A Guide to Social Return on Investment

published by The Office of the Third Sector, United Kingdom; 2009.

How to measure organisational impact in the Third Sector is a long held conundrum. Now, however, there is a new pressure that confers an aura of urgency to the issue: the social marketplace. Advocates of the social marketplace understand the need for a universally recognised unit of measure for social returns. Given the lack of agreement in the sector, the UK government has stepped in to regulate an approach. In May 2009 the UK government’s Social Enterprise Summit launched a new guide for Social Return on Investment (SROI). This guide aims to give Third Sector organisations the toolkit to calculate their social returns for the benefit of investors and public sector funders. The government chose SROI as the way to calculate and articulate the social, economic, and environmental impacts of Third Sector organisations.

SROI is simply defined as a framework for measuring a concept of inclusive value. It encompasses social, environmental, and economic dimensions and uses money as the common unit to represent all three types of value. Since the costs of funding various projects are known, SROI allows the calculation of cost-benefit ratios. There has been some grumbling in the sector about the imperfections of the approach, but also a push for the state to lay-out some direction.

To check out its usefulness for your organisation see: www.cabinetoffice.gov.uk/third_sector/news/news_stories/090512_sroi.aspx

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