Associate Professor, PhD A.V. Litvin¹
Associate Professor, PhD A.N. Kazakov²
L. Esipovich^1
1Udmurt State University, Izhevsk
²Friedrich-Schiller-University Jena, Germany

Keywords: physical culture and sports, social efficiency, investments, SROI, model, values, practical importance.

Background. Social sector developmental investments are designed to cover every system level (federal, regional and local), with the private partnerships being increasingly involved in the investment projects. This process needs to be supported by the relevant toolkits for calculations and analyses of the relevant performance rates and criteria which, in their turn, require special calculation methodology being applied and tested in practice. It should be noted that the social investment projects face a variety of challenges both in the public social disbursements and private investment management systems, particularly in the context of the modern business social responsibility concept. It should also be mentioned that due to the challenges of the modern social investment processes on the whole and the physical culture and sports sector investments in particular the above issues still need to be studied in more detail, with the relevant notions being further developed and sorted out whilst many conceptual issues are still being vividly discussed and also waiting for detailed analyses.

A key calculation problem of the social returns on investment projects is due to the difficulties in assessing the project benefits in sound monetary terms. The traditional rates of investment project benefits are not always applicable, and this is one of the reasons for virtually every social project being now rated as economically inefficient. On the other hand, sports are known to be highly beneficial for society in many aspects as they effectively cut down the public expenditures for health services and crime prevention services and facilitate integration of the human capital. Therefore, physical culture and sports actually facilitate solutions of a variety of problems for many state agencies and business actors including, among other things, corporate image promotion, infrastructure development, civil unrest risks prevention/ mitigation implications etc.

The modern SROI-concept-based investment benefit calculation technology is also not free of certain drawbacks that include the following: (1) need for a commonly accepted classification of the relevant social values; (2) the available project benefit interpretation and implementation algorithm is still underdeveloped and too complicated; (3) social benefits of the investment projects are rated by a limited range of indicators; and (4) some project benefits can hardly be expressed in clear monetary terms.

The modern concept of social return on investments was primarily designed in the early 2000ies by a research team of Roberts Enterprise Development Fund (San-Francisco, USA) [1] followed by the concept being further developed by the UK-based New Economics Foundation research team that made an attempt to harmonise the SROI concept with the existing social benefits reporting systems [2]. As things now stand, no studies have been performed to apply the modern SROI concept for assessments of social benefits of the investment projects in the national physical culture and sports sector in Russia.

Objective of the study was to develop an applied SROI model to clarify the calculation methodology for the social return on the public and non-governmental resources invested in the sports sector under specific projects.

Methods and structure of the study. We believe that we need to further standardize the calculation technology within the frame of the base SROI concept and customise the outcome data including a set of special checklists being developed for convenience of the investment project management experts [3]. The main contradiction that needs to be addressed is due to the need for monetary terms/ equivalents or some similar terms and procedures being applied to integrate and harmonise the diverse model characteristics and parameters that can hardly be quantified in practice. There are also many other aspects in the study subject that need to be duly addressed in the study.

In the theoretical aspect, the study needs to factor in and analyse the relevant axiological, psychological, sociological, economical and legal components of the process. In addition, the formal calculation procedure cannot be designed unless supported by due mathematical and logical methods, including fuzzy logic methods. In the process management aspect, the study needs to thoroughly analyse the existing decision-making, reporting, planning and forecasting practices. It should be mentioned that the global studies in this area are still making the first steps and, hence, the theoretical basics are still insufficient. The study area may be expanded with time when new statistical data on the country-specific experiences and/or specific social investment projects are reported.

Furthermore, studies of this problem need to be governed both by the general methodological principles and more specific ones developed within the concept under consideration. Ranked with the former (general methodological principles) may be the system-approach, determinism, development, relevance, humanism and the individual social responsibility principles. Ranked with the specific ones i.e. developed within the SROI methodology may be the stakeholders’ commitment, change monitoring, importance, substantiality, adequate self-rating, transparency and verification principles; plus some of the key corporate social responsibility principles.

Calculations under the modified SROI model will be based on the relevant investment impact and social return data. To further clarify the model itself, the researchers need to mine the statistical data relating to the traditional SROI model parameters. Having designed the new mathematical model, we can further clarify the list of the necessary parameters. These parameters (invested amount, for example) may be classified into two groups: expected and actual. The actual data may be mined from the official sources and by the relevant questionnaire survey (opinion polling) methods, with the questionnaire forms being distributed via email to speed up and save costs of the process. The expected data for each of the parameters may be also mined via polling, with the process outcomes being additionally discussed in the focus groups. A representative sample will include at least 50-60 respondents. The proposed procedure will be designed to ensure due authenticity, dependability and interpretability of the outcome data [4].

Study results and discussion. It is the traditional SROI model that is to be used as a starting point for the study. The newly designed model will be based on the assumption that there are such project values/ benefits that can hardly be quantified in monetary terms. The second assumption is the following: a certain set of values may be differently measured in different situations. And the third assumption is that a set of values on the input of the model will be considered as open in some sense i.e. variable in quantity.

The new model may be formally and briefly described as follows. First of all, the social return will be found with account of the monetary and non-monetary values as the function (F₁) of the investments (I) using the following formula:

F₁ (I) = (W₁, W₂)

Where W₁ means the total monetary values and W₂ means the total non-monetary values.

An objective of this calculation stage is to make a preliminary assessment of the social benefits in values-specific terms albeit making no account of the specific situation that claims these values. The new modified model will make allowance for some uncertainty that is natural for any consideration of social values (both monetary and non-monetary ones) and needs to be formalised by the relevant fuzzy logic methods. When considering a specific situation (S), the analyst should remember that a certain set of social values may be differently rated by the stakeholders. The S value will be considered one more parameter for the SROI model and accounted by the following (F₂) function for calculation of specific social return on investment (SROI) E:

F₂ (W₁, W₂, S) = E

Where S means the situation-specific parameter, where W₁ means the total monetary values and W₂ means the total non-monetary values; and E means the SROI value.

The proposed new SROI model will be different from the standard one by the non-monetary values being factored in depending on the situation as described by fuzzy logic tools, and this will give the means to compute the social return on investments more accurately and dependably. The new methodology will be designed to ensure due authenticity, validity, dependability, representativeness and interpretability of the outcome data.

Conclusion. Practical objective of the study was to complement the existing theoretical provisions and clarify the calculation and analytical toolkit of the modern SROI-method-based calculations of the social return on investment in application to the physical culture and sports sector, the new model being potentially beneficial for the following:

– National policies design and strategic planning processes in the sports sector;

– Investment projects in the sports sector development and implementation by the national, regional and local government bodies and private business corporations;

– Decision-making by management of sport institutions when some specific tasks need to be solved;

– Investment project design specialists when they need to assess social benefits of the ongoing or future socially-sensitive investment projects; and

– Experts developing new forms of social reports, accounting and analytical documents, training manuals etc.

Theoretical importance of the proposed study is due to the new multifactor calculation methodology being offered to assess social benefits of non-commercial sport institutions/ investment projects with a special emphasis on the interests and values of every project stakeholder.

References

1. Litvin A.V., Daumann F., Kazakov A.N. Otsenka effektivnosti sotsialnykh investitsiy: osnovy, funktsii, sostoyanie issledovaniy [Return on investment rating: basics, functions, status of research]. Konkurentosposobnost v globalnom mire: ekonomika, nauka, tekhnologiya, 2016, no. 5, pp.133-135.
2. Litvin A.V., Kazakov A.N. Otsenka sotsialnoy i ekonomicheskoy effektivnosti investitsiy v sport [Social and economic return on investment assessment in sports]. Proc. res.-pract. conf. dedicated to the 85th anniversary of Udmurt State University. Izhevsk: Udmurt University publ., 2016, pp. 225-227.
3. Emerson J., Wachowicz J., Chun S. Social Return on Investment: Exploring Aspects of Value Creation in the Nonprofit Sector. San Francisco: Roberts Enterprise Development Fund, 2000.
4. Scholten P., Nicholls J., Olsen S., Galimidi B. SROI A Guide to Social Return on Investment. Lenthe Publ., 2006.

Corresponding author: litvin-andrey@mail.ru

Abstract

The article considers the logic and methodology of the Social Return on Investment (SROI) in application to the physical culture and sports sector. The key SROI calculation problem for investment projects may be described as referring to the challenges of adequate monetary assessment of project benefits in view of the significant drawbacks in the traditional approach to assess the social return on investment based on the valid SROI concept. Objective of the study was to develop a new modified SROI model. The new SROI model will be based on the assumption of some values and benefits being non-assessable in monetary terms; a certain set of values may be differently important depending on the situation; and every set of values on the output of the model will be viewed as open i.e. variable in quantity. The practical importance of the study findings is that they supplement the existing theoretical provisions and adjust the existing calculation and analytical toolkit of the social return on investment based on the valid SROI concept in application to the physical culture and sports sector projects.