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This content is taken from the Living in Minca, Middlesex University Business School & Jindal Centre for Social Innovation + Entrepreneurship's online course, Social Enterprise: Growing a Sustainable Business. Join the course to learn more.
Converting ROI ($) to SROI (people, money, and environment)

Social Return on Investment Toolkit

SROI was initially developed by Jed Emerson at Harvard Business School for the Roberts Enterprise Development Fund (usually referred to as the REDF model) in 2000.

SRI is now one of three main social impact measurement frameworks that the REDF promotes. The other two include Social impact reports, which are based on data collected in interviews with staff and clients; and OASIS (Ongoing Assessment of Social Impact) – an organisation wide management information system designed to provide timely and accurate information about social impacts of the entire organisation.

The SROI model has developed a process of key steps that should be followed when undertaking an SROI analysis. The six step process for SROI analysis are as follows:

Step One: Establish scope and identify key stakeholders. This step relates to establishing clear boundaries about what the SROI analysis will cover, the people that will be involved in the process and the nature of their involvement.

Step Two: Map outcomes. Develop an impact map, or theory of change that demonstrates the links between inputs, outputs and outcomes.

Step Three: Evidence outcomes and value them. This stage relates to finding data that will show whether outcomes have occurred and then giving them a monetary value.

Step Four: Establish impact. Having collected evidence on outcomes and given them a monetary value, this step involves discounting the impact by those aspects of change that would have occurred in any case or resulted from exogenous factors.

Step Five: Calculate the SROI. This step involves adding up all the benefits, subtracting any negatives and comparing the result to the investment made. Test the sensitivity of the ratio.

Step Six: Report, use and embed. Sharing the findings with stakeholders, responding to any questions they may have, embedding good outcomes processes and verifying the SROI report.

Benefits of SROI

Some of the claimed benefits of SROI include:

  • Improved performance measurement, program planning and evaluation;
  • Allowing organisations to easily demonstrate the social value and impact achieved from activities and programs;
  • Facilitating the communication of the social value and impact achieved to internal and external stakeholders;
  • Raising an organisation’s profile, which can improve the case for funding;
  • Facilitating the comparison of social value creation across organisations in broadly similar areas or with similar goals (e.g. organisations that seek to place disadvantaged and socially excluded people into employment).

If you feel ready, you can start measuring your impact using the Social Return on Investment toolkit. We invite you to read the pdf documents at the bottom of this step to learn how to use it. Be aware that it is a time consuming and complex activity! If you have used SROI in the past or if you using it as you complete this course, please share your experience with your fellow learners.

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This article is from the free online course:

Social Enterprise: Growing a Sustainable Business

Living in Minca

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