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Importance of SROI

For those getting involved in a social enterprise, or those thinking of setting one up, a key area to look at is Social Return On Investment or SROI. Those involved in a commercial start-up would be familiar with ROI or Return on Investment. SROI should express social value in monetary terms, which allows a relative view of the impact of the activities to be made. This is of particular importance to investors or financial stakeholders in the organisation. This allows a social enterprise to concentrate on critical impacts, rather than inputs or indeed outputs. It is not always easy to do which is why at the European Venture Philanthropist Association (EVPA) conference last year there was a lot of discussion about indicators of impact.

Use of SROI is not just for the ‘traditional’ social enterprise sectors such as employment or poverty but is often being applied now by arts and culture organisations. With government funding being cut there is increasing competition for funding and a good SROI analysis can be a strong indicator of success. As social enterprises are created to solve or usually alleviate a social problem, therefore actual impact is critical. But in many cases measuring an impact particularly those involved in human beings is difficult – when do we take the impact point? For example if the impact is in young people when do we measure the impact? This leads to a mixture of impact measures some of which may not be possible to be communicated in mere numbers.

One of the aims of this blog is to disseminate thought leadership, practical examples and information about the sector. We will be concentrating on SROI in the coming months in particular, as its use will be a critical development across the sector in the coming months and years.

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  1. February 24, 2010 at 17:14

    Speedpak, the company I work for, is a social enterprise that provides commercial work experience, training and support to unemployed people from Dublin’s Northside. We have been looking at ways in which we can demonstrate a SROI so that we, our funders and all other stakeholders can see the value of what we do. Since 2008 with the help of a research company, we have developed a comprehensive, robust monitoring system to measure progress or “distance travelled” at Speedpak in relation to education, work skills, attitudes and behaviours. For us it is more than an SROI tool, it has become a management/evaluation tool that measures the impact of a particular work experience, training or support intervention. These type of systems, which marry quantitative and qualitative data give a much more comprehensive picture of the work and depth of intervention and supports provided by social enterprises. For us, being able to demonstrate the ‘internal’ progression that people make, will be even more important at a time where jobs in the labour market are in short supply.

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