What is Social Return on Investment (SROI)?
Social Return on Investment (SROI) is a framework for measuring and accounting for a much broader concept of value than that which is measured in purely financial terms. SROI seeks to reduce inequality and environmental degradation and improve wellbeing by incorporating social, environmental and economic costs and benefits.
SROI measures change in ways that are relevant to the people or organisations that experience or contribute to it. It tells the story of how change is being created by measuring social, environmental and economic outcomes, and uses monetary values to represent them. This enables 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.
SROI is about value, rather than money.
In the same way that a business plan contains much more information than the financial projections, SROI is much more than just a number. It is a story about change on which to base decisions, that includes case studies and qualitative, quantitative and financial information.
An SROI analysis can take many different forms. It can encompass the social value generated by an entire organisation, or focus on just one specific aspect of the organisation’s work.
What can SROI be used for?
Carrying out a SROI is crucial for when evidencing your impact and maximising the value of your products or services. Organisations have also found it useful when attracting funding.
Skills for Justice has recently concluded a SROI for an emergency services project assisting vulnerable people. The SROI found that the project provided highly valuable services to the community and vulnerable people with a social value of £7.67 for every £1 spent on the project. Such findings can be highly persuasive in attracting continued funding and additional investment in a project, function or service.
Another SROI carried out by Skills for Justice found that that a new Military and Public Service course successfully prepared students for a career in the armed forced, and that the course provided a social value of £2.59 for every £1 spent. The SROI enabled the collegeto justify their decision to pilot a new military style academy using their current public services curriculum, as well as developing a licencing programme to roll out the course to other colleges and training providers.
The Public Services (Social Value) Act
In addition to the aforementioned benefits of assessing for social value, acknowledging social value is now a requirement by those providing or procuring public services. The Public Service (Social Value) Act came into force on 31st January 2013 and will require public authorities to have regard to economic, social and environmental wellbeing in connection with public services contracts.