurally damaging. Large and small providers have shown resilience staying true to their kaupapa and impact. However for some, the uncertainty manifested in the down-sizing or closure of some amazing organisations (with more that are likely to follow).

2025 is the opportunity to create social investment clarity and stand up an operating model that weaves the collective strengths of our community providers, our government data prowess, and different sources of capital. If one leg of the tripod fails, so does social investment. The makeup of the Social Investment Board holds great promise in its representation of different stakeholders and community voice, and we hope that this leads to meaningful co-design and delivery in 2025. 

An SROI ‘arms race’ 

Ākina is starting to see something of an SROI (Social Return on Investment) arms race - with higher and higher numbers (return on investment ratios) appearing in impact reports. As providers scramble to secure their financial future, there has been a worrying perception emerging that a high SROI number is the key to getting to the front of the social investment funding queue. 

Any SROI analysis has a decent degree of subjectivity, with an inherent risk of overclaiming the outcomes which occur as a result of a programme or initiative. 

According to the Treasury, SROI results of between 1-2x (i.e. for every dollar invested, the social return is between $1-2) are more likely to have robust underlying assumptions. An SROI of over 5x suggests that the assumptions may be overly optimistic. 

Ākina’s perspective: There are lots of different ways to prove and improve your impact, the most important of which are based on understanding your opportunities to observe positive change and capturing these outcomes and stories in a manageable way. We’re starting to hear some good signals from the Government about the need to utilise a range of measurement tools and methodologies.  

Data will save us? 

A final observation: Much has been made about the potential of integrated government data to deliver better social outcomes. Using data to manage and direct funding is obviously core to successful social investment, however there have been instances where overreliance on data and algorithms has led to the exclusion of innovative ideas (and poorer overall performance and outcomes), just because they didn’t happen to meet the data profile of a successful programme. 

This is a common phenomenon: 

  • The decreased performance of NBA teams after they introduced algorithm-based player recruitment systems. 

  • Amazon introduced machine learning to filter job applicants, which systematically discriminated against female applicants due to being trained predominantly on male resumes. 

  • Uber’s surge price algorithm - which has led to prohibitively high fares during emergency events. 

These examples highlight the importance of addressing biases, contextual nuances, and data quality when deploying algorithm-based decision-making systems. Transparency, human oversight, and iterative evaluation are critical to avoid similar pitfalls.

Calculating SROI is a serious investment, involving analysis of avoided costs and analysis of the value of the outcomes for those experiencing them. If you’re unsure where to start, first invest in properly understanding the outcomes you create, then measure them or calculate their value. 

Make sure what you're measuring is meaningful by understanding your impact story first.  Ākina can support your organisation to lay good foundations with a theory of change. This will help you understand the problem you are solving, how your activities contribute to changes over the short, medium and long term and will set you up for a robust SROI which doesn’t overclaim. 

Learn how Ākina:

Get in touch with Ākina to start your Impact journey now.

Reference:
The Treasury. (2024, October). CBAx tool user guidance: Guide for departments and agencies using Treasury’s CBAx tool for cost-benefit analysis (p. 17).

https://www.treasury.govt.nz/sites/default/files/2024-10/cbax-tool-user-guidance-oct24.pdf

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