There are many things that we value, as societies and individuals, which cannot be easily captured in economic terms. Social Return on Investment (SROI) is a framework for measuring and accounting for this much broader concept of value, and it is attracting increasing interest with both commissioners and service providers.
SROI is a rigorous measurement framework that helps organisations to understand and manage the social, economic and environmental value they are creating. It is essentially a form of adjusted cost-benefit analysis which puts a value on the full range of benefits, including some less tangible outcomes like improved family relationships – this is known as social value. Monetary values are calculated to represent these, enabling 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.
An SROI analysis can provide clarity, help service providers focus on how they create change and help commissioners focus on how they can increase the value obtained through their commissioning practice. It can also help understand the value of what is created for different stakeholders. By clearly demonstrating the social impact of their service, organisations are in a better position to negotiate, and to make improvements.
SROI for improving services:
• An SROI analysis can help to understand and maximise the social value an activity creates. It can be used as a management tool for strategic planning about the design and direction of services, to improve performance, inform expenditure and highlight added value.
• An SROI creates a formal dialogue with stakeholders that enables them to hold the service to account and involves them meaningfully in service design. Read more about user participation.
• It is not only the result of an SROI that is useful – the process itself can provide a constructive challenge to working practices.
SROI for securing funding:
• SROI can help make organisations more sustainable by raising their profile, communicating impact, making tenders more persuasive and securing funding.
SROI for commissioners and funders:
• SROI is a useful way to help commissioners and funders decide where to invest, and later to assess performance and measure progress over time.
SROI for developing policy:
• SROI can be used by organisations that develop public policy for which recognition of social value is important. For example, it has been used to compare the value of investing in different kinds of service interventions.
We offer mentoring, support and practical advice to take an organisation through an SROI analysis, and to understand the implications of the findings. We are trained in SROI, and are members of the SROI Network.