Intr Intr
oduction oduction
1 What is Social Return on Investment (SROI)?
Every day our actions and activities create and destroy value; they change the world
around us. Although the value we create goes far beyond what can be captured in
financial terms, this is, for the most part, the only type of value that is measured
and accounted for. As a result, things that can be bought and sold take on a greater
significance and many important things get left out. Decisions made like this may
not be as good as they could be as they are based on incomplete information about
full impacts.
Social Return on Investment (SROI) is a framework for measuring and accounting for
this much broader concept of value; it seeks to reduce inequality and environmental
degradation and improve wellbeing by incorporating social, environmental and
economic costs and benefits.
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
represent them. 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.
SROI is about value, rather than money. Money is simply a common unit and as such is
a useful and widely accepted way of conveying 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 and qualitative, quantitative and
financial information.
An SROI analysis can take many different forms. It can encompass the social value
generated by an entire organisation, or focus on just one specific aspect of the
organisation’s work. There are also a number of ways to organise the ‘doing’ of an
SROI. It can be carried out largely as an in-house exercise or, alternatively, can be led
by an external researcher.
There are two types of SROI:
• Evaluative, which is conducted retrospectively and based on actual outcomes that
have already taken place.
• Forecast, which predicts how much social value will be created if the activities meet
their intended outcomes.
Forecast SROIs are especially useful in the planning stages of an activity. They can help
show how investment can maximise impact and are also useful for identifying what
should be measured once the project is up and running.
A lack of good outcomes data is one of the main challenges when doing an SROI
for the first time. To enable an evaluative SROI to be carried out, you will need data
 A guide to Social Return on Investment
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