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Putting a dollar value on your social impact: a primer

Posted on 02 Jun 2020

One of the biggest challenges for grantmakers is proving that the grants they fund have the desired impact. Practitioners will know that there are many ways to measure social impact, and that social return on investment (SROI) is one of the most widely recognised methods. Think Impact’s Alischa Ross, a senior consultant with the advisory firm that works with many of the country’s leading government and not-for-profit agencies, explains some of the basics.

Alischa Ross
Think Impact’s Alischa Ross

How can you capture the value created for people and the environment in your decision making and reporting? When you’re clear and certain about the impact you want to have, how can you design a program or a strategy to match?

You need social return on investment.
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Social return on investment (SROI) is an internationally recognised approach to understanding and measuring the effects of a program, organisation or policy. By focusing on stakeholder voice, you can identify the social, environmental and economic impact generated, and calculate a financial ratio that shows the value of social impact created for every dollar invested.

SROI is a powerful tool for telling the story of the change resulting from your programs, policies and organisation. SROI uses financial proxies to place a value on non-financial changes so stakeholders’ stories of change can be told in monetary terms.

SROI draws on well-established methodologies in economics, accounting and social research. It is underpinned by seven principles, shown here.

Social value principles
Social value principles are globally recognised

A copy of the full guide to SROI can be found on Social Value International’s website: http://socialvalueint.org/knowledge-base/the-guide-to-sroi.

SROI seeks to understand all types of value – social, economic and environmental. Through a process of assigning “financial proxies”, all of the value identified is represented by a common unit of measurement: dollars. An SROI analysis produces a ratio that indicates the total return for the dollars invested; for example, for every $1 invested, $4.35 of total value is created. This ratio provides an indication of cost effectiveness, by comparing the investment required to deliver the activities with the value of the outcomes experienced by all beneficiaries.

The SROI process also involves steps that lead you to an understanding of the “additional value” that would not have been generated in the absence of the activities being analysed. Value that would have happened anyway (deadweight), or that is attributable to other actors (attribution) or has displaced other outcomes (displacement) is factored into the calculation.

Why consider an SROI assessment?
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Measuring in dollar terms can be very powerful when you want to engage investors, funders and policy makers who understand success or performance in financial terms. However, it’s important to remember that this ratio is only one part of the value of conducting an SROI assessment.

SROI
SROI studies can provide a compelling measure of value. Visible Changes evaluates women’s property initiatives.

A SROI assessment typically involves detailed conversations with stakeholders to understand what change occurs, for whom and in what circumstances. This can be transformational for organisations and their workforce culture, driving a more client-centred approach and passion to create the desired change.

When used well, SROI is a model that can transform the way we understand and communicate social and environmental impacts and reflect that understanding in decision making. When you have a more complete understanding of value, you can design programs, policies and strategies with greater certainty of the impact you will be having.

In summary, a SROI approach can help you to:

  • Deeply engage with stakeholders to understand how value is created
  • Understand intended and unintended outcomes
  • Build credibility through having a complete picture of the impact of your program, policy or strategy.

What kind of results should I expect?
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SROI
SROI data can help tell the story of impact

A great way to understand what SROI is and how it is undertaken is to review completed reports. Here are two examples of SROI reports produced by Think Impact:

How good is my SROI study anyway?
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When it comes to meeting principle 7 – “verify the result” – there’s an assurance process that’s handled by Social Value International (SVI), the global network that governs the SROI methodology. This means that reports are reviewed by a qualified assurance expert against the agreed set of SROI principles.

The assurance process is rigorous and can take 10–15 weeks from report completion to assurance confirmation, unless the process is fast-tracked.

What about becoming an SROI practitioner?
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Think Impact is a leading SROI operator, and employs more than 10% of all SVI practitioners globally.

This includes Think Impact associate director Rebecca Cain, one of only two people in Australia qualified to deliver SROI practitioner training.

Dates are now set in two states for a course that covers the SROI tools and innovations proven by Think Impact, case studies, demonstrations, communicating results, and resources and templates for analysis.

Accredited two-day SROI practitioner training
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MORE INFORMATION
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