The Social Return on Investment (SROI ) measures the value added to the society caused by different interventions. Within the scope of an SROI analysis , an impact model establishes causal relationships for a specific project, programme or organisation. The impact identified in this way is measured and, where appropriate, converted into monetary units. It becomes possible to aggregate the individual impacts and correlate them in total to the input. The resulting SROI value represents the relationship between the monetised impacts and the input . An SROI value of 1:2 thus shows a social return of 2 Euros or Dollars for every one Euro or Dollar invested.
The SROI approach essentially focuses on impacts , their measurement , analysis and representation. This is more meaningful than a focus on performance. It particularly applies where performance is targeted at positive societal development and is not an end in itself. The central understanding of impact in this book comprises not merely what happens, but what would not have happened without the intervention . In our understanding, a systematic analysis of the impact model including any unintended impact is fundamental for impact measurement in terms of an SROI analysis.
We understand impact measurement âand SROI analysis all the more soâas an effort which does not just aim at generating key figures that are expressed as far as possible in money, but at understanding, measuring and, where reasonably possible, monetising the impact of a social investment in its causal relationships. Thus, beyond the monetary representation of effects, it generates an understanding of correlations and identifies attributable results.
Impact measurement and SROI analysis intuitively make sense for non-profit organisations and the public sector, as well as for all (social purpose) organisations which focus on improving social conditions. It is also becoming increasingly important for companies that, from CSR initiatives to their core business, want to analyse their social impact . A key figure like the SROI value is attractive with a view to ongoing reporting requirements.
There is no single true SROI analysis . SROI in essence means that more or less extensively monetised impacts are correlated to monetary and (to a limited extent) monetised input . We will show that in line with different design possibilities and methodological rigour, SROI analysis can range from âlight â or âmedium â to âadvanced â and âintegratedâ and can be tailored in a very context-specific way. Metaphorically speaking, the glasses used for analysis can have different strengths, coloured lenses and designs. Concrete decisions when identifying, measuring and monetising the impacts specify the picture within the framework. This book provides guidance to any such choices.
The non-profit and social purpose sector is changing. The impact of social investments or even just private contributions to the common good is gaining in significance for all parties involved: the investors, namely the donors, contributors and dedicated volunteers, but in some social enterprises also the equity investors with a social or ecological/environmental objective, who are becoming ever more interested in what it was possible to achieve with their contributions. This is due, on the one hand, to the fact that in giving, the classical motivations of altruism or symbolic exchange (see Mauss 1990) are playing less of a role, and modern self-realisation values more. People who give want to shape. This implies that they want to see the results of their contribution recorded.
A growing interest in impact also springs, however, from the competition between the sectors for the best way to perform public tasks and/or supply public goods. The âblurring of the boundariesâ (Nicholls and Murdock 2012) between the third sector and/or civil society, market and the state means that with the growing necessity for co-production and user involvement, i.e. to jointly perform certain tasks or jointly resolve social problems, management information is needed that helps coordinate and finance the collaboration. This influencing factor is particularly associated with questions of social innovation , and above all with innovative funding instruments like impact investing or social impact bonds . Evidence-based politics is no longer an empty slogan, but rather in some domains of political governance has already been the state of affairs for years (see Chap. 3); this is true in development cooperation, for instance, which, like health economics or scientometrics, is among the pioneers interested in measurement approaches for impact and/or success.
Finally, the growing social and economic weight of the non-profit sector (in some countries more than 4% or 5% of GDP) and its significance for employment on the labour market compels more legitimisation efforts to document the effectiveness and entitlement to strong public financial flows or comprehensive tax breaks to or for the sector, to provide accountability and to justify financing.1 This pressure for accountability goes hand in hand with the publicâs expectation, bolstered by the media and Internet world, of full transparency and information that is available at any time.
This comprehensive interest in impact thus originates with individuals and organisations in the non-profit (social entrepreneurship/philanthropy) sector, but also the public and the whole of society. At these three levels, emphasis is placed on donorsâ motivation, organisationsâ strategic direction and the allocation of resources in society. Accordingly, questions about approaches that can measure this impact are growing in significance. At the same time, with the experience gained with new public management, that is, using elements of business management in public (performance) management, the perspective towards manageable information relevant to steering has changed: these approaches have frequently helped increase the efficiency of carrying out tasks, but have at the same time helped place an increased interest in effectiveness on the agenda. People are no longer just asking whether things are done right, but whether the right things are being done (by the right actors) (see Drucker 1967).
This shift to different dimensions of impact that take into account the fact that economic key figu...