Social Return on Investment (SROI) provides a principled approach that can be used to measure and account for a broad concept of value. It can be used to both plan and evaluate activities.
SROI measures social, environmental and economic change from the perspective of those who experience or contribute to it. It can be used to identify and apply a monetary value to represent each change that is measured. The resultant financial value is then adjusted to take account of contributions from others. In this way the overall impact of an activity can be calculated and the value generated compared to the investment in the activities. This enables a ratio of cost to benefits to be calculated. For example, a ratio of 1:3 indicates that an investment of £1 in the activities has delivered £3 of social value.
Whilst an SROI analysis will provide a headline costs to benefits ratio, it will also deliver a detailed narrative that explains how change is created and evaluates the impact of the change through the evidence that is gathered. An SROI analysis is based on clear principles and progresses through set stages. SROI is much more than just a number. It is a story about change, on which to base decisions, and that story is told through case studies, qualitative, quantitative and financial information.
There are two types of SROI analyses: a forecast SROI predicts the impact of a project or activity and an evaluative SROI measures the changes that it has delivered.