Measuring Social Return On Investment

Date:

Determining Your Success Rate

Measure your impact with Social Return on Investment

When helping our clients determine their success rate, we use a series of questions to guide the discovery process. Answering the following four questions helps tie the activities or outputs to the organizations desired mission outcomes:

  • How will/do you define success?
  • How many people do you serve?
  • How many people are successful?
  • What is your success rate?

Social Return On Investment Model

In simple terms, the SROI process involves:

  • Communicating with stakeholders to find out what social value means to them
  • Placing financial proxies on the identified indicators
  • Coming up with suitable indicators or techniques of knowing that changes have occurred
  • Recognizing how that value come about through a set of activities
  • Making a comparison of the social impact financial value created versus the cost incurred to produce those changes.

What Is Green Marketing

Green marketing, sometimes called, eco-marketing involves creating marketing campaigns to create a green image for its customers. Brands use this to promote a particular eco-friendly product, promote a concrete initiative, and draw attention to a time-sensitive issue.

However, some brands are using a low environmental impact as their unique selling points. This involves promoting a specific product or service that is eco-conscious.

However, if the brands overall strategy is not sustainable, it creates a backlash from consumers. Therefore, a brand needs to adopt a holistic approach when it comes to sustainability.

When customers think you are misleading them with your marketing practices, it creates an adverse reaction that will reduce their brand trust and loyalty. It leads to greenwashing.

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How To Calculate Sroi

An SROI calculation is a rigorous process. It demands that we understand impact for what it really is. The amount of change that has occurred because of our intervention would not have occurred otherwise. And it gives us a framework for understanding how much change we get back, how much impact value we have created, in return for what we put into making that change happen. In short, it puts environmental and social value back into our cost-benefit equations. As per Social Value International,

Measure Your Impact With Social Return On Investment

Social Return on Investment Analysis: Measuring the Impact of Social ...
HOW IT WORKS

SROI usually uses a six-stage process:

  • Establish, sound out and identify interested and affected parties.
  • Find evidence for, and evaluate results.
  • Calculate SROI.
  • Interpret of results and report.

The heart of SROI is to show what we would miss financially had the project not gone ahead.

SROI takes significant time and resources to do properly, but its increasingly popular with funders and service providers.

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Benefits Of Sroi Principle

Those that propose the use of monetary proxies for social, economic, and environmental value maintain that it has numerous benefits, including:

  • The principle helps communicate the impact value of activities to internal stakeholders, especially those responsible for raising finances and those in the resource allocation department both that prefer quantitative and qualitative approaches.
  • SROI simplifies the alignment and integration of financial management systems with performance management systems.
  • It enables sensitivity analysis indicating the areas where assumptions matter in that the result is more affected by alterations of some assumptions than others.
  • When the principle is applied, there is more transparency since it helps clarify the values that have been included and those that have been not.
  • With SROI, the organization can identify the crucial sources of value and therefore streamline performance management.

Our Work Using The Sroi Methodology

In our methodology we follow the seven principles as described by Social Value UK :

1. Involve stakeholders Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders.

2. Understand what changes Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes as well as those that are intended and unintended.

3. Value the things that matter Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders preferences.

4. Only include what is material Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact.

5. Do not over-claim Only claim the value that activities are responsible for creating.

6. Be transparent Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders.

7. Verify the result Ensure appropriate independent assurance.

Download the full guide on the seven principles here.

For examples of our work and case studies where we have used the SROI methodology, search the website using the general search facility at the top of the page. Examples include:

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Measuring Social Return On Investment Before You Invest

Using a social return on investment framework, organizations can estimate the future impact, cost, and scale of programs before they begin, and allocate resources for greater impact.

By Matthew Forti & Jake GoldbergNov. 18, 2015

Nonprofits serious about maximizing their social good typically use measurement to: improve programs during implementation and prove those programs post-implementation. And at One Acre Fund, which helps smallholder farmers prosper, weve found that the real-time learning and discipline that emerge from this kind of measurement drive greater impact per client over time.

But in recent years, as weve grown and pursued multiple delivery models in multiple geographies, we began to wonder whether we could use measurement data before implementing programs to determine which ones should get off the ground, and with what level of resources, in the first place.

For instance, in 2014 it cost $10.40 in field expenditures to serve each farmer in our Burundi direct service program, and that program generated $67.40 of impact per farmer the SROI of our Burundi program was thus 6.5. For 2016 resource allocation, we forecast the cost and impact per farmer in Burundi .

We are in the extremely early stages of using SROI, but wanted to share four lessons that have already emerged and how weve adapted:

How Do We Measure Social Value

Calculating Your Social Return on Investment

When it comes to social return on investment, there is no universally agreed way of measurement, but currently, the most dominant and widely accepted approach when calculating and reporting social value is to provide a financial value. It is important to realise that this financial value is a proxy and is not real money or a financial return on investment. The proxy is used simply as a comparator and as a way of quantifying the outcomes in a way that most people can understand and relate to. But it can lead to a one-dimensional perspective and give the illusion that one social value initiative is better than another. This would clearly not be the case. Even if we could accurately and consistently measure and quantify social value for one group of stakeholders, considering that social value is intrinsic and subjective, another group of stakeholders could place a different value on the same experience. The result is that great care must be taken whenever there is a claim or comparison. This is especially true when considering things like the Arts, one persons pottery exhibition is another persons junk.

In this section:

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Best Practice In Measuring Social Impact And Return On Investment Of Csi

In the social development field, one of the most cited questions from investors and participatory stakeholders regarding social/community development and investment projects is: How will you measure your social impact /outcome / change of the development programme? In the business field, what still really matters most is: What is the return on investment of your community/social development programme? The dilemma is to determine the relationship between community/social impact and business value .

Many public, private and community stakeholders have over the past few decades become disillusioned about the potential social impact and value of CSI programmes. While examples of truly successful social and community development programmes exist throughout Africa and South Africa, these are dwarfed by failed projects. Such projects sounded fantastic at the outset and promised financial sustainability, social upliftment, better education, more jobs, improved working conditions and environmental protection, but ended up as white elephants. They not only failed to deliver on the promises of sustainable community development, but also resulted in negative, unintended or even no impact, tarnished reputations and soured stakeholder relationships.

What is social impact assessment?

It does not eliminate or replace monitoring and evaluation, but rather complements these, as shown below:

A good social impact assessment is one that:

The Investment Impact IndexTM

How Social Return On Investment Works

SROI is useful to corporations because it can improve program management through better planning and evaluation. It can also increase the corporations understanding of its effect on the community and allow better communication regarding the value of the corporations work . Philanthropists, venture capitalists, foundations, and other non-profits may use SROI to monetize their social impact, in financial terms.

A general formula used to calculate SROI is as follows:

S = initial investment amount \begin & SROI = \dfrac\\ & \textbf\\ & SIV = \text\\ & IIA = \text\\ \end SROI=IIA×100%SIVIIAwhere:SIV=social impact valueIIA=initial investment amount

Assigning a dollar value to the social impact can present problems, and various methodologies have been developed to help quantify the results. The Analytical Hierarchy Process , for example, is one method that converts and organizes qualitative information into quantitative values.

While the approach varies depending on the program that is being evaluated, there are four main elements that are needed to measure SROI:

  • Inputs, or resources investments in your activity
  • Outputs, or the direct and tangible products from the activity
  • Outcomes, or the changes to people resulting from the activity
  • Impact, or the outcome less an estimate of what would have happened anyway

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Tips For A Successful Green Marketing Campaign

1. Connect Sustainability to Brand Equity

The social value associated with your brand or a product is your brand equity. When you participate in sustainability efforts, it shows that your company contributes to the environment positively. This can improve your brand value in the long run.

A perfect example is the Ben & Jerrys 2019 advert which showcases the companys sustainability as its core value. Their ice cream is used as a metaphor for our melting planet. This means they are using their platform to create climate change awareness.

2. Total Transparency about your Commitments

If you want to avoid greenwashing, communicate every commitment youre making clearly without leaving anything out. Deception leads to losing brand loyalty in the process.

An excellent example of a company that communicates its commitments clearly is LEGO. They have been involved in honest green marketing. For instance, in 2015, they announced that they want to become sustainable and committed $150 million on its green efforts in the next 15 years.

Then, they created a separate website that details their actionable steps and their sustainability efforts in a simple and easy-to-understand manner.

3. Make Sustainability a Business-wide Initiative

Patagonia is a brand that is doing this right. They disclose everything they do that impacts the environment and even call out those dishonest green claims, the clothing industrys irresponsible practices, and the culture of overconsumption.

Translations Of The Guide

Solution Social Return on Investment (SROI)

The Guide is now also available in 10 different languages including Russian, Japanese and Portuguese. Browse and download the full selection from the Social Value International website.

Social Value UK is the national network for anyone interested in social value and social impact.

We work with our members to increase the accounting, measuring and maximising of social value from the perspective of those affected by an organisations activities, through our Social Value Principles. We believe in a world where a broader definition of value will change decision making and ultimately decrease inequality and environmental degradation.

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What Factors Go Into Calculating Social Return On Investment

Social return on investment is a method for measuring values that are not traditionally reflected in financial statements, including social, economic, and environmental factors. They can identify how effectively a company uses its capital and other resources to create value for the community. While a traditional cost-benefit analysis is used to compare different investments or projects, SROI is used more to evaluate the general progress of certain developments, showing both the financial and social impact the corporation can have.

How Social Returns On Investment Works

SROI accounts for the stakeholders view of impact and places financial proxy values on those impacts that stakeholders identify that in typical cases do not have market values. The purpose of SROI is to include people values that are often left out from the financial statements to help in resource allocation decisions.

Corporations use social returns on investment to evaluate, plan, and improve the management of different social and environmental programs.

When they understand the social returns on investments, the stakeholders can communicate better the effect the corporation is making to the community both internally and externally.

That means the venture capitalists, foundations, philanthropists, and other non-profit can understand their social impact on financial values.

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Key Statistics About Social Media Roi

Are you wondering what tracking revenue looks like for other marketers? Here are four social media ROI stats that will add context to your ROI measurement efforts:

  • $48.94B is expected to be spent on paid social advertising in the US alone in 2021 – a 21.3% YoY increase.

  • Only 34% of surveyed marketers were confident in their ability to measure their success on social media, while 30% did not feel like they were able to measure their performance at all.

  • 83% of people say Instagram helps them discover new products, and 81% say it helps them research products and services.

  • 54% of Gen Z say social media is their top influence channel, even ahead of websites.

But How Do You Measure The Social Returns On Investment

4 Ways to Measure Social Media ROI | The Journey

Social returns on investment are principles that evaluate the value of companies social, economic, and environmental activities not conventionally reflected in the typical financial analysis.

Different entities use this SROI principle to measure their impact and determine if they effectively use their capital and other resources to create value for the community.

Also, the principle helps identify where they need to improve or enhance the performance of their investments.

SROI offers information about actual and planned changes, quantitative, qualitative, and financial information on which to base social service decisions.

A consistent quantitative approach has been developed to help understand and manage the organizations impacts, projects, business, organization, policy, or fund.

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How To Measure Social Value

There are a number of approaches to measuring social value and one of the most effective approaches is the Social Return on Investment framework. This approach allows us to work with stakeholders to understand what has changed in their lives and value those changes.

Based on 7 principles SROI allows us to compare the benefits we create to the relative costs of producing them. Yet, importantly it is not just about producing a number it is perhaps best thought of as a story of change with both quantitative and qualitative evidence.

What is SROI?

SROI is not a new approach or concept. It is built on well-established evaluation approaches and on health and environmental economics. It focuses on the:

  • What is the problem we are trying to solve?
  • What is the solution to the problem?
  • Who changes as a result of activities?
  • How do they change?
  • How do we measure the changes?
  • How much of each change happened?
  • How long will it last / how long will we measure?
  • What is the relative importance of the different changes?
  • How much is caused by us?
  • Which changes are important enough for us to manage?
  • The involvement of stakeholders underpins the whole process of SROI. By asking people what has changed for them, we can understand the positive and negative outcomes of our work.

    Whether it is to help you in tendering or funding applications, attracting great people to work with you, or being able to improve the social impacts of your work, SROI can help you.

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    What Approaches To Measuring Social Value Are Available

    There are a plethora of approaches to measuring return on social value investment available and some organisations, like social enterprises use different ones depending on circumstances. It is beyond the scope of this brief guide of to provide detailed explanations or indeed to provide other alternatives, but we have given an overview of each approach and links to the originating web sites should you require further information. The one you select will depend on a variety of things, including time available, resources, availability of data, access to stakeholders, nature of your social value, when you need the report by and so on. One important point to note is that regardless of which approach you to decide upon, most are designed for larger organisations and may either be unsuitable or need to be adapted for SMEs.

    If you would like advice on which one to use and support with the process then simply, get in touch!

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    What Resources Are Needed

    Leadership

    The organisation must have buy-in to the process at a senior level to ensure that the process is properly resource. This can be achieved by establishing a steering group early into the process.

    Proficiencies or skills

    Skills in measuring long-term outcomes can help to make the process easier. If intending to follow through to develop the social return on investment calculation, it is useful to have some experience of using MS Excel and working with numbers.

    Staff time

    Staff time to complete an SROI analysis is variable, depending upon the quality of information the organisation already collects and the scope of the analysis.

    Courses, support, and information

    Courses are available that provide a step-by-step introduction SROI . NEF Consulting offers two-day courses that lead to accreditation as an SROI practitioner.

    The Office of the Third Sector project has funded the publication of a guide to SROI, which is available to download from the nef or the SROI UK Network websites.

    Some business schools social entrepreneurship programmes may offer modules on measuring social value as part of their social entrepreneurship modules. The measurement of SROI is part of judgement criteria for applicants to the Global Social Venture Competition open to MBA students and alumni.

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