Data from Statistics Canada’s 2006 “Report on the Volunteer & Charitable Sector,” shows that of the organizations which fall within the standard distribution of the annual revenue of Ontario’s volunteer and charitable organizations (i.e. the Third Sector), 54% have annual revenues under $100,000; 35% between $100,000 to $1,000,000 and 11% over $1,000,000.

The organizations which fall under the “small” and “medium” classifications above, represent the Third Sector. Within the non-profit sector in Ontario, there are approximately 70,000 of these organizations.

These organizations are non-profit organizations and generally seek to spend 80% of revenue on programming and 20% on administration and fundraising. While at times the procurement of management consulting services could fall within programmatic spend, it is most likely found in the administration sections of the operating budgets making only 20% of the total revenue figures stated available for the purchase of management consulting services.

A review of 100 consulting services contracts revealed the ranges of deal-size for contracts awarded to The Big Four are:

1. Small: $50,000 to $149,999 36%

2. Medium: $150,000 to $2,999,999 46%

3. Large: $3,000,000 and up 18%

The average range of an engagement overall was $2,100,000, making these services for the most part, well out the range of purchase for the Third Sector.

From the evidence, it becomes clear that finding economic efficiencies in social services, which will yield a return on the investment already made in the digital transformation of Government, is a natural evolution of the relations between Government and the Third Sector. And as stated, the assumption is made that the lead agent of this change is a “digital transformation and that this will require involvement of consultants. As there is a limited provincial budget, the consultant fees will have to be found via a reallocation of funding.

#MBA #socialinnovation #consulting #digital #government #wbs #bradfordturner #impactinvesting #nonprofit #toronto #thirdsector #impact #policy #socialfinance

The chart below illustrates that the vast majority of dollars spent on management consulting services are spent on “information technology” followed by “management” then “technical” then “research & development” then “policy & communications.”


Auditor Generals Report, 2018

This is a particularity revealing figure as it shows the level of investment that is being made into the consulting services addressing “digital transformation” of ministerial systems in government.

In the 2018 Annual Review, the Auditor General took the position that consultants can be cost-effective for short periods, to perform specialized services, or for their expertise. However, that cost advantage over permanent employees disappears for longer-term projects. In 2016, the Treasury Board Secretariat compared the cost of information technology (IT) consultants to similar full-time staff, and determined that an IT consultant costs $40,000 a year more (30%), than similar full-time staff, after factoring in employee benefits (Auditor General, 2018).

Twenty-two percent of the competitively procured contracts reviewed in the audit had amendments greater than $10,000, even though the contracts either had no provision for amendments or specified maximum amendment amounts that were exceeded. Most amendments were between $100,000 and $500,000, with two for $1.5 million. The additional services in these amendments were not competitively procured (Auditor General, 2019).

The Market for Consulting Service to the Third Sector

Data from Statistics Canada’s 2006 “Report on the Volunteer & Charitable Sector,” shows that of the organizations which fall within the standard distribution of the annual revenue of Ontario’s volunteer and charitable organizations (i.e. the Third Sector), 54% have annual revenues under $100,000; 35% between $100,000 to $1,000,000 and 11% over $1,000,000.

The organizations which fall under the “small” and “medium” classifications above, represent the Third Sector. Within the non-profit sector in Ontario, there are approximately 70,000 of these organizations.

These organizations are non-profit organizations and generally seek to spend 80% of revenue on programing and 20% on administration and fundraising. While at times the procurement of management consulting services could fall within programmatic spend, it is most likely found in the administration sections of the operating budgets making only 20% of the total revenue figures stated available for the purchase of management consulting services.

We believe that organizations can achieve more positive change through continuous learning from impact data. That is why we work with Sinzer’s methodologies and tools to guide our customers step by step with a pragmatic and tailor-made impact management approach that suits their needs. We help organizations understand and maximize their positive impact and reduce their negative impact based on insights from data. Our team is dedicated to continuously support our clients to implement the best strategies and methods to improve their impact.

Impact Strategy

We help clients to tackle social challenges. A ‘Theory of Change (ToC)’ provides insight into how change happens. We assist organizations in developing a ToC and to create an Impact Road Map so that they can align their operational activities with their impact ambitions.

Data collection

Our consultants have extensive experience with research and data analysis and use both qualitative and quantitative research methods. We support clients in developing a monitoring- and data collection plan and provide advice in setting up a workable, simple data collection system.

Analysis and reporting

The Sector leverages Sinzer’s specialized in data analysis and impact reporting for small projects, long-term and complex programs and for entire organizations. Sinzer has been pioneers in the field of impact measurement and management since 2008. Both our teams draw from extensive experience with different types of data analysis and is up to date with the latest knowledge of research methods and reporting standards.

Impact Maximization

Data can offer all sorts of new insights. We help clients to make sense of their data and show how these insights can contribute to more positive impact. To enable continuous improvement, we support clients in setting up simple and manageable data collection systems that facilitate learning. Lastly we provide advice on how to convert this learning into concrete actions. This way your organization can have even more positive impact on society.

Management consulting firms are in businesses to make a profit. For firms to provide digital capacity-building services to the Third Sector, it must be commercially viable which currently it is not. Third Sector organizations (with few exceptions) cannot raise investment capital or generate profit-margins from developing economies-of-scale in market-competitive product offerings; and unlike the government, they cannot levy taxes on the population to be invested in the growth of the organization. In short, Third Sector organizations do not have the available working-capital to match the price-points of Big Four service offerings (which here, have been analyzed from available consulting services contracts of The Big Four) (presented later in detail) (Supply Chain Ontario, 2019).

Context Behind the Hypothesis: Government Spending (A Market Analysis)

There are several, interdependent, markets which required definition, in order to properly test the hypothesis: the market for social services in Ontario; the market for consulting services to government; the market for consulting services to the Third-Sector.

Government Spending on Transfer Payments: The Market for Social Services

Ernst & Young’s 2018 report Managing Transformation A Modernization Action Plan for Ontario, classifies the non-profit sector into sub-sectors – the grouping representing the Third Sector being labelled the “Community and Social Services Sector” (Ernst &Young, 2019). Analysis of transfer payments received by this sub-sector, serves to illustrative the size in monetary terms and the nature of the transactions which define the market for social services.

The Ontario Government provides “transfer payments to recipients external to government to fund activities that benefit the public and are designed to achieve public policy objectives” (Government of Ontario, Open Government, 2019). Currently transfer payments from the provincial government to Third Sector organizations, make-up approximately 73% of the sector’s revenue (Imagine Canada, 2006).

Total government expenditure for a fifteen year period has grown from $95B to $144B in real terms; transfer payments grew by $46.3B (CAGR of 3.4%), interest on debt grew by $2.4B (CAGR of 1.4%), and direct OPS expenditures grew by $0.1B (CAGR of 0.0%) (Ernst & Young, 2018).

Government spends a very significant amount on transfer payments but nearly all of this funding is allocated toward “core” operations with little to no room for strategic investment in innovation and efficiency i.e. digital transformation. Ontario faces a series of deficits which have occurred grown in correlation to the growth of the Third-Sector. Both Ernst & Young, the Auditor General, C.D. Howe Institute, The Mowat Centre, and more, agree that sustainable government spending lies in reform of “the delivery of public services that not only contribute to deficit elimination, but are also desirable in their own right.” (Commission on the Reform of Ontario’s Public services, 2012).

In the next post, we will provide a view of the major sectors and breakdown of each sector spent directly by the OPS and through transfer payments.

The Sector is growing its capacities as a social innovation and resource development consultancy, specializing in aligning priorities of cross-sector teams, to unlock new capital and resources.

The Sector scales organizations that will change the world and with the Sinzer tool for impact management they add a technology-based robust solution to their tool box. The Sector uses several methods in their services such as collective impact-framed business planning, relationship brokering, deal structuring, social finance and impact investing, and they have added serious bench strength to issues of monitoring and evaluation.

Together with Sinzer, the Sector designs, facilitates, and manage toward continuous improvement, collaborations that allow local, municipal and regional governments to partner with civil society, corporations, impact investors, and high impact not-for-profit organizations, in Ontario and around the globe.

What is Social Return on Investment?

So, up until now we have learned that Social Return on Investment (SROI) is a framework for measuring and accounting for this much broader concept of value. SROI measures change in ways that are relevant to the people or organizations that experience or contribute to social value.

This shows how change is being created by measuring social, environmental and economic outcomes and uses monetary values to represent them. This enables a ratio of benefits to costs to be calculated. For example, a ratio of 3:1 indicates that an investment of € 1,- delivers € 3,- of social value.

SROI is all about value. And not so much about money. Money is simply a common unit and is as such a useful and widely accepted way of communicating value. But in the same way that a business plan contains much more information than (future) financial expenses of a business, an SROI analysis is much more than just a number. It is a story about change, on which you can base decisions that includes case studies and qualitative, quantitative and financial information.

There are two types of SROI:

1. Evaluative, which is conducted retrospectively and based on actual outcomes that have already taken place.

2. Forecast, which predicts how much social value will be created if the activities meet their intended outcomes.

Forecast SROIs are especially useful in the planning stages of an activity. They can help show how an investment can maximize impact and are also useful for identifying what should be measured once the project is up and running. A forecasted SROI can be followed with an evaluative SROI to verify the accuracy of the predictions.

A lack of good outcomes data is one of the main challenges when doing an SROI for the first time. You will need data on outcomes to enable an evaluative SROI to be carried out, and a forecast SROI will provide the basis for a framework to capture outcomes. It is often preferable to start using SROI by forecasting what the social value may be, rather than evaluating what it was, as this ensures that you have the right data collection systems in place to perform a full analysis in the future.

#sinzer #wbs #warwickbusinessschool #social #socialinnovation #MBA #impactmeasurement #innovation #unitednations

The Sector Inc, makes two important assumptions to it’s approach:

1. The Speed of Digital

Of the many aforementioned issues around funding, governance, human resources, etc., which exist in the Third Sector: these traditional issues will become obsolete through technological change before they can be solved through conventional approaches given the pace of digital transformation the sector will have to soon undergo.

1. Consulting Firms Are the Required Intermediary to Facilitate

Third Sector organizations cannot transformation in isolation. As the overall fulfillment of government services depends on the efficiency of the Third Sector, it is highly likely that government (not having the internal capabilities to design and implement digital transformation), will have to collaborate with partners.

Management consulting firms are designed and structured, to provide solutions to undertakings of this magnitude. Below is Government of Ontario’s “Action Plan of the Future.”

The timeline of the plan places “integrated service delivery” from 2019 onward and as future of Third Sector organizations is to fit into this system, the pace at which external factors will force the internal digital transformation of a new organization of the sector will be rapid (Government of Ontario, 2018).

Hypothesis

If the Government of Ontario shift’s spending from consulting services in policy and program-design at the ministerial level, toward a greater proportion of spend, allocated toward management consulting services focused on digital transformation of service-delivery, at the agency and point-of-service level, it will yield a positive social return on investment.

What if “The Big Four” were Retained?

The Big Four,” collectively hold the majority of government contracts related to digital transformation with The Government of Ontario (as per a review of available data from Procurement Ontario) (Supply Chain Ontario, 2019). Collectively, they represent the critical mass of management consulting services, supply, which is available in Ontario and would need to accessed to facilitate Third Sector digital transformation, through fulfilled consulting engagements, if funded by The Province, as per the assumptions of The Sector Inc research study (Supply Chain Ontario, 2019).

Learning more about Social Return on Investment will give you a better understanding of how to measure your impact and be accountable to your stakeholders. To start off this guide and understand the concept of Social Return on Investment, it is important to give a brief explanation of what is meant by ‘impact measurement’ and what we mean when we talk about ‘value’.

 

What is impact measurement?

Impact measurement has broad applications and while there is a focus on investors and government requirements, service providers have also called for their needs and those of their beneficiaries to be reflected in measurement We feel, therefore, that the social and environmental performance needs to be measured with the same level of robustness as financial performance – which is very common in all different kinds of businesses. Measuring financial performance can offer important insight, but did you know there are also many benefits of measuring your impact?

There are three main benefits of good impact measurement:

1. The ability to generate value for all stakeholders. This impact goes beyond a simplistic focus on the needs of a potential investor and instead drives at ensuring value creation for investors, investees and beneficiaries.

2. The potential mobilization of greater capital into areas of positive social impact creation.

3. Increased transparency and accountability for delivering on the intended area of impact. Reading this brief explanation only, you can understand that every day our actions and activities create and destroy value – they all change the world around us.

The Ontario Public Service, of the Government of Ontario, includes ministries, agencies, and Crown corporations. Its workforce consists of over sixty-thousand public servants. For most of its organizational-lifecycle, the OPS has been structured to design and deliver social services directly to the population of Ontario (Government of Ontario, 2007).

As described in Transforming the Ontario Public Service for the Future, over the last twenty years, the OPS has “transitioned from being an organization which provided service-delivery directly to clients, to an organization which now focuses its core operations on policy and program design, as well as financial administration” (Government of Ontario, 2017).

Over this time period, “most developmental services” were refocused, closed, or transferred, to non-profit facilities” (Government of Ontario, 2017). The Province no longer “see’s itself” as being in the role of ensuring the quality of social services delivered; or the “level of productivity at which these organizations that deliver them, operate”. This has created a new sector of the Canadian Economy often coined as the “Third Sector” (Scott et all, Imagine Canada, 2006).

While the Province of Ontario has claimed that along with refocusing, closing, or transferring developmental services” to the Third Sector, “I&IT systems were developed to transform the delivery of social services by municipalities and non-profit organizations,”, and improve government oversight of the direct social service delivery function” its is debatable whether the “digital transformation” has truly occurred in the Third Sector, yet alone, improved oversight of delivery, and the delivery, of social services to clients (Government of Ontario, 2017).

In the meantime, the Province of Ontario, is “now viewed as a global leader in emerging areas such as artificial intelligence (AI), cyber security and robotics” and the Government of Ontario’s policy is to “hold itself to the same customer service standards as private sector businesses,” being first province in Canada to achieve an all-of-government digital” (Government of Ontario, 2012).

Over this time-frame, the Third Sector has grown to more than 90,000 organizations which work in areas ranging from healthcare to sports, the arts, social services, education, international development and the environment. The Third Sector “represents 8.1% of Ontario’s GDP and 10.5% of the provinces’ labour force (Imagine Canada, 2019).

MBA students set up consultancy to streamline public servicesAiming to save taxpayers thousands of poundsThe Sector involves students from five different countriesCompany set-up over a pub meeting on Warwick Week

When Canadian Bradford Turner started moving the pepper and salt around the table at the Dirty Duck he had little idea that it would lead to a start-up operation whose founders span three continents.

Explaining to Elena Dimova the intricacies of the business idea Turner had been carrying around for nearly a decade – essentially a consultancy that would save taxpayers money – involved several napkins and the re-arranging of the condiments.

Russian Elena, who works as a client specialists team leader in Thomson Reuters’s C&E and capital markets division, said: “Bradford was so passionate about this business idea, so I interrogated him about it over a drink and made him go through the business model properly – the salt and pepper were moved around a lot! ”

After seven years working for non-profit organisations and in the public sector, and seeing budgets slashed in Canada since the financial crisis, Bradford, a Distance learning MBA student, felt an opportunity had opened up for an organisation that specialised in delivering better public services in the most cost efficient way.

While working with NGO Save the Children, non-profit education organisation Junior Achievement Canada, and on various Canadian healthcare infrastructure projects, Bradford had seen how Government departments in Canada – so removed from the ground – had wasted their money on layers of inefficient bureaucracy when delivering social projects.

A niche opening was available for a consultancy that could provide Government departments a strategy to deliver more with less money, or as Bradford puts it “optimizing socioeconomic outcomes in government services by implementing integrated planning and client-focused service delivery models”.

Frederick Peters, a Research Fellow at Canada’s City Institute at York University, with a PhD in Political Science and a consulting focus on social infrastructure, partnered Bradford to grow the concept and look into building it into a business.

Dreaming in the Dirty Duck

“I had been looking at starting this firm for 10 years,” says 35-year-old Bradford. “I have the experience and the niche idea but I didn’t want to go into it without the 360 degree understanding of how to run a business, that’s why I decided to do an MBA before taking the plunge.”

Bradford signed up for Warwick Business School’s Distance learning MBA but he soon discovered he had everything he needed in the course to start his business straight away and The Sector Inc was born.

“It was a huge realisation,” says Bradford. “On the MBA I have met like-minded people from all over the world, all the advice I need is there from fellow students and academics. Also, the course has the flexibility to allow me to build a business from scratch and continue with my studies.”

At the first of six Warwick Weeks – where distance learning MBAs fly to the school from all over the world for a week of lectures – Turner got chatting at the Dirty Duck pub on the university campus with some of his classmates. And over a pint and the condiments he pitched his idea.

As well as Elena, Belgium-based Londoner Remon Fahim, Mark-Andre Casper, of Cologne, and Chafic Filfili, of Lebanon, were also recruited from his MBA class. Dimova is exploring opportunities in Russia, while Fahim is focusing on the UK operation.

Remon is also familiar with government cuts as a commercial manager with Serco, a FTSE 250 company that specialises in running outsourced public services from prisons to London’s Boris bikes.

“While on a drive down to London after a long weekend at Warwick, I was discussing my experiences in public services and community development with Bradford,” says Remon. “It became apparent that I could compliment Bradford’s NGO background with my private sector knowledge. I have spent seven years working with government departments and I immediately understood Bradford’s vision.”

With colleagues in Russia, Canada, Germany, the UK and Lebanon it can be a challenge having a management meeting, but modern technology certainly helps.

“It is hard sometimes finding a good time for conference calls,” says Bradford. “But we have to collaborate in teams on the MBA so you quickly get used to communicating via the internet, it has not been a problem.

“Thanks to the MBA I have got to know them and seen how clever they are by working on assignments together, it has allowed us to demonstrate our knowledge and skills. We are learning from each other and being from different countries means we have new markets to target, while leveraging our business networks.”

For now The Sector is concentrating on Canada and its first job saw them research and put together a feasibility study on a proposed community hub for the York Region in Southern Ontario.

“It took eight months and we produced a 150-page report assessing the viability of the community hub,” says Bradford. “Instead of having these social and community groups working separately we looked at how they could be integrated under one roof, the savings that would produce and if it would improve delivery.

“We provided a series of recommendations on how it would go ahead as we found it would produce efficiencies and improve services. Hopefully it will go ahead and that could become a blueprint for other cities.”

Turner and Peters are full-time on The Sector, while the rest of the team carry on with their jobs. They all bring different skills, Remon does the quantitative modelling and financial analysis; Chafic is the big data analyst; Mark-Andre looks after risk and governance thanks to his insurance background, while Elena has financial expertise.

“I am involved in investigating what markets there are in Russia for The Sector,” says Elena. “At the moment it is really tough fitting it in around a job and the MBA – I’m not getting much sleep. But this is an exciting opportunity and not something I dreamed of embarking on when I signed up for the MBA.”

See this story featured in the Financial Times.

See thie story featured in Warwick Business School.

The Sector Inc’s extensive research study on the role of global consulting firms in government digital transformation in Ontario:

Table of Contents

1. Introduction: The Undefined Role of the Ontario Public Service

1.1 Assumption 1: The Speed of Digital

1.2 Assumption 2: Consulting Firms Are the Required Intermediary

1.3 Hypothesis

1.4 The Approach: What if “The Big Four” were Retained?

1.5 The Problem Statement: The Third Sector Can’t Afford the Big Four

2. Context Behind the Hypothesis: Government Spending (A Market Analysis)

2.1 Government Spending on Transfer Payments: The Market for Social Services

2.2 Segmenting the Third Sector’s Transfer Payments

2.3 Government Expenditure on Consulting Services (The Market For…)

2.3.1 Government Buying “Technical” & Consulting Firms Selling “Technical”?

2.3.2 Costly Consultants Permanent Employees Could Do for Less

2.4 The Market for Consulting Service to the Third Sector

3. Literature Review: Existing Literature from All Three Sectors

3.1 Conducting the Literature Review

3.2 Broader-Public-Sector Literature on Government Transformation

3.2.1 The Creation of Streamlined Client Pathways

3.2.1.1 Government Literature on Streamlined Pathways

3.2.1.2 Third Sector Literature on Streamlined Pathways

3.2.1 Proven Outcomes & Tracked Evidence (Finance First)

3.2.2 Inter-Governmental Integration: Integration Before Digitization

3.2.3 Inter-Sectoral Integration: The Digital Requirement

3.3. The Big Four Literature on Digital Transformation of Government

3.3.1 The Preeminent Role of Digital in Government Transformation

3.3.1.1 A Tone of Urgency, Competition, & Optimism

3.3.3 Better Delivery Through Stronger Data

3.3.4 Self-Serve Models

3.4 Literature on the Third-Sector’s Skill Gap

3.4.1 The Sector’s Digital Skills Gap

3.4.2 A Lack of Internal Digital Capabilities

4. Research Methodology: An “Intrinsic” Case Study

4.1 Overall Approach: The Critical Success Factors to the Consulting Engagement

4.1.1 Research Questions: Breaking the Problem into Factors to Build Strategy

4.1.2 The Structure of the Research

4.1.3 Research Presentation Format

4.2 Research Plan 1: Factors For & Against, Digital Transformation; Third Sector Perspective

4.2.1 Description, Rationale and Expectations

4.3.1.1 The Survey (Questionnaire)

4.3.1.2 Semi-structured Interviews

4.3.2 Critique

4.3.2.1 The Survey (Questionnaire): The Sample Bias, Timing, and Reliability

4.3.2.2 Semi-Structured Interviews

4.3.3 Issues Encountered: The Good and the Bad

4.3.3.1 The Survey (Questionnaire)

4.3.3.2 Semi-Structured Interviews

4.3.4 Analyzing the Results

4.3.4.1 The Survey (Questionnaire)

4.3.4.2 Semi-structured Interviews

4.4 Research Plan 2: Providing Capacity Building Services; The Big Four’s Perspective

4.1.1 Description, Rationale, and Expectations

4.4.1.1 Semi Structured Interviews

4.4.1.2 Data-mining for Verification and Fact Checking

4.4.2 Critique

4.4.2.1 Semi-Structured Interviews

4.4.2.2 Data Mining for Verification & Fact-Checking

4.4.3. Issues Encountered

4.4.3.1 Semi-Structured Interviews

4.4.4 Analyzing the Results

5. Findings

5.1 Analysis of Findings

5.1.1 Third Sector Perspective: Analyzing Survey Results and Interview Responses

5.1.2 Market Factors which Support Digital Transformation of Third-Sector Organizations

5.1.3 The Big Four’s Perspective: Analyzing Survey Results and Interview Responses

5.2 Learning Points Toward Strategic Government Spending

6. Proposed Strategic Government Spending

6.1 Diverting Funding from Program & Policy Design to Service Delivery

6.1.2 Provincial Transfer Payments to Create Scale and Efficiency

6.1.2.1 Creating Scale Through Operations Design

6.1.2.2 Creating Third Sector Scale Through Consolidation

6.1.2.3 Issuing Tenders for Management Consulting Services Toward Digital Transformation

7. Concluding Remarks

7.1 Dissertation Summary

7.2 Critique and Limitations

7.2.1 Lack of Technical Rigor

7.2.2 Lack of Formal Financial Analysis

7.3 Further Research

#government #ontariopublicservice #socialinnovation #corporateresponsibility #Toronto#digital-transformation #government #ontariopublicservice #socialinnovation #corporateresponsibility #Toronto #consulting #mba #warwickbusinessschool