WHAT IS SOCIAL RETURN ON INVESTMENT?
Social Return on Investment (SROI) is an approach to measuring and understanding the financial impact of a social services organization. While SROI is built on the logic of cost/benefit analysis, it is different in that it measures the comparable value of organizations whose results cannot be easily measured in money. SROI provides information about actual and long-term results of services, and the qualitative, quantitative, and financial information on which to base decisions about the delivery of social services by organizations.
SROI analysis has been developing since the 1960’s. The SROI process has become more fully developed and internationally accepted during the last decade, primarily based on multi-year studies conducted by The SROI Network, Social Value International, The New Economics Foundation, New Philanthropy Capital, the National Council on Voluntary Organization, and the Government of Scotland.
A SROI analysis can fulfil a range of purposes. It can be used as a tool for strategic planning, as a basis for funding and investment decisions, as a basis for communicating impact and financial results to stakeholders, and as a methodology for comparative evaluation of an organization's long-term effectiveness
While not the only basis for funding and investment decisions, the SROI results provide the most accurate and comprehensible answer to three of the important questions asked by funding decision makers:
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What are the direct economic impacts from these services?
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What are the long-term consequential financial benefits we achieve?
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What is the measurable "bang for the buck" from our funding?