6. Valuing change

On this page:

• 6.1 Financial proxies
• 6.2 SROI Filters
• 6.3 Value of outcomes

6.1 Financial proxies

Financial proxies are used to value an outcome where there is no market value. The use of proxies in this SROI forms a critical component of the valuation exercise as most of the outcomes identified have no market values. There are a number of techniques used to identify financial proxies and value outcomes. Importantly, within an SROI, the financial proxy reflects the value that the stakeholder experiencing the change places on the outcome. This could be obtained directly through stakeholder consultation, or indirectly through research. Techniques for valuing outcomes are included in Appendix 4.

Financial proxies in this SROI analysis have been identified using the resource reallocation technique for the justice system stakeholder outcomes, cash transaction for the material support received by families and the revealed preferences technique for the rest of the stakeholders. Where relevant, for consistency the same financial proxy values have been used across the different IJP programs analysed in the project.

The financial proxies approximate the value of the outcome from the stakeholder's point of view. The main challenge faced when determining the most appropriate proxy for the outcomes experienced by the young people was being able to capture the full value of the outcome they will achieve when they experience the full benefit of the outcomes from the program. As young people had difficulty understanding the concept of how they valued the changes, we needed to rely on the anecdotal evidence provided by the Coordinator about how the young people would potentially value the material outcomes.

For the outcomes experienced by the justice system, the financial proxies cover the unique costs associated with young people avoiding involvement with each stage of the justice system. For example, the financial proxy value for outcome 6.3 Decrease in number of young people in detention includes the costs of detention but not those costs associated with young people's journey to detention, such as police costs and court costs, as these are allocated to the other justice system outcomes.It was not feasible to test the financial proxies directly with the stakeholders, in part due to the age of the young people. However, the proxies were sense tested with the Drum Atweme Coordinator and the Department of the Prime Minister and Cabinet to make sure they are relevant and were not over- or under-valuing the change that is created as a result of the program. Other financial proxies considered included individual counselling sessions for Outcome 1.1 Increased self-esteem. This financial proxy was rejected as the peer support and mentoring provided by Drum Atweme was considered more closely related to another group activity that would increase self-esteem such as membership of a netball team. For the other stakeholders, a different financial proxy was identified for each of the material outcomes they experience. It was not possible to value outcomes 4.2 and 5.3 due to a lack of suitable measurements or financial proxies.

In future SROI analyses it will be critical for stakeholders to be more fully involved in the development and testing of financial proxies. Investigation of the cost savings and resource reallocation that result from young people's participation in the program will provide a more sound basis on which to assess the impact of the program in the future. In particular, these could relate to the value of young people's participation in the workforce as a result of the program. The proposed approach to future measurement and evaluation of the program is discussed in Section 9.1.

Table 6.1 shows the full value of the proxies for each of the outcomes, description and the rationale for selecting the proxy. All financial proxies are calculated on a year of the proxy, unless otherwise indicated.

Table 6.1 - Financial proxies used In the SROI analysis

Table 6.1 - Financial proxies used In the SROI analysis - 1. Young people in the performance group

Outcomes	Financial proxy description	Full proxy value	Rationale
1.1 Increased self-esteem	Cost of participating in a netball team	$10,830	Revealed preference - Young people increase their self-esteem through taking part in a team activity where peers support each other and coaches become mentors
1.2 Increased engagement in meaningful activity	Cost of boarding school fees	$33,786	Revealed preference - For many young people involved in Drum Atweme, attending boarding school through receiving a scholarship is a key way of continuing at school and attain better qualifications
1.3. More positive connections to others	Cost of leadership program	$14,140	Revealed preference - A leadership program is an alternative way of developing more positive connections with others, particularly in becoming a role model to others
1.4 Avoidance of anti-social behaviour	Difference between Newstart allowance and minimum wage	$19,081	Revealed preference - Young people are able to avoid reputational damage and deterioration of skills, which would have prevented them from being able to get a job

Table 6.1 - Financial proxies used In the SROI analysis - 2. Young people in the school group

Outcomes	Financial proxy description	Full proxy value	Rationale
2.1 Increased engagement in meaningful activity	Annual fee for regular music lessons	$720	Revealed preference - For young people in the school group, another meaningful activity would be engaging music lessons

Table 6.1 - Financial proxies used In the SROI analysis - 3. Schools

Outcomes	Financial proxy description	Full proxy value	Rationale
3.1 Offer more relevant, engaging curriculum	Salary of a music teacher working one day per week for five years	$62,017	Revealed preference - The opportunity to offer a more relevant, engaging curriculum through having Drum Atweme in the school is similar to that of hiring a music teacher

Table 6.1 - Financial proxies used In the SROI analysis - 4. Families

Outcomes	Financial proxy description	Full proxy value	Rationale
4.1 Receive material support	Average amount of material support received per family during investment period through food and essential items purchased for their children	$800	Cash transaction - The material support that families receive through food and essential items purchased for their children means that families avoid the costs of purchasing these goods themselves.
4.2 More positive perceptions and expectations of their children	Not possible to value	―	―
4.3 Pass down knowledge, stories and culture	Cost of one trip per annum out bush to connect young people with culture	$5,000	Revealed preference - The opportunity to pass down knowledge, stories and culture is similar to taking young people out bush to connect with culture

Table 6.1 - Financial proxies used In the SROI analysis - 5. Alice Springs community

Outcomes	Financial proxy description	Full proxy value	Rationale
5.1 More opportunities to experience Aboriginal culture	Value of a community grant from the Alice Springs Town Council to access the Araluen Arts Centre	$1,000	Revealed preference - To give the community more opportunities to experience culture, the Alice Springs Town Council provides grants for community groups to perform
5.2 Local businesses earn more income from tourists	Average of the price conference organisers and tour group operators are willing to pay for one opportunity to experience Aboriginal culture	$2,000	Revealed preference -Conference organisers and tour group operators on average charge a mark-up on the Drum Atweme performance fee of $1000 as part of their conference/tour packages Note that this will be conservative, as it does not take into account the spending of tourists in Alice Springs as this cannot be estimated
5.3 Improved perceptions of Aboriginal young people	Not possible to value	―	―

Table 6.1 - Financial proxies used In the SROI analysis - 6. Justice system

Outcomes	Financial proxy description	Full proxy value	Rationale
6.1 Decrease in number of young people with antisocial behaviour	Additional cost of policing to monitor anti-social behaviours of young people in the community for five years (maximum value)	$16,619	Resource reallocation - Additional cost of policing to monitor anti-social behaviours of young people in the community
6.2 Decrease in number of young people offending	Average costs to the justice system per young person offending (excluding costs associated with policing anti-social behaviour) for five years (maximum value)	$25,900	Resource reallocation -Aggregate of police costs, court costs and juvenile justice costs which are all costs incurred when a young person offends.
6.3 Decrease in number of young people in detention	Average costs to the justice system per young person being detained for five years (maximum value)	$175,140	Resource reallocation - Government can reallocate funding for juvenile justice as a result of participants in the program being supported by the program

For young people in the performance group, a proportion of the total financial proxy value was assigned to the different outcomes based on the extent of the change they experience in the program. The value of the outcome is dependent on the young person's length of engagement in the program. Young people who are engaged with the program longer value the outcome more. This is demonstrated in Table 6.2 for Outcome 1.1 "Increased self-esteem".

Table 6.2 - Proportion of the financial proxy value assigned to each indicator type for the young people

Indicator	% of value
# young people whose self-esteem will increase from extremely low to low during the investment period	20%
# young people whose self-esteem will increase from extremely low to average (and are in the program for 2 years) during the investment period	40%
# young people whose self-esteem will increase from extremely low to being average (and are in the program for 3 years) during the investment period	60%
# young people whose self-esteem will increase from extremely low to being average (and are in the program for 4 years) during the investment period	80%
# young people whose self-esteem will increase from extremely low to being average (and are in the program for 5 years) during the investment period	100%

When the value is modelled by the number of years in the program, including the duration and drop-off (discussed in the next section), the profile is as follows.

Figure 6.1 - Value modelled across number of years in the program

For a detailed description of the valuation of each of the outcomes including the calculations and the source of the financial proxy, please refer to the impact map.

6.2 SROI Filters

To present an accurate view of the value created through the Drum Atweme program, valuation filters (SROI filters) are applied to the financial proxies. This is in accordance with the SROI principle of not over-claiming. The SROI filters adopted for this project are discussed in Appendix 5.

Different techniques were used to identify the most appropriate filter for each of the outcomes.

Deadweight

To estimate how much of the change will happen anyway (i.e. without the intervention of the program), where possible comparable population data was used. In other cases, stakeholders were asked to estimate the degree to which they believe the change will occur anyway. The deadweight differs across different stakeholders and for different outcomes for stakeholders, indicating that the experience of the stakeholders would be different if Drum Atweme were not to continue.

Attribution

Estimates of how much of the change will be as a result of other stakeholders or activities which are not included in the investment were determined through stakeholder engagement. The attribution assumption for young people in the performance group is the same across all four outcomes as the input from other stakeholders did not contribute towards one specific outcome, instead their input contributed to all of the outcomes.

For other stakeholders, attribution assumptions vary based on the influence of other organisations or people.

Displacement

Stakeholder engagement was used to identify if any of the outcomes will displace other activities. No activities were identified which will be displaced as a result of the activities of the program.

Duration and Drop-off

Duration refers to how long an outcome lasts for. . In the impact map, the first period of duration refers to the period of investment. Subsequent periods of duration refer to the number of years after the period of investment. Through stakeholder consultation, it was projected that outcomes experienced for young people would only last for the duration of the program. For those young people aged 16 and over who had experienced five years of change, the outcomes experienced would continue for another two years after. Duration for other stakeholders differed for different outcomes.

Drop-off recognises that outcomes may continue to last for many years but in the future may be less, or if the same, will be influenced by other factors. Through stakeholder consultation, it was determined that the influence of the program would diminish at a rate of 50 per cent per annum after the program.

The specific SROI filters applied to each outcome in this analysis are included in Appendix 6.

The application of the SROI filters calculates an adjusted annual value for each financial proxy identified for the analysis. This adjusted value represents the value of the outcome that can be solely attributed to the investment described in this analysis.

A worked example of the adjusted value for the Outcome 6.1 Decrease in number of young people with anti-social behaviour, a change experienced by the justice system, is included in Figure 6.1 below.

Figure 6.1 - Worked example for adjusted value of the outcome

6.3 Value of outcomes

The total adjusted value is the value calculated for each outcome, which takes into account the following components:

• Financial proxy: value of the outcome
• SROI filters: accounting for whether the outcome would have happened anyway (deadweight), who else will contribute to the change (attribution), whether the outcome will displace other activities or outcomes (displacement) and the how long the outcome will last for (duration and drop off)
• Quantity: the number of stakeholders that will experience an outcome

The total adjusted value for outcomes sums the value created for each group of stakeholders experiencing change and also incorporates duration and drop-off. The following table is a summary of the total adjusted for all of the outcomes experienced by each stakeholder group.

Table 6.3 - Total adjusted value of outcomes

Outcomes	Total value for outcome ('000)
1. Young people	―
1.1 Increased self-esteem	$368
1.2 Increased engagement in meaningful activity	$688
1.3. More positive connections to others	$480
1.4 Avoidance of anti-social behaviour	$562
2. Young people in the school group	―
2.1 Increased engagement in meaningful activity	$170
3. Schools	―
3.1 Offer more relevant, engaging curriculum	$124
4. Families	―
4.1 Receive material support	$28
4.2 More positive perceptions and expectations of their children	NA*
4.3 Pass down knowledge, stories and culture	$35
5. Alice Springs community	―
5.1 More opportunities to experience Aboriginal culture	$30
5.2 Local businesses earn more income from tourists	$125
5.3 Improved perceptions of Aboriginal young people	NA*
6. Justice system	―
6.1 Decrease in number of young people with anti-social behaviour	$333
6.2 Decrease in number of young people offending	$687
6.3 Decrease in number of young people in detention	$3,695
TOTAL	$7.3m

All of the outcomes identified as material (relevant) to the stakeholders are also material (significant) based on the total value they create for each of the stakeholder groups and their comparison to other stakeholder groups. While the value of some outcomes is expected to be small relative to other outcomes, the outcome is still relevant and significant for the stakeholder group. These outcomes with small relative values should be tracked and reviewed for materiality in the future. Therefore, no outcomes were excluded after completion of the valuation stage of the analysis.

For a detailed description of the valuation of each of the outcomes, please refer to the impact map.