What is Social Return on Investment?
Every day, our actions create and destroy value. Yet much of this - particularly social and environmental - is overlooked as traditional methods of valuing impact focus solely on financial returns.
Social Return on Investment (SROI) offers a broader understanding of value by accounting for social, environmental, and economic costs and benefits. It assigns monetary values to impacts, providing a benefit-to-cost ratio (e.g., $1 investment creates $3 of social value). However, SROI is about value, not money – money is simply a familiar, practical unit for expressing value experienced.
SROI goes beyond numbers using qualitative, quantitative, and financial data for decision-making. It can evaluate an organization’s overall impact or focus on specific projects, using either:
Evaluative: Based on actual results.
Forecast: Predicts future Social Value if goals are achieved