SROI Act II: A Call to Action for Next Generation SROI

by David Lascelles and Sam Mendelson, Centre for the Study of Financial Innovation; June 2009.

‘Act II’ comes with more humility and empathy than is typically attributed to the founders of the SROI movement. REDF (The Roberts Enterprise Development Fund) pioneered the SROI approach through applying it to their work in re-employment services.
Responding to years of criticism during their evangelisation of SROI as the way to measure impact, they now characterise social return on investment with a softer edge. They refute that the single number SROI result is the “silver bullet” for social impact measurement. Such a search for a single number to determine the success or failure of a nonprofit is driven by “bureaucratic fantasy” rather than reality. Instead, the report acknowledges that there are inevitably types of impact which cannot be easily reduced to a financial equation.
This report is forward looking. In order for SROI to mature, the author argues three scenarios need to unfold. First, organisations must have software that links accounting (costs) and performance (benefits) if they are to successfully measure cost/benefit. Second, SROI analyses should include non-monetary values. Finally, the precise SROI analysis employed should respond to the types of questions being asked of the nonprofit. Ultimately, SROI Act II seems a more sober, mature, and kinder missive to the sector.
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