Social Return on Investment (SROI)
SROI puts a monetary value on social outcomes and expresses them as a ratio against what was invested, so a funder or board can compare social return the way they'd compare financial return.
A left-to-right chain tracks the ratio's stages, from scoping the outcomes through to the final reported number.
Reach for this when…
- A funder wants to see impact expressed in numbers, not just stories.
- You're choosing between two social programmes competing for the same budget.
- You suspect a well-loved programme isn't actually worth what it costs to run.
How to run it
- Establish scope and identify the stakeholders whose outcomes count.
- Map the outcomes each stakeholder group actually experiences.
- Find evidence for those outcomes and assign them a financial proxy value.
- Strip out deadweight, attribution to others, and drop-off over time.
- Calculate the ratio: social value created divided by investment made.
- Report the ratio honestly, including its assumptions, and use it to decide.
A worked example
Situation. Andrés Chávez runs Fundación Amanecer, a vocational training NGO in Quito, Ecuador, whose biggest funder had started asking for evidence beyond the graduate photos in the annual report.
Applied. He ran an SROI analysis on the six-month plumbing course, tracking graduates' income change against a matched group who hadn't taken it, and stripped out the portion of income gain that would likely have happened anyway.
Result. The course came out at roughly three dollars of social value for every dollar invested once deadweight was removed, giving the funder a defensible number instead of a testimonial and giving Andrés a case for expanding the course rather than starting a new one.
The catch
The financial proxies are where SROI gets shaky - putting a pound value on confidence or dignity is a judgement call dressed up as arithmetic, and different analysts land on different numbers for the same outcome. The ratio also invites comparison between programmes that aren't really comparable. Done properly it takes real time and skill; done quickly, the ratio is more marketing than measurement.
An SROI ratio without its assumptions stated alongside it is a number you can't actually check.
Origin: Jed Emerson / REDF (Roberts Enterprise Development Fund); the SROI Network, now Social Value International