Social Return on Investment: does it resonate with you?
27th January 2010
We need your views on Social Return on Investment (SROI), a technique that measures the social value of an organisation and converts it into pounds and pence. Whether you’re a seasoned SROI practitioner, are interested in the approach, or have never even heard of it, please take part in our online survey to tell us how useful the seven principles of the technique are for your organisation.
The survey
Your response will help evaluate a government-funded project that NCVO is involved in and you’ll also have the chance to win an ipod touch or a Sony Pocket e-Reader. Do the 5 minute SROI survey.
SROI in the news
SROI has been identified by the Centre for Social Justice, a think tank headed by the former Conservative Party leader Iain Duncan Smith, as a valuable framework for steering future statutory funding of services. The think tank has proposed the establishment of an independent body to measure the social return of policies and programmes. The Centre now intends to explore different ways of measuring SROI and consider how the principle could be introduced into government contracts. It has already conceded that this approach could “never be completely universal” and would need to allow for innovation and the realities of grassroots work.
The Conservatives’ interest in the voluntary and community sector’s ability to deliver and demonstrate results has also been emphasised by Oliver Letwin, chair of his party’s policy review, at NCVO’s recent Campaigns Conference.
“The voluntary sector is the foundation step of what we want to achieve,” Letwin said, adding the sector should be paid by results or grants, not "process-based, micro-managed contracts".
Comments
I attended a seminar about Measuring Social Impact recently, and heard for the first time about the huge initiative that SRoI appears to be. I may not have all the facts right (so, apologies for that), but what I heard alarms me. My understanding is that SRoI "attempts" to quantify the savings that could be made by investing £1 in a charitable project - in other words, what Mark is trying to get to above. I completely agree that it is a laudable concept, but I am also deeply suspicious about whether it is possible to attempt it in a meaningful way or with any hope of accuracy. I understand that a lot of effort has gone in to developing complex models that attempt to do just that - but the variables are immense, and the chances of achieving a truly useful answer must surely be remote. However - the attraction of an SRoI "answer" is very obvious, and any charity that can afford the time and money to pay an accredited SRoI practitioner to calculate its SRoI will have a winning card in any competition for funding or support; because the funder will always be attracted to the notion of a scientifically calculated "saving" that arises from investing in that project. I am very worried that funding and support decisions will be made on the basis of who can afford to calculate their SRoI, and also those who can afford to pursue the answer to the nth degree in the quest for a spectacular saving. Intuitively, I just don't think it is possible to present "savings" so (apparently) accurately. I have read that SRoI numbers should not be taken as pure "fact", but it is human nature that they will be - what funder would decide in favour of a project that does not present its SRoI, compared to one that does? Or one that has an SRoI of £5, compared to one of £20? Subjectivity, policy change, uniqueness, technological change, the impact of averaging and assumptions - all these and more will have an impact on the SRoI result surely. Can anybody reassure me about my concerns?
Sally’s posting on NCVO 3rd Sector Foresight discussion, November 2009.
Hi Sally
You raise some really interesting points here and I'm sure that many others will be sharing your very valid concerns.
As part of the Office of the Third Sector-funded Measuring Social Value project - which has commissioned the survey mentioned in the news item above - NCVO and other project partners are delivering sessions around the country helping charities to better understand what their full social value is, and why it's so important.
During these sessions, we're introducting SROI as an example of the techniques which can help to identify social value, or impact. Obviously, SROI also offers something extra: the option to convert this value into monetary terms.
Whether organisations choose to take this extra step should really depend on who they're trying to communicate their value to. If your audience is money-minded, then it may be worthwhile. But for other audiences, different ways of demonstrating your organisation's worth will be more appropriate. This process of choosing how to present your value is perhaps best summed up by something we at NCVO call impact marketing.
But we appreciate that organisations won't always have the freedom or the self-confidence to negotiate with their funders/commissioners about what information to report on and how to provide it. We'd say that it's always worth a conversation with them about this, though, because we know that some organisations have found that their funders have welcomed the chance to receive more meaningful outcomes data about the projects they support. Take a look at this case study from Magpie Dance and Connexions, for example: www.ncvo-vol.org.uk/strategy-impact/learn/impact/case-studies
You're also absolutely right to be wary of the potential dangers of reducing everything down to a single number - whether that's money or percentages. If we do see more funding streams requiring the use of SROI in future, it'll be vital for commissioners and funders to understand the importance of looking at the story behind the figures - and vital that they take the time to do so.
And while SROI users need to be able to present a credible figure for their social return ratio, they also need to be able to explain in a convincing and engaging way how they reached that figure - which is something that lies at the heart of the seven principles of the technique.
The Measuring Social Value project is working on ways to standardise SROI and is currently developing an online database of indicators and financial proxies to help people doing SROI assessments. We'll keep the Strategy and Impact network posted on this as things progress.