Business Case Development

Unless funding is unlimited, leaders must ask, “What is the best use of our resources?”

Assessing the Return on an Investment on a new or existing venture can be complex:

ROI may depend on many interdependent elements with a variety of risk profiles.
“Qualitative” issues may overshadow quantitative calculations.
The real value of an investment may be connected to a larger strategy.

Compelling Reason can help sort out the complexities in building a business case for financial decisions. Our models accommodate multiple variables in numerous scenarios, and our independent opinions add clarity.

Similarly, a Social Return on Investment (SROI) can be used to measure how much “good” comes from a public agency or a not-for-profit organization. Our consultants have developed methodologies that analyze the short and long term costs and benefits of social endeavors. The resulting SROI enables program sponsors to understand and communicate their value.

Case Studies

I. The Business Case for Oregon’s ADRC

Oregon’s Department of Human Services engaged Compelling Reason to analyze the “business case” for the state’s Aging and Disability Resource Connection (ADRC). Before ADRC, people needing services had to navigate a complex system themselves. They could get help, but it wasn’t easy to find. Age and disability posed additional challenges for those who most needed help.

ADRC brought those programs under an umbrella that coordinated information assistance and referrals. It also introduced professional options counselors who assess needs and match consumers to services.

“Making the business case” analyzed whether ADRC services provide more benefits to consumers than the ADRC program costs. Not all benefits can be quantified, of course, and, despite the term “business case,” we didn’t assume that ADRC was supposed to be “profitable.” The idea is simply to estimate whether the money invested in ADRC is producing benefits that exceed its costs based on what can be quantified.

Social return on investment measures how much “good” comes from a given effort. It is the ratio of quantified benefits (the social return) to quantified costs (the investment). We calculated ADRC’s SROI by (1) comparing the benefits received by seniors and people with disabilities with ADRC, versus the status quo, to (2) the incremental costs borne by the state to operate ADRC.

“Benefits” is the sum of the subset of benefits we quantified, in the five categories below.

Long-term care and housing
Aid, food, health, transport
Preventing homelessness
Preventing falls
Preventing abuse

ADRC options counselors assist consumers in each of these benefits categories, as demonstrated by these examples:

Help consumers remain at home and avoid more-costly care options
Obtain financial aid, food, health products and services, transportation
Prevent eviction, find low-income housing, get rent assistance
Encourage consumers to attend proven fall-prevention programs
Safeguard funds, make referrals to Adult Protective Services, and more

Benefits totaled $39.8 million at a cost of $3.6 million for fiscal year 2016-17. Our estimate of ADRC’s SROI is 11.1 to 1. We conclude that the business case for Oregon’s ADRC is strong.

As a result of this study, Oregon was invited by the Administration for Community Living, the federal agency that sponsors ADRC, to participate in a 10 state effort to develop a national ROI calculator for ADRC services.

II. Quantifying Youth Development Program SROI

Mark Chussil and Bruce Hamilton calculated an SROI for youth development programs in Portland Oregon. Their model assessed the lifetime benefits of gaining education, avoiding incarceration, and avoiding teen parenting. The cost/benefit calculations include the effects of higher wages and tax payments, state expenditures on the criminal-justice system, healthcare and welfare for children, and more. The study concluded that benefits to children and society are 9 times the associated program costs.