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Social Return on Investment (SROI) is an innovative approach to measurement and value that can be used across the public, private and third sectors. Developed from cost-benefit analysis and social accounting, SROI uses economic valuation to make visible a far greater range of social, environmental and economic costs and benefits than conventional analyses. In so doing, it provides a fuller picture of the value that is being created or destroyed and enables more informed decision-making about how resources are allocated.
"It allows us to systematically evaluate and show that it's not just about getting people back into work, but [in the long term] what is their quality of life? Are they earning more?"
- Green Apprentices
SROI can bring about change in the following areas:
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Public Sector Policy: to understand how limited public resources can be allocated resources can be allocated to maximise value.
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Third Sector Organisations: to capture the added social and environmental value created by third sector organisations. For example, nef worked with a Merseyside Getting Out to Work initiative to assess the social value created through their intensive training of ex-offenders. The analysis showed that for every £1 invested in the programme generated £10.50 of social value.
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Philanthropic Funding Bodies: as an effective tool to accurately compare competing requests for investment in the face of growing demands for such financing. For example, nef conducted SROI analyses on behalf of the Adventure Captial Fund to assess the return on their investments in seven community enterprises.
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Private Sector Companies: to allow the private sector to connect with those stakeholders that their operations affect rather than just their shareholders or owners. SROI is a tool for the organisation to either demonstrate its current economic, social and environmental sustainability, or in the event of a sub-optimal evaluation, plot a route toward a sustainable future.
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