SROIs

In the financial world, investments are evaluated based on returns to investors and corporations based on their ability to create monetary value for shareholders.  The job of investment managers and corporate executives is to maximize value for stakeholders.  In the social sector, the objective is still to create value, typically in the form of better lives for those served, but information about the amount of value being created is rarely available.  Funders and suppliers of human assistance who seek to optimize the impact of their giving lack information needed to do so, namely information about which programs most cost-effectively improve lives and meet needs of beneficiaries.  As a result, funds may go to less effective programs, to the detriment of other, more effective programs.

Social Returns on Investment (SROIs) measure and value the benefits realized by disadvantaged beneficiaries and society in terms of benefits/costs.  They are ‘Social’ ROIs because benefits accrue to people other than donors/investors, and, like financial ROIs, when done appropriately, they allow fair comparisons across all projects.  Benefits-per-cost information is commonly used to measure the impact of large scale social and development programs.  Considerable support is emerging for its use in the evaluation of non-profit programs and other social endeavors. 

Prioritizing funding to high SROI programs has the potential to raise dramatically the amount of wealth poor beneficiaries realize from existing funding dollars.  Suppose, for example, that from a donation of $10,000, Program A could produce total actual benefits of $150,000 for 15 people over 10 years.  Program B, on the other hand, produces $50,000 for 5 people with the same amount of funding over the same period.  The beneficiaries of Program A and B each receive the same value over 10 years but Program A serves 10 more people and produces $100,000 more in value.  

We recognize that funding only the highest SROI programs may not be appropriate for some funders.  This tactic runs the risk of “picking the low-hanging fruit” – helping only those who need one-time or very low cost interventions to dramatically improve their circumstances – leaving behind harder, but still worthy cases.  Further, attempting to value certain results (e.g., spiritual benefits realized by congregants or clients of a religious organization) may be offensive.  We have given some thought to these concerns and offer some preliminary responses here.

Measurement Guidelines

Measurement Process

Sample SROI Evaluation

SROI Benchmarks & Comparisons