Investing in impact: Developing Social Return on Investment report now published

This report is the culmination of a two-year pilot project, designed to test and develop the effectiveness of Social Return on Investment (SROI) as a way of measuring the impact of investment into social enterprises and other third sector organisations.

The full report can be downloaded from the document library by following link above.

Social Return on Investment (SROI)

SROI is a process of understanding, measuring and reporting on the social value that is created by organisations. Originally pioneered in the US, SROI has been adapted and developed for the UK context in recent years by a number of specialist researchers and think-tanks.

In 2005, the international SROI Network agreed a framework for the use of SROI and based on these standards, nef (the New Economics Foundation) published a guide for organisations and SROI practitioners in the UK, which set out a particular approach to carrying out SROIanalysis. In practice, however, very few SROI analyses had been carried out with organisations in the UK to date.

Social investment

In Scotland in recent years interest from funders and policy makers has grown around social investment - where financial resources are invested into an organisation in order to generate some kind of non-financial, but socially beneficial, return. This may be the only return on investment, or it may be part of a blend of financial and social return.

In particular, the Scottish Government, as part of the development of its strategy to support social enterprise  was keen to explore how impact measurement could be embedded in any future approaches to investing into social enterprise.

Pilot project

Drawing these elements together, the purpose of this pilot project was to build on the approach developed by nef, test it with a wider range of organisations and impact areas, develop methods for valuing 'soft outcomes', seek to make SROI more accessible to organisations and their stakeholders and engage with funders and investors to look at the issues around their use of SROI.

Throughout the project, and in this report, a distinction was drawn between using SROI for evaluative purposes and using SROI as a forecasting or predictive5 tool.