Social Return on Investment (SROI) is a methodology used to evaluate the total value created by an organisation’s activities on all of its stakeholders. It draws on well-established methodologies from economics, accounting, and social research. The SROI method ascertains the value of outcomes experienced by stakeholders and is especially pertinent in valuing “soft” outcomes, or outcomes that do not have a simple market value. The most important component of the SROI is to understand the value that the clients of the services and other stakeholders place on their outcomes, so that we can understand what they value the most. Decisions can then be made to increase that value and avoid actions that reduce it.
Conducting a Social Return on Investment evaluation is a commitment and isn’t always the best approach to measure your impact, depending on your objectives.
If you want to learn more about how SROI could work for your organisation, and find out what other approaches might be a good fit, email us at info@theoutcome.ie to set up a free no-commitment call.
The Outcome offers a range of Social Return on Investment services, including:
Consulting and project management: we support you in conducting an SROI evaluation
Research design: we design your research components, you do the rest
Reporting only: you design and conduct the research, we write the report to assurance standard
Full-service: we design and conduct the research, and write the report to assurance standard
Reasons to use the Social Return on Investment methodology
It involves all stakeholders
One of the key principles of the SROI methodology is to include all stakeholders who are impacted by the activity being measured, including service users/ customers, internal stakeholders and other organisations. This means that it builds a holistic picture of the value created by your organisation or activity. In order to understand, measure, and value the outcomes experienced by stakeholders, an SROI analysis requires extensive data collection from each stakeholder group that is potentially impacted positively or negatively. By including all stakeholders in the research, we avoid making assumptions about what has changed and what value those changes have.
It demonstrates value in financial terms
Many outcomes experienced by stakeholders are intangible, for example they may have experienced an increase in confidence, feelings of inclusion or reduced stress. These things do not have a standard market value, but we usually find financial value the most relatable format for expressing the value of something, so the SROI methodology uses a variety of tools to translate stakeholder experiences into financial terms. On completion of an SROI evaluation, your organisation will be able to say, “for every € we invest, we create ‘€x’ of social value.” This is a powerful way to demonstrate the value your organisation creates, especially to funders.
It can evidence the difference that funders or donors have made
Donors and funders want to know that their contribution has had a positive impact. In fact, outcome evidencing is fast becoming a requirement placed on organisations in order to secure donations from funders. SROI is a useful tool to express the positive impact created for stakeholders by a funder’s contribution. The rigour and transparency of the methodology provides a standardised approach to impact evidence that appeals to decision makers.
It shows commitment to measuring and amplifying your impact
An SROI evaluation is a rigorous method for measuring your impact, and is often conducted by an external practitioner both to remove biases and because it can be a time consuming and complex approach for internal teams to manage. Undertaking an SROI evaluation shows commitment to measuring your impact, and taking action against recommendations made based on the findings of the methodology shows commitment to amplifying that impact and creating even more value for your stakeholders.