Guide To Social Return on Investment

A guide to Social Return on Investment (SROI) has been launched in the UK to help third sector organisations articulate the added social and environmental value they create.

The guide was developed as part of an ongoing Measuring Social Value project being run by a consortium by SROI UK, with New Philanthropy Capital, New Economics Foundation, Charities Evaluation Service and National Council of Voluntary Organisations as members.

Kevin Brennan, the UK Minister for the Third Sector says this new guide to Social Return on Investment is timely, as it will help third sector organisations to communicate better their impact to customers, government and the public, through measuring social and environmental value with confidence, in a standardised way that is easy for all to understand.

Here’s how the guide explains SROI:

SROI measures change in ways that are relevant to the people or organisations that experience or contribute to it. It tells the story of 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 about value, rather than money. Money is simply a common unit and as such is a useful and widely accepted way of conveying value.

In the same way that a business plan contains much more information than the financial projections, SROI is much more than just a number. It is a story about change, on which to base decisions, that includes case studies and qualitative, quantitative and
financial information.

An SROI analysis can take many different forms. It can encompass the social value generated by an entire organisation, or focus on just one specific aspect of the organisation’s work. There are also a number of ways to organise the ‘doing’ of an SROI.

It can be carried out largely as an in-house exercise or, alternatively, can be led by an external researcher.

There are two types of SROI:
• Evaluative, which is conducted retrospectively and based on actual outcomes that
have already taken place.
• 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 investment can maximise impact and are also useful for identifying what should be measured once the project is up and running.

A lack of good outcomes data is one of the main challenges when doing an SROI for the first time. To enable an evaluative SROI to be carried out, you will need data on outcomes, 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.

The level of detail required will depend on the purpose of your SROI; a short analysis for internal purposes will be less time-consuming than a full report for an external audience that meets the requirements for verification.

Download the Guide at www.thesroinetwork.org