Balanced Value Impact Model

Social return on investment (SROI)

Social enterprises are required to demonstrate the social and economic value they generate. Social return on investment (SROI) is a performance measurement tool currently being encouraged to capture this impact. SROI as an analytic tool for measuring and accounting for this broader concept of value. It incorporates social, environmental and economic costs and benefits into decision making, providing a fuller picture of how value is created or destroyed.

SROI provides a means of giving a monetary figure to social and cultural value deriving from an investment. For instance, the value created by a training programme for ex-offenders might reveal that for every £1 invested, £10.50 of social value was created.

SROI is a framework based on social generally accepted accounting principles that can be used to help manage and understand the social, economic and environmental outcomes created by an activity or organisation.

SROI is based on seven principles:
  1. Involve stakeholders: Understand the way in which the organisation creates change through a dialogue with stakeholders.
     
  2. Understand what changes: Acknowledge and articulate all the values,  objectives and stakeholders of the organisation before agreeing which aspects of the organisation are to be included in the scope; and determine what must be included in the account in order that stakeholders can make reasonable decisions.
     
  3. Value the things that matter: Use financial proxies for indicators in order to include the values of those excluded from markets in same terms as used in markets.
     
  4. Only include what is material: Articulate clearly how activities create change and evaluate this through the evidence gathered.
     
  5. Do not over-claim: Make comparisons of performance and impact using appropriate benchmarks, targets and external standards.
     
  6. Be transparent: Demonstrate the basis on which the findings may be considered accurate and honest; and showing that they will be reported to and discussed with stakeholders.
     
  7. Verify the result: Ensure appropriate independent verification of the account.
     
See also Social Value UK - the national network for social impact and social value.

This page has paths: