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| Primary purpose Summary Potential benefits Who can use the tool? What resources are needed? Development, ownership and support Third sector examples Further sources of information Social Return on SROI is an outcomes-based measurement tool that helps organisations to understand and quantify the social, environmental and economic value they are creating. Developed from traditional cost-benefit analysis and social accounting, SROI is a participative approach that is able to capture in monetised form the value of a wide range of outcomes, whether these already have a financial value or not. An SROI analysis produces a narrative of how an organisation creates and destroys value in the course of making change in the world, and a ratio that states how much social value (in £) is created for every £1 of investment. In 2008, the Office of the Third Sector in England and Scottish Government each committed to three-year projects to develop and disseminate SROI across the third sector. SROI is informed by a set of principles that are designed to ensure that process is robust, transparent, and informed by stakeholders. The principles inform a six-step methodology:
The length of time and resources it takes to carry out an SROI varies significantly depending on the scope of the analysis and the extent to which outcomes data is already available. Organisations can undertake SROIs in-house if they have capacity, or alternatively engage a consultant. There are two types of SROIs. Evaluative SROIs are conducted retrospectively and based on actual outcomes that have taken place over a given evaluation period. These are most useful where a project is already up and running and there is good outcomes data available. Forecasted SROIs predict how much social value will be created if activities meet their intended or most likely objectives. Forecasted SROIs are used when a project is still in the planning stages to assess its likely impact or in instances where there is a lack of outcomes data. A forecasted SROI can be followed with an evaluative SROI to verify the accuracy of the predictions. The three-year projects funded by the Office of the Third Sector and Scottish Government are expected to simplify the SROI process by making available a database of common indicators and financial proxies. These will be available from 2010.
SROI offers the following potential benefits:
Potential limitations
SROI was developed initially for use in the third sector. It has now been used by a range of public and third sector organisations of varying sizes. A number of funding schemes, such as the Department of Health Social Enterprise Investment Fund (SEIF), have started stipulating the use of SROI as the measurement approach. Leadership The organisation must have buy-in to the process at a senior level to ensure that the process is properly resource. This can be achieved by establishing a steering group early into the process. Proficiencies or skills Skills in measuring long-term outcomes can help to make the process easier. If intending to follow through to develop the social return on investment calculation, it is useful to have some experience of using MS Excel and working with numbers. Staff time Staff time to complete an SROI analysis is variable, depending upon the quality of information the organisation already collects and the scope of the analysis. Courses, support, and information Courses are available that provide a step-by-step introduction SROI (see organisations below). nef consulting and The SROI Network both offer two-day courses that lead to accreditation as an SROI practitioner. The Office of the Third Sector project has funded the publication of a guide to SROI, which is available to download from the nef or the SROI UK Network websites. Some business schools’ social entrepreneurship programmes may offer modules on measuring social value as part of their social entrepreneurship modules. The measurement of SROI is part of judgement criteria for applicants to the Global Social Venture Competition open to MBA students and alumni. Development, ownership and support SROI was pioneered by REDF, a San Francisco US-based venture philanthropy fund, and brought to the UK by nef in 2003. nef developed the methodology over a five-year period, carrying out more than 25 analyses and raising awareness in the third and public sector. In 2008, The SROI Network, a UK network for SROI, was established. The network provides assurance, acts as a portal for information, and raises awareness of the methodology.
Further sources of information The SROI Network www.sroi-uk.org nef (the new economics foundation) www.neweconomics.org nef consulting www.nef-consulting.co.uk A SROI Primer can be accessed online at http://sroi.london.edu
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“It allows us to systematically evaluate and show that it’s not just about getting people back into work, but [in the long term] what is their quality of life? Are they earning more?” - Green Apprentices
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“It’s about finally being able to be objective. It makes the difference when you’re preparing reports or bids for Treasury or government.” - Green Apprentices |
