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Best Practices In

Social Return On Investments

SROI Principles, Best Practices, Financial Proxy & Cost/Benefit Analysis

Actionable Impact Management

What is Social Return on Investment?

Social Return on Investment (SROI) is an organizational method of accounting for value creation, primarily social or environmental value. SROI enables organizations to measure how much change is being created by tracking relevant social, environmental, and economic outcomes. The key difference between SROI and other methodologies is the assignation of monetary values to the amount of change created.

To give a very simplistic example: SROI assigns a monetary value to inputs and outcomes and uses that assignation to calculate a ratio. If that ratio is 5:1, it means that every dollar allocated will generate (or has generated) social value worth five dollars.

How to Calculate SROI?


As the name suggests, this type of SROI analysis is implemented before the program or activity itself has been implemented. It is used as a predictive tool to determine the amount of social value that might be created given the outcomes sought.

When to use a Forecast approach to calculate SROI:

Most useful when going through the planning process of a program or activity because it encourages organizations to put in place the infrastructure needed to adequately measure change (relevant indicators, data collection processes, etc.). It also helps to determine how capital can best be leveraged for the most impact.



This type of SROI analysis is implemented after a program or activity has already had time to affect change. In other words, there are already outcomes to be measured.

When to use an Evaluative approach to calculate SROI:

Most useful and best leveraged when an organization is already tracking outcomes data properly or at least has a process already in motion that is accounting for the social value of currently running programs or activities. An evaluative approach needs quality outcomes data.

Example Social Return on Investment Infographic: Source, Gauge.

Social return on investment example

Principles of SROI Methodology

According to a guide by the UK Cabinet Office, with methodology development supported by Social Value International, there are 7 key principles underlying the application of the SROI methodology.

The seven SROI principles are:

  1. Involve stakeholders.
  2. Understand what changes.
  3. Value the things that matter.
  4. Only include what is material. 
  5. Do not over-claim.
  6. Be transparent.
  7. Verify the result.

SROI measures change in ways that are relevant to the people or organizations that experience or contribute to it, assigning monetary values to represent social, environmental and economic outcomes.

As a result, this valuation produces a ratio of benefits to costs or investments (inputs). For example, a ratio of 3:1 indicates that every $1 delivers $3 of social value. To estimate the value of the outcomes, SROI uses financial approximations - or proxies - that may vary according to the stakeholder. 

Carrying out an SROI analysis keep the following principles in mind:


1. Involve Stakeholders

In this case “stakeholders” refer to individuals (or groups/organizations) affected by the program or activity that is being implemented. More specifically, the change that is expected to occur affects these stakeholders in some way.

The principle calls on those implementing an SROI methodology to first identify who those affected are and then maintain them as active participants throughout the SROI process. What is measured and how it is done can then be executed in a way that is more relevant to all those affected by the program or activity.


2. Understand what changes

The SROI process demands clear understanding and communication of how change has occurred, and whether it is positive or negative. One should also distinguish between change that was expected and change which was not foreseen (positive or otherwise). With these in mind, organizations are encouraged to clearly articulate the theory behind the change they are affecting through their activities.


3. Value things that matter

One of the distinguishing factors of the SROI process, this principle refers to the assignation of monetary values (also referred to as financial proxies) to the outcomes generated. This gives such outcomes a way to be valued in an ideally more objective and comparable manner.


4. Only include what is material

It is important to include information about the outcomes of an activity and who has been involved in affecting (or has been affected by) that change. Organizations should ask themselves whether including or not including certain information would affect the stakeholders involved (those who affect or are affected by the change experienced).

If there is information that might sway a decision about the activity by those stakeholders it should be included. This lends credibility to an organization’s account of the social value created.


5. Do not over-claim

This principle is backed up by the transparency organizations must commit to in the SROI accounting process. It asks the questions, what would have happened without the organization’s activities, how much did the organization’s activities contribute to the outcomes generated, and what contributions did other organizations/entities have on those outcomes?

Detailing the answers to these questions enables an organization to avoid the over-claim pitfall and better inform stakeholders of the effectiveness of the organization’s activities.


6. Be transparent

There is transparency to be demonstrated in all aspects of the SROI accounting process. This includes tracking and communicating the methodologies used to determine metrics, collection processes, analyses conducted, etc. This also includes communicating with whom you spoke with (stakeholders) and how they affected or informed the decision-making process.


7. Verify the result

External validation of the results of your SROI analyses and how you arrived at those results will help lend credibility to your process and enable stakeholders at all levels to better evaluate the outcomes you reported. A process called independent assurance can serve organizations seeking such third party verification of the reliability of an SROI analysis.


Read More:

Understanding how to wield Social Return on Investment - Part 1

Understanding how to wield Social Return on Investment - Part 2

Watch the webinar with Ben Carpenter, Social Value International and Timothy Lambert, SI2 Fund.


Social Return on Investment Methodology

social return on investment process_

Source: Semantic Scholar.


Social Value UK outlines six stages to an SROI analysis.


Stage 1: Establishing scope and identifying key stakeholders

Frame the limits of your analysis well. This demands clear understanding and identification of the stakeholders involved, as well as their roles throughout the process. Setting a realistic (and relevant!) scope will help avoid scope creep down the line.


Stage 2: Mapping outcomes

At this stage organizations focus on visualizing how change is created or will be created. Generally, this is done by creating a “Theory of Change” model, demonstrating the interrelationship of inputs, outputs and outcomes for the activity or activities to be analyzed.


Stage 3: Evidencing outcomes and giving them value

This stage requires identifying the outcome indicators which will be used as change metrics and determining the duration of those outcomes (are they long-lasting? short-term?). It also demands collecting those data and assigning values to the outcomes.


Stage 4: Establishing impact

Impact must be attributed to the activity executed -- in other words the organization must demonstrate that the change that occurred (looking at the outcomes evidence) would not have resulted anyway (without the activity or program).


Stage 5: Calculating the SROI

A stage which requires unique SROI analysis expertise, at this point an organization determines the ratio which communicates how much value is generated per investment unit (e.g. per dollar).


Stage 6: Reporting, using, and embedding

Stakeholders need to be informed about the results of the analysis. That way, they can continue informing in a relevant way the evolution and execution of the activity being implemented.

SROI Resources

The following is a preliminary list of resources that might help you refine your SROI valuation process.

The Social Value Self Assessment Tool is designed to help users judge how well they are measuring and reporting on their social value, in line with the Principles of Social Value.


Industry wide calculators

Social Impact Calculator: estimates the economic social value of community development projects. 

Grounded Solutions Inclusionary Housing Calculator: enables exploration of the connection between mixed-income housing development and local incentives in the housing sector.

UK Social Value Bank calculator: used by housing associations, councils, government departments, for-profit organizations and the National Lottery to measure uplift in wellbeing. 



Largest international network for social value and worldwide chapters


Social Value UK Members Directory


Social Accounting


U.S.A. Financial Proxies

Job Creation:

Indicator: Jobs Created at Directly Supported/Financed Enterprises: Total (IRIS PI3687)
Financial Proxy: Wisconsin Yearly Minimum Wage: $15,080 (minimum wage.org)
Rationale: We can assume that the jobs created by the new businesses will at least pay the minimum wage to their employees. By multiplying $15,080 by the total number of jobs created, we will get the approximate economic value of those jobs. For a more specific financial proxy based on occupation, see the Bureau of Labor Statistics.

Indicator: New Businesses Created: Total (IRIS PI4583)
Financial Proxy: The median income for individuals who were self-employed at their own incorporated businesses in Wisconsin was $43,432 in 2014 (U.S. Small Business Administration).
Rationale: We can assume that the new businesses created will at least have the same income as the businesses created in 2014 (which is the latest reference available to us). By multiplying $43,432 by the total number of businesses created, we will get the approximate total economic value of the new businesses. 

Indicator: Full-time Employees: Minorities/Previously Excluded (IRIS OI8147)
Financial Proxy: The average wages by race and ethnicity in Wisconsin in 2016 were $65,493 for Alaska Native, $54,823 for Asian, and $46,641 for White (Data USA: Wisconsin). The numbers and ethnicities vary for each state of Wisconsin; for a more accurate value, visit the source and search by state.
Rationale: We can multiply the total jobs given to a minority group by the average wage to get the approximate total economic value of the jobs.

Indicator: Full-time Employees: Female (IRIS OI6213)
Financial Proxy: The average female salary for a full-time common job in Wisconsin is $46,170 (Data USA: Wisconsin)
Rationale: We can multiply the total jobs given to women by the average female salary to get the approximate total economic value of the jobs. 


Business Creation:

Indicator: Total Jobs Created by Women-Owned Businesses
Financial Proxy: Women-owned businesses employ over 8.4 million workers and generate $264 billion in payroll (U.S. Department of Labor Blog)
: If we divide the $264 billion payed in payroll by the 8.4 million of workers, it means that each worker is generating an average income of $31,429. Now, by multiplying this value by total number of jobs created by women-owned businesses, we get the approximate economic value of the jobs created by women-owned businesses.



Indicator: Microfinance: Interest saved from not using loan shark (Robin Hood)
Financial Proxy: Percent of interest saved * average loan amount
Rationale: Calculate the percent of interest saved by subtracting the percent interest your grantees typically charge on loans to women/minority/low income borrowers from the interest charged by loan sharks, which is approximately 100 percent. 
By multiplying the percent of interest saved by the average loan amount, we get the average amount saved in interests per borrower. Then, we multiply the average interests saved per borrower by the total number of borrowers.



Indicator: Number of Housing Units Improved (PI058)
Financial Proxy: A change in living area square footage increases the appreciation by approximately 23 percent. Adding beds or baths increases the growth rate by approximately 15 percent. The average gain associated with an increase in effective year built is approximately 6 percent, although this may understate the full value of a property renovation. A change in lot size increases appreciation by approximately 5 percent (Property Renovations and Their Impact on House Price Index)
Rationale: Multiplying the average value of the units improved by the appreciation percent according to the type of improvements, we get the average value of appreciation per house. Then, we multiply the result by the total number of housing units improved to get the total value of the appreciation. 

Indicator: Reduction in risk of dropping out of school
Financial Proxy: Every individual dropout cost Wisconsin more than $1,377 in 2011 (Maclver Institute)
Rationale: Home owners have less risk of having their children drop out of school. By multiplying the number of students in the community of home owners by the approximate cost of every individual dropout, we get the economic value of children not dropping out of school.

Indicator: Reduction in risk of homelessness
Financial Proxy: HUD secretary says a homeless person costs taxpayers $40,000 a year (PolitiFact)
Rationale: Home owners have less risk of suffering homelessness. By multiplying the number of housing loans by the cost of a homeless person, we get the economic impact of not having those persons going into homelessness. 

Indicator: Reduction in risk of mental health treatment-Adults
Financial Proxy: The adult psychiatric services rate in Wisconsin is $1,039 (Department of Health Services, Division of Care and Treatment Services)
Rationale: Home owners have less risk of suffering stress and anxiety. By multiplying the number of home owners by the cost of psychiatric services, we get the total cost saved by the home owners for not having to receive mental treatment.  


Car Owners:

Indicator: Reduction in risk of emergency medical care

Financial Proxy: The average charge for an emergency room trip is $1,233 for the following conditions: sprains & strains, open wounds, normal pregnancy or delivery, headache, back problems, upper respiratory infection, kidney stone, urinary tract infection, intestinal infection (The Washington Post)
Rationale: Car owners are more likely to get regular/preventive medical care due to mobility. By multiplying the average charge for an emergency room by the number of car owners, we get the total cost saved by the car owners for not having to take emergency trips.  


Indicator: Reduction in risk of stress treatment

Financial Proxy: The cost of cognitive-behavioral therapy effective for treating anxiety disorders is $100 or more per hour (Anxiety and Depression Association of America)
Rationale: Car owners are less likely to stress and anxiety attributable to long commutes. By multiplying the number of car owners by the cost of cognitive-behavioral therapy we get the total cost saved by the car owners for not having to be treated for stress and anxiety. 



Social Return Measurement Resources at Sopact:

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