Social Return on Investment (SROI) is a framework that helps organizations to evaluate the broader impact of their actions in terms of social, environmental, and economic outcomes. It quantifies these impacts in monetary terms, allowing for a more comprehensive understanding of the value created by an investment. SROI is used to enhance decision-making, improve transparency, and provide a fuller picture of how an organization contributes to society.
Establishing scope and identifying key stakeholders: Determine what, who, and how long to measure. | Mapping outcomes: Identify and document the outcomes that the investment will produce. | Evidencing outcomes and giving them a value: Collect data and assign monetary values to the outcomes. | Establishing impact: Assess which outcomes would have happened anyway and which are attributable to the project. | Calculating the SROI: Use the data to calculate the SROI ratio, which compares the value of outcomes to the investment. | Reporting, using, and embedding: Prepare detailed reports and use the findings to improve future performance.
Engage stakeholders throughout the SROI process to ensure accuracy and legitimacy. | Use conservative estimates to avoid overstating impacts. | Regularly update and review the SROI analysis to reflect changes and improvements.
Provides a broader perspective on value creation beyond financial returns. | Enhances decision-making by quantifying social and environmental impacts. | Improves transparency and accountability to stakeholders.
Can be subjective due to the monetization of social and environmental outcomes. | Time-consuming and resource-intensive to gather necessary data. | Depends heavily on the quality and availability of data.
When needing to justify or evaluate the social impact of a project. | In grant applications or funding proposals to demonstrate potential impact.
When quick, simple financial analysis is required without detailed social impact assessment. | If there is a lack of data to support a comprehensive analysis.