Social Return on Investment - SROI

SROI network Twitter feedSROI is a framework for evaluating a programme or service, to decide whether the resources about be invested (or already invested) are justified. It is mainly used in situations which deliver a social or community benefit - where it has been difficult to justify investing money because the returns aren't shown in financial terms. For example, in a for-profit business, you buy a new machine for your production line because it saves you more in the long term than it costs to buy and maintain. This means you can directly compare the cost with the return and decide whether to invest.

SROI is externally verified and tells you "how much, how many"This page is part of a longer article on how best to measure and report social good.  I hope you enjoy it and I'd be delighted with comment and criticism.  You can find out more about the whole series at this page.

Although these standard approaches take more work and often require an independent consultant or auditor to verify the work done, this makes them much more credible with organisations that provide the funding, or with Council Members/ Trustees/ the concerned Public who want to be sure that their money is being spent wisely.

When you're providing care for people, you have all the wage costs, but apart from a feelgood factor, how do you know if your wage costs are being invested sensibly?

I've described a specific SROI audit, looking at a service to measure user experience. And I've described the process of doing an SROI audit, using the framework.

Note that SROI is a framework not a straight-jacket.  There is room to apply this framework to different situations including to evaluate the social benefits achieved by commercial projects, and the potential outcomes of long-term environmental projects, whilst still adhering to the principles, process and framework.

SWOT

Strengths

Weaknesses

Clear set of principles, which apply in ALL cases

Clear steps to follow to achieve consistent reporting

Engages with stakeholders, and stakeholder views of the benefits achieved are paramount

Results should describe the change, the theory of change (how the programme or activities undertaken actually caused the change, and whether other factors were involved

Assigns a "financial equivalent" value which enables a cost-benefit analysis to be done to decide whether this is an appropriate investment, where the outcomes wouldn't normally be measured in financial terms

Readers may fail to read the qualitative benefits and good that the programme has brought for stakeholders, and concentrate instead on the headline figure, the SROI ratio

Some room for personal bias and uplifting/ downrating financial equivalence by the independent assessor, though this should be controlled by stakeholders themselves if the process is followed

Opportunities

Threats

Lends itself to both detailed reporting and headlines, making it easily digestible

Takes many of the best points from other Evaluation methods and combines them into a single framework.  In particular, stakeholder engagement carried out in outcomes approaches can input directly, and alignment to the organisation's principles from Social Auditing will contribute to an SROI report

 

Resource-intensive, and usually requires an independent consultant to prepare the SROI report

Resource Use

SROI uses a standard framework, which makes it quite efficient considering the amount of information to be gathered, collated and reported.  A quick SROI will probably take 15-20 days, and a more detailed one (such as the 83 page Quality Checkers SROI report) could take more than twice this.  SROI can also be used in other situations, and it is comprehensive and therefore takes time.

Because of the standard framework and approach, it makes sense to use someone trained and accredited by theSROINetwork

Verifiable

The SROI standard approach will generally ensure that the information in the end report is robust.  You can also submit the report to the SROI network for verification, for a fee.

The data come from stakeholders (the programme or service's customers, other funders, people affected or involved) and they should have a chance to check it (check the report for a description on how the information has been checked by the stakeholders), and it should be easy to understand

Lastly, using an independent experienced SROI auditor will give you the best report

 

Quantified

The SROI report will include baseline measures, how much has changed, how much would have changed without the programme, and - CRUCIALLY - a financial equivalence where this is possible.  This makes it very useful for making investment decisions

What it is good for

SROI reports are powerful tools for making investment decisions on how much to fund a particular service or programme.  Because they demonstrate a Return on Investment (headline figure) it is easy to say "yes fund" or "no stop funding", and because they describe the recipients and the requirement in detail, it is easy to say "more" or "spend the money somewhere else".

SROI reports are not designed to report the cost-effectiveness of a whole organisation

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