Social Return on Investment (SROI) is a
framework for measuring a concept of value that is much broader
than simply financial. It tells the story of how change is being
created by measuring social, environmental and economic outcomes
and uses monetary values to represent them.
It provides a financial proxy value of the impact made by an
organisation or programme, which can be understood alongside
traditional financial costs. It is transparent and consistent and
aims to demonstrate the social value of activities in a tangible
way that everyone can understand.
Project was a Scottish Government funded programme
designed to develop, promote and support the use of Social Return
on Investment across the third sector in Scotland. The work
was undertaken by a consortium of organisations with Forth
Sector Development as the lead partner.
The legacy from the SROI Project in terms of information,
support and guidance (including a number of case studies) for
funders, commissioners and third sector organisations is now
available through Forth Sector Development's Social Impact
Scotland website together with information on a range of other
social impact measurement tools.
What is SROI?
Social Return on Investment (SROI) is a method for measuring and
communicating a broad concept of value that incorporates social,
environmental and economic impacts.
It is a way of accounting for the value created by our
activities and the contributions that made that activity possible.
It is also the story of the change affected by our activities, told
from the perspective of our stakeholders.
SROI can encompass all types of outcomes - social, economic and
environmental - but it is based on involving stakeholders in
determining which outcomes are relevant. There are two types
Forecast SROIs are useful at the planning stage of a project, or
if you have not been collecting the right kinds of outcomes data to
enable you to undertake an evaluative SROI.
SROI was developed from social accounting and cost benefit
analysis, and has a lot in common with other outcomes approaches.
However, SROI is distinct from other approaches in that it places a
monetary value on outcomes, so that they can be added up and
compared with the investment made. This results in a ratio of total
benefits (a sum of all the outcomes) to total investments. For
example, an organisation might have a ratio of £4 of social value
created for every £1 spent on its activities.
What does it measure?
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
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. 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, qualitative,
quantitative and financial information.
Why use It?
An SROI analysis can serve many purposes and can help with a
range of activities: strategic planning, raising the organisation's
profile or making a stronger case for future funding. It provides
useful information not only to the third sector organisations but
also to funders, investors, and policy makers.
If you are a third sector
organisation, using SROI will give you a management
tool to guide resource allocation and improve performance, to
monitor a project or activity and evidence impact and to
communicate added value if competing for a tender.
If you are a funder or investor, using
SROI will give you a method of assessing the performance of an
investment against your objectives, and of measuring the overall
returns from the support and funding you provide.
If you commission public sector
services, using SROI will give you a means of
assessing the value beyond the financial return of a contract, and
as a means of tracking the benefits of a commission against singe
If you are a policy maker, using SROI
allows you to measure understand and communicate the value of the
third sector and the activities of organisations