Social return on investment (SROI):
SROI is a principles-based method for measuring extra-financial value (i.e.,
environmental and social value not currently reflected in conventional financial
accounts) relative to resources invested. It can be used by any entity to evaluate
impact on stakeholders, identify ways to improve performance, and enhance the
performance of investments1. It tells the story of how change is being created by
measuring social, environmental and economic outcomes and uses monetary values
to represent these changes.
To familiarize with SROI, VAW forum can implement SROI analysis for a small pilot
project before implementing it across the forum. SROI can be calculated by following
the below six steps and filling in all the information of the attached template:
1. Establishing scope and identifying key stakeholders: It is important to have clear
boundaries about what SROI analysis will cover, who will be involved in the process
and how. Define the project for which SROI will be calculated. It could be for future
project or it could be an evaluation of the past projects. The starting point is the
stakeholders – the groups/person who will be affected by or will affect the activities.
Identify all the stakeholders in the first column of the template and in the second
column, enter information on what each stakeholder wants to change in the current
project.
2. Mapping outcomes: Through engaging with stakeholders develop an impact map
which shows the relationship between inputs, outputs and outcomes. Define and fill
third column of template with inputs in terms of what each stakeholder will be
investing in this project. Determine the monetary value of each investment and
enter it the fourth column of the template. There are multiple ways to quantify nonfinancial activities. Below mentioned are few of them:
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Formal discussion with all stakeholders
Brainstorming session
Predetermined criteria to quantify
Leadership team defines value of each activity
Based on other project of same size
Based on data available from industry/research
Now, define what output this project will generate and enter it in the template. This
is basically quantifying using one of the above methods, what changed or what will
change because of stakeholder’s investment
3. Evidencing outcomes and giving them a value: This step is important as it involves
finding data to show whether outcomes have happened and then giving them a
1
http://en.wikipedia.org/wiki/Social_return_on_investment
monetary value. Outcomes are defined based on indicators agreed before. Mention
all the indicators in column seven. Now, quantify them in terms of quantity and
monetary value.
4. Establishing impact: Those aspects of change that would have happened anyway
or are a result of other factors are taken out of the analysis. This step is basically
determining rates of deadweight, drop off, displacement, attribution and discount.
Once these rates are determined calculate the impact. This can be calculated as
quantity multiplied by value less deadweight, attribution and displacement. Now
calculate the impact for next few years if calculating SROI for future project. If this is
evaluation of project then use historic data of last few years.
5. Calculating the SROI: This stage involves adding up all the benefits, subtracting
any negatives and comparing the result with the investment. The SROI index is the
total impact (Net present value) for years 1 to 5, divided by the total investment.
6. Reporting: The final step is to report the SROI to all the stakeholders and
determine the next steps of project.
VAW forum can tweak this template as required. Columns can be added and/or
removed based on each project’s requirement.
The SROI Template2
Stakeholders
Who changes?
wants change?
Who
Intended/
unintended
changes
Inputs
What they want
to change
What
they
invest
(description)
Outputs
What they invest
(value $ ) (20)
Summary
activity
(quantified)
The Outcomes
of
Description of
outcome
Indicator
Quantity
(1)
Value(2)
The columns of the impact map continue to the right:
Deadweight
% (3)
What would have
happened
without us?
Displacement
% (4)
Attribution
% (5)
Drop off
% (6)
Impact
What activity did
you displace?
Who else
contributed to the
change?
Does the value
of the outcome
drop off in future
years?
Outcome: quantity (1)
times value(2) less
deadweight(3),
attribution(5) and
displacement (4)
Calculating
Social
Return
Discount
rate (%)
Agreed
Discount
rate
(7) Impact in
first year
(8)Impact
from previous
year (7) less
drop off (6)
(9)Impact
from previous
year(8) less
drop off (6)
(10)Impact
from previous
year(9) less
drop off(6)
(11)Impact
from previous
year(10) less
drop off(6)
Year 1
Year 2
Year 3
Year 4
Year 5
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
The SROI index is the total impact (Net present value) for years 1 to 5, divided by the total investment (20).
2
SROI - Scottish Investment Fund
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCwQFjAA&url=http%3A%2F%2Fwww.scottishinvestmentfund.co.uk%2FFile%2FSROI_Guidance_for_applicants.doc&ei=
pBjKUdy0LMGjyAGPs4D4Ag&usg=AFQjCNF3J-rPkq8Is5pQi177fnuWxN0z_w&bvm=bv.48340889,d.aWc
Glossary
Deadweight: A measure of the amount of outcome that would have happened even
if the activity had not taken place
Discounting: The process by which future financial costs and benefits are
recalculated based on discount rate to present-day values
Displacement: An assessment of how much of the outcome has displaced other
outcomes
Drop off: The deterioration of an outcome over time
Duration: How long (usually in years) an outcome lasts after the intervention, such
as the length of time a participant remains in a new job
Inputs: The contributions made by each stakeholder that are necessary for the
activity to happen
Net present value: The value in today’s currency that is expected in the future minus
the investment required to generate the activity
Outcome: The changes resulting from the activity. The main types of change from
the perspective of stakeholders are unintended (unexpected) and intended
(expected), positive and negative change
Outputs: A way of describing the activity in relation to each stakeholders inputs in
quantitative items
Stakeholders: People or entities that experience change, whether positive or
negative, as a result of the activity that is being analysed