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social return on investment
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Conventional financial returns do not capture the social and environmental benefits of projects and programmes. social return on investment (SROI) aims to capture these benefits.
nef have developed an innovative new approach to SROI. We have built on pioneering work by Jed Emerson and REDF (the Roberts Enterprise Development Fund) in the USA.
The nef approach to SROI is stakeholder based.
There are five areas where use of SROI can bring about change:
- Public procurement - improve the impact - nef's work on local multipliers has demonstrated the role that procurement spending, by spending locally, can play in stimulating local economies. Pressure is building from local authorities and other providers of public services to find ways of measuring the impact of their expenditure in ways that capture more of the impact than simple financial returns – and hence to open up public services to a wider range of organisations that deliver greater community impact
- Public expenditure - improve the impact - Expenditure by government in pursuit of public policy interventions may create further gains or losses to the public purse. For example, it is useful to be able to assess the full extent of the costs and savings created by introducing an increased crime prevention strategy or further resourcing of a preventative public health agenda as compared with further expenditure on acute care.
- Social economy - performance improvement - Within most social economy organisations from grant-dependent charities to fully self-sufficient social enterprises, there is an increasing demand from management for ways of proving social and environmental impact. From the point of view of the organisation, this information is not only invaluable in illustrating the effectiveness with which they achieve their goals but also in helping to improve the performance of the organisation by tracking and measuring outcomes and impacts
- Grant giving and financial investment – enable new forms of investment - As new methods of investment are developed from outcome-related grants to social investment and venture philanthropy, where the risks and rewards of investment are new and uncharted, new ways to capture the returns are needed – and hence enable these new forms of investment to develop.
- Corporate social responsibility – greater accountability - The recognition that organisations are accountable for their impacts to others than their shareholders or owners, and that this accountability may exceed legal requirements in order to contribute to sustainability, is an important development which is throwing up a need for new standards and new tools like SROI – and hence enable greater accountability
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