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SROI is less useful when:
• a strategic planning process has already been under taken and is already being
implemented;
• stakeholders are not interested in the results;
• it is being undertaken only to prove the value of a service and there is no opportunity
for changing the way things are done as a result of the analysis.
Comparing social return between different organisations
Organisations work with different stakeholders and will have made different
judgements when analysing their social return. Consequently, it is not appropriate
to compare the social return ratios alone. In the same way that investors need more
than financial return information to make investment decisions, social investors will
need to read all of the information produced as part of an SROI analysis. However, an
organisation should compare changes in its own social return over time and examine
the reasons for changes. Organisations should also endeavour to educate funders and
investors on the importance of putting the ratio in the context of the overall analysis.
Certain situations require a different approach
This guide covers most situations. However, for situations where there is investment in
assets, or the use of debt finance, there is a note in the Resources section (page 80).
3 Who Can Use SROI?
Types of organisation
SROI has been used by a range of organisations across the third, public and private
sectors, including those that are small, large, new and established.
Third sector organisations and private businesses
Third sector organisations and private businesses that create social value can use SROI
as a management tool to improve performance, inform expenditure and highlight
added value. These may be start-up organisations developing business plans or
established organisations. It can be used for analysing the value arising from trading
activities whether the organisation is selling to the general public, to the public sector
or to other businesses.
Commissioners and funders
Bodies that commission social value or invest in the creation of social value can
use SROI initially as a way to help them decide where to invest, and later to assess
performance and measure progress over time.
Both social investors and public service commissioners are in the business of securing
social value that is delivered by third parties. The mechanisms by which that value is
secured may differ but, by measuring that value, better decisions can be made. SROI
can be used at three points in the commissioning or investment process:
A guide to Social Return on Investment 11
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