SROI Discussion


A guide to

Social Return on Investment

January 2012

in association with

“For FRC Group using SROI has been a fascinating

process which has fine tuned our understanding of

the impacts that are achieved as we improve our

performance, and exposed areas in which we can

do more.”

Verity Timmins, Impact Manager, FRC Group

“At Impact Arts we have embraced SROI as one of our

central evaluation tools, which complements our existing

evaluation practice very well. SROI has clear benefits

for our organisation in terms of our future funding and

business development activities, as well as focusing our

day to day practice on where and how we add value.”

Susan Akternel, Innovation and Development Director, Impact Arts

“SROI has helped us develop an ongoing relationship

with our stakeholders which shows that we are listening

to their needs and we can now report how our work

impacts on their lives and the lives of others.”

Maeve Monaghan, Director, NOW Project

A guide to Social Return on Investment 3

Update to the 2009 Guide

This Guide is an update to the 2009 Guide to Social Return on Investment that was

published by the Cabinet Office. There are no changes to the principles or to the

methodology used to apply those principles within the framework. The purpose of

the update is to amend the language used so that it is more relevant for international

audiences and for different sectors and types of organisations.

A small number of typographical errors have also been corrected.

The worked example was included as an example of how those principles are applied

in practice. A supplement will be available for the worked example ‘Wheels to Meals:

one year on’ which sets out how the organisation has developed its approach to SROI

after completing an evaluation against the initial forecast.

Supplements to the Guide will be prepared from time to time and form part of the

guidance available. At the date of this update a supplement on Materiality has been

released and is available from the SROI Network website.

January 2012


The 2009 guide was written by Jeremy Nicholls, Eilis Lawlor, Eva Neitzert and Tim

Goodspeed, and edited by Sally Cupitt, with additional contributions from Sheila Durie, Jenni

Inglis, Karl Leathem, Tris Lumley and Richard Piper.

Comments, guidance and advice were also received from the advisory group and from members of

the SROI Network. Thanks to the following members of the SROI Network: Helen Fitzhugh, Adrian

Henriques, Martin Kinsella, David Marshall, Kathleen Quinn, Kevin Robbie, Stephanie Robertson,

Peter Scholten and Sara Williams.

Thanks to the following members of the advisory group: Saeeda Ahmed, Gustavo

Bagattini, Simon Berry, Amitti CanagaRetna, Andrea Chauhan, Ken Cooper, Theresa

Crawley, Elly de Decker, David Emerson, Tracy Houston, Pradeep Jethi, John Kingston,

Martin Kinsella, Alan Knight, George Leahy, Liz Liston-Jones, Joseph Lowe, Fergus Lyon,

Claire Michelet, Ralph Mitchell,

Penny Newman, Gerald Oppenheim, Akhil Patel, John Pearce, Tess Pendle, Matthew Pike, Martin

Scott, Oliver Sian Davies, Richard Spencer, John Stewart, Chris Walker, Peter Wells and Jo Wheeler.

Particular thanks also to Gustavo Bagattini and John Pearce.

A number of people and organisations have contributed to the development of SROI, started by Jed

Emerson and the Roberts Enterprise Development Fund, including nef (the new economics

foundation), Sara Olsen, Stephanie Robertson and other members of the SROI Network. The

development of SROI has been supported by, amongst others, Hewlett Foundation, the Hadley Trust,

the Adventure Capital Fund and the Equal Social Economy Scotland Development Partnership.

This update has been written by the original authors.

4 A guide to Social Return on Investment


Introduction 07

1 What is Social Return on Investment (SROI)? 08

The principles of SROI

The stages in SROI

2 How Can SROI Help You? 10

3 Who Can Use SROI? 11

Types of organisation

Skills required to analyse the SROI report

Time requirement

4 Using This Guide 13


Language used

The worked example

Resources available

5 Future Updates 15

The Guide to SROI Analysis

Stage 1: Establishing scope and identifying stakeholders 16

1.1 Establishing scope 18

1.2 Identifying stakeholders 20

1.3 Deciding how to involve stakeholders 24

Stage 2: Mapping outcomes 28

2.1 Starting on the Impact Map 30

2.2 Identifying inputs 31

2.3 Valuing inputs 31

2.4 Clarifying outputs 32

2.5 Describing outcomes 33

Stage 3: Evidencing outcomes and giving them a value 36

3.1 Developing outcome indicators 38

3.2 Collecting outcomes data 40

3.3 Establishing how long outcomes last 43

3.4 Putting a value on the outcome 45

A guide to Social Return on Investment 5

Stage 4: Establishing impact 54

4.1 Deadweight and displacement 56

4.2 Attribution 59

4.3 Drop-off 61

4.4 Calculating your impact 62

Stage 5: Calculating the SROI 64

5.1 Projecting into the future 66

5.2 Calculating the net present value 67

5.3 Calculating the ratio 68

5.4 Sensitivity analysis 69

5.5 Payback period 71

Stage 6: Reporting, using and embedding 72

6.1 Reporting to stakeholders 74

6.2 Using the results 76

6.3 Assurance 78

Resources 80

1 Format for an SROI report 82

2 Glossary 84

3 Note on cost allocation 86

4 Note on capital or loan-financed projects 91

5 Sources of support and further information 92

6 Downloads 95

7 A summary of the relationship between SROI and other approaches 95

8 The seven principles of SROI 96

9 Checklist for SROI analysis 98

10 The worked example 102

11 A blank Impact Map (provided as a loose insert

in the printed version of this guide, and also

available as a download)

6 A guide to Social Return on Investment


There is increasing recognition that we need better ways to

account for the social, economic and environmental value that

results from our activities. The language varies – ‘impact’,

‘returns’, ‘benefit’, ‘value’ – but the questions around what

sort of difference and how much of a difference we are

making are the same. Understanding and managing this

broader value is becoming increasingly important for the

public and private sectors alike. This is true whether it is civil

society organisations working to create value, Governments

commissioning and investing in activities to create social value,

investors seeking to ensure that their investments will make

a difference, or private businesses recognising both risk and

opportunity in the wider effects of operations.

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A guide to Social Return on Investment 7

All this means that it is also more important that we have some

consistency and a shared language when we talk about value.

SROI is the application of a set of principles within a framework

that is designed to help bring about that consistency, whilst

at the same time recognising that what is of value will be very

different for different people in different situations and cultures.

The first edition of this guide, which itself built on the work

of three earlier SROI guides1, was prepared as part of a three

year programme on measuring social value funded in 2008 by

the then ‘Office of the Third Sector’ based in the Cabinet Office

of the UK Government. This was delivered by a consortium

of organisations: the SROI Network, nef (the new economics

foundation), Charities Evaluation Services, the National Council

for Voluntary Organsations and New Philanthropy Capital.

In addition to this programme, the Scottish Government also

supported the development of SROI, including a database of

indicators to support SROI analysis.

The work of the SROI Network now stretches across many

different countries and continents, and this second edition of

the guide reflects that interest. We have though decided to use

only one currency symbol, for reasons of clarity and consistency,

and so have continued to use £. However, readers will be

able to find examples in various currencies and translations

of the Guide on our website. For more information on the

developments of SROI, please refer to the SROI Network


1 The SROI Framework, drafted by Sara Olsen and Jeremy Nicholls; A Guide to SROI Analysis by Peter Scholten, Jeremy

Nicholls, Sara Olsen and Brett Galimidi; and Measuring Social Value, by Eva Neitzert, Eilis Lawlor and Jeremy Nicholls (new economics foundation).

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8 A guide to Social Return on Investment

1 What is Social Return on Investment (SROI)?

Every day our actions and activities create and destroy value; they change the world

around us. Although the value we create goes far beyond what can be captured in

financial terms, this is, for the most part, the only type of value that is measured and

accounted for. As a result, things that can be bought and sold take on a greater

significance and many important things get left out. Decisions made like this may

not be as good as they could be as they are based on incomplete information about full


Social Return on Investment (SROI) is a framework for measuring and accounting for

this much broader concept of value; it seeks to reduce inequality and environmental

degradation and improve wellbeing by incorporating social, environmental and

economic costs and benefits.

SROI measures change in ways that are relevant to the people or organisations that

experience or contribute to it. It tells the story of how change is being created by

measuring social, environmental and economic outcomes and uses monetary values to

represent them. This enables a ratio of benefits to costs to be calculated. For example,

a ratio of 3:1 indicates that an investment of £1 delivers £3 of social value.

SROI is about value, rather than money. Money is simply a common unit and as such is

a useful and widely accepted way of conveying value.

In the same way that a business plan contains much more information than the

financial projections, SROI is much more than just a number. It is a story about change,

on which to base decisions, that includes case studies and qualitative, quantitative and

financial information.

An SROI analysis can take many different forms. It can encompass the social value

generated by an entire organisation, or focus on just one specific aspect of the

organisation’s work. There are also a number of ways to organise the ‘doing’ of an

SROI. It can be carried out largely as an in-house exercise or, alternatively, can be led

by an external researcher.

There are two types of SROI:

• Evaluative, which is conducted retrospectively and based on actual outcomes that have already taken place.

• Forecast, which predicts how much social value will be created if the activities meet their intended outcomes.

Forecast SROIs are especially useful in the planning stages of an activity. They can help

show how investment can maximise impact and are also useful for identifying what

should be measured once the project is up and running.

A lack of good outcomes data is one of the main challenges when doing an SROI

for the first time. To enable an evaluative SROI to be carried out, you will need data

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A guide to Social Return on Investment 9

on outcomes, and a forecast SROI will provide the basis for a framework to capture

outcomes. It is often preferable to start using SROI by forecasting what the social value

may be, rather than evaluating what it was, as this ensures that you have the right data

collection systems in place to perform a full analysis in the future.

The level of detail required will depend on the purpose of your SROI; a short analysis

for internal purposes will be less time-consuming than a full report for an external

audience that meets the requirements for verification.

The principles of SROI

SROI was developed from social accounting and cost-benefit analysis and is based on

seven principles. These principles underpin how SROI should be applied and are set

out in full in the Resources Section (see page 96-98). The principles are:

• Involve stakeholders.

• Understand what changes.

• Value the things that matter.

• Only include what is material.

• Do not over-claim.

• Be transparent.

• Verify the result.

Like any research methodology, SROI requires judgement to be used throughout the

analysis and there is no substitute for the practitioner’s judgement. This guide flags

up points in the process where judgements are required, and where decisions about

materiality need to be taken. For example, materiality is a concept that is borrowed

from accounting. In accounting terms, information is material if it has the potential to

affect the readers’ or stakeholders’ decision. A piece of information is material if missing

it out of the SROI would misrepresent the organisation’s activities. For transparency,

judgements about what is material should be documented to show why information has

been included or excluded. We encourage you to become familiar with the concept as it

will inform your decisions throughout the process.2

The stages in SROI

Carrying out an SROI analysis involves six stages:

1 Establishing scope and identifying key stakeholders. It is important to have clear

boundaries about what your SROI analysis will cover, who will be involved in the

process and how.

2 Mapping outcomes. Through engaging with your stakeholders you will develop an

impact map, or theory of change, which shows the relationship between inputs, outputs

and outcomes.

2 Guidance from AccountAbility recommends that you consider the views of your stakeholders, societal norms, what your peers

are doing, financial considerations, and organisational policies and objectives as criteria for judging materiality.

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10 A guide to Social Return on Investment

3 Evidencing outcomes and giving them a value. This stage involves finding data to

show whether outcomes have happened and then valuing them.

4 Establishing impact. Having collected evidence on outcomes and monetised them,

those aspects of change that would have happened anyway or are a result of other

factors are eliminated from consideration.3

5 Calculating the SROI. This stage involves adding up all the benefits, subtracting any

negatives and comparing the result to the investment. This is also where the sensitivity

of the results can be tested.

6 Reporting, using and embedding. Easily forgotten, this vital last step involves

sharing findings with stakeholders and responding to them, embedding good

outcomes processes and verification of the report.

SROI has many similarities with other approaches and these are set out in the

Resources section (page 80).

2 How SROI Can Help You

An SROI analysis can fulfil a range of purposes. It can be used as a tool for strategic

planning and improving, for communicating impact and attracting investment, or

for making investment decisions. It can help guide choices that managers face when

deciding where they should spend time and money.

SROI can help you improve services by:

• facilitating strategic discussions and helping you understand and maximise the social value an activity creates;

• helping you target appropriate resources at managing unexpected outcomes, both positive and negative;

• demonstrating the importance of working with other organisations and people that have a contribution to make in creating change;

• identifying common ground between what an organisation wants to achieve and what its stakeholders want to achieve, helping to maximise social value;

• creating a formal dialogue with stakeholders that enables them to hold the service to account and involves them meaningfully in service design.

SROI can help make your organisation more sustainable by:

• raising your profile;

• improving your case for further funding;

• making your tenders more persuasive.

3 Evidencing outcomes and giving them a value. This stage involves finding data to show whether outcomes have happened and then valuing them.

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A guide to Social Return on Investment 11

SROI is less useful when:

• a strategic planning process has already been undertaken and is already being implemented;

• stakeholders are not interested in the results;

• it is being undertaken only to prove the value of a service and there is no opportunity for changing the way things are done as a result of the analysis.

Comparing social return between different organisations

Organisations work with different stakeholders and will have made different

judgements when analysing their social return. Consequently, it is not appropriate

to compare the social return ratios alone. In the same way that investors need more

than financial return information to make investment decisions, social investors will

need to read all of the information produced as part of an SROI analysis. However, an

organisation should compare changes in its own social return over time and examine

the reasons for changes. Organisations should also endeavour to educate funders and

investors on the importance of putting the ratio in the context of the overall analysis.

Certain situations require a different approach

This guide covers most situations. However, for situations where there is investment in

assets, or the use of debt finance, there is a note in the Resources section (page 91).

3 Who Can Use SROI?

Types of organisation

SROI has been used by a range of organisations across the not for profit (or voluntary),

public and private sectors, including those that are small, large, new and established.

Not for profit organisations and social enterprises

Not for profit organisations and social enterprises can use SROI as a management tool

to improve performance, inform expenditure and highlight added value. These may be

start-up organisations developing business plans or established organisations. It can

be used for analysing the value arising from trading activities whether the organisation

is selling to the general public, to the public sector or to other businesses.

Private businesses

Both large and small businesses can use SROI to assess risks and opportunities arising

from the impact of their products and services on their stakeholders e.g. employees,

suppliers, customers, the environment and their local communities.

Small businesses can also use SROI to assess risks arising from the impact of the

business on stakeholders and to identify ways to align their business objectives with

wider societal objectives, which may result in opportunities for new, or improved

products or services.

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12 A guide to Social Return on Investment


Funders that invest to create social value can use SROI initially as a way to help them

decide where to invest, and later to assess performance and measure progress over

time. The approach allows an investor to assess the applicant’s understanding of, and

commitment to, creating social environmental or economic value.

Funders that are operating under responsible investment criteria can use SROI to

ensure that the businesses in which they invest are managing the most material social,

environmental and economic risks.

Other funders can use SROI to assess social, environmental and economic risks that

will, or may occur, as a result of an investment and which could affect the returns.


Public service commissioners are in the business of securing social value that is

delivered by third parties. The mechanisms by which that value is secured may differ

but, by measuring that value, better decisions can be made. SROI can be used at three

points in the commissioning process:

• Programme/pre-procurement – forecast SROI analyses can be used at the strategic planning stage to decide how to set up a programme, for market testing and to

determine scope and specification of contracts.

• Application/bidding – forecast SROI analyses can be used to assess which applicant or bidder is likely to create the most value. (Where applicants or bidders are already

delivering the intervention that is being commissioned, evaluative SROI can be used

at the application/bidding stage).

• Monitoring and evaluation/contract management – evaluative SROI analyses can be used to monitor the performance of a successful contractor.

Using SROI to inform public sector commissioning decisions is in line with value for

money appraisals.2 Value for money assessments are generally based on the ‘optimum

combination of whole-of-life costs and quality (or fitness for purpose) of the goods or

service to meet the user’s requirement’. These costs and benefits must include ‘wider

social and environmental costs and benefits for which there is no market price’.3

For developing policy

SROI can be used by organisations that develop public policy, for which recognition

of social value is important. For example, it has been used to compare the value of

investing in support-focused community penalties for women offenders as opposed to

sending them to prison4 and to assess the value (or costs) of an additional runway at

Heathrow airport.5

2 3 Further guidance on the use of SROI in public sector commissioning

is available on the SROI Network website, 4 Unlocking value, nef 5 Grounded: a new approach to valuing Runway 3, nef

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A guide to Social Return on Investment 13

Skills required to analyse the SROI report

Carrying out an SROI analysis requires a mixed set of skills. It will be helpful if

you have prior experience of engaging stakeholders, outcomes measurement or

evaluation, using Microsoft’s Excel software and basic accounting skills. Even if you

have experience in these areas, it may still be helpful to attend a training course. You

can also bring in help from within your organisation, although, in the absence of this,

you may need to arrange some external support.

Time requirement

Giving exact guidance on timescales is difficult because it is contingent on many

factors, including scope, skills level and data availability, and whether you will be using

the report for internal management or external reporting purposes.

All new measurement systems take some resources to implement. However, there are

ways to keep the resources you require to a minimum. You could start with a project

or contract rather than the whole organisation, or you could start with a forecast SROI

analysis, especially when looking at a new business or a new activity. A forecast

SROI analysis for internal management purposes, for example to help design

information systems, would not need to be as detailed as a report you were planning

on making public.

An evaluative SROI analysis will be more time-consuming and could take several

months, but the time required is much reduced if the organisation already produces

good outcomes data or has a system of social accounting in place. However, it can take

time to introduce systems to assess outcomes. Doing a forecast SROI analysis first can

help one plan and prioritise the introduction of new information and outcome

assessment systems.

4 Using this Guide

This guide goes through the SROI process in stages. The completion of a table which

maps out the analysis is central to the process. This table is called an Impact Map.

There is a loose insert of the Impact Map included in the printed version of the guide,

and copies are also available for download from the SROI Network website,

If you are new to SROI, it is a good idea to read the whole Guide before starting. This is

important because although it works through the process step by step, some of these

steps can be completed at the same time, so reading the whole guide first may save

you time later. Then return to the beginning and start working your way through. Bear

in mind that not everything in the Guide will be relevant to your analysis.

If you have some experience in SROI you may wish to use the Guide as a reference

tool. Social investors and commissioners interested in using SROI could focus on the

introduction, the principles and specific guidance for investors and commissioners

from the SROI Network website,

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14 A guide to Social Return on Investment


You will see these symbols throughout the guide:

Time for you to put what you have learned into

practice. Over to you!

The caution symbol warns you about

common mistakes.

The return symbol highlights key points where

you may decide you need to go back to an

earlier step in the process.

It is important to remember that SROI is a

framework based on principles. Often there

are no right and wrong answers and you will

need to use your judgement to respond to the

question appropriately. The main points

at which this is required are highlighted with

this symbol.

‘Involve’. This symbol highlights points where

you should involve your stakeholders to refine

and confirm your decisions.

Language used

For simplicity we have used the following language throughout this guide:

• ‘Social value’ is used to describe social, economic and environmental value.

• ‘The social return of your activity’ is used rather than ‘the social return of your organisation’. If you are analysing the social return of all your activities then this

would be the same as the social return of your organisation.

• Where ‘impact’ is used we mean your outcomes after taking into account what would have happened anyway, the contribution of others and the length of time the

outcomes last.

• The guide is written for ‘you’ although ‘you’ may be a single person or a team.

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A guide to Social Return on Investment 15

Wheels-to-Meals – The worked example

Throughout the guide we will use the fictional example of Wheels-to-Meals, which

is presented in this format.

This is a hypothetical example. It is used to explore the principles and processes of

SROI. Some elements of the Impact Map have been included to support learning and

provide an appropriate example.

Wheels-to-Meals is a business that developed from a meals on wheels service

provided by volunteers. Increasingly, it realised that its clients not only needed the

good hot meals it provided but, equally important, the contact and socialising with

the volunteers who brought them. Wheels-to-Meals provides a luncheon club to

eligible older and disabled local residents and the majority of the volunteers are

also elderly. The luncheon club is delivered with the same resources as a meals on

wheels service, except that residents are transported to meals, rather than the other

way round. The service includes provision of hot, nutritious lunches, transport,

opportunities to socialise, and mild exercise. The service is available for up to 30

residents, 5 days a week and 50 weeks a year.

Resources available

There is a loose Impact Map enclosed in the printed version of this guide, which is

also available for download from the SROI Network website,

The Resources section on page 80 also includes:

• The format for an SROI report.

• A glossary.

• A note on cost allocation.

• A note on capital or loan-financed projects.

• Sources of support and further information.

• Downloads.

• A summary of the relationship between SROI and other approaches.

• The seven principles of SROI.

• A checklist for SROI analysis – you can use this to tick off each step as you work through.

• An impact map for the worked example.

5 Future Updates

Like financial accounting and other ways of measuring, SROI is subject to further

refinement and development. Users of this guide should check the website for updates to the methodology. Suggestions for changes can

be made through the SROI Network website.

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16 A guide to Social Return on Investment

Stage 1:

Establishing scope

and identifying