Understanding social return on investment
The social return on investment (SROI) methodology is a principles-based approach that values change for people and the environment that would otherwise not be valued. It assigns monetary value to traditionally non-valued things such as the environment and social value. SROI is used in developing policies and principles used by Family and Community Support Services Calgary.
How SROI is used
SROI can be used as a forward planning framework, for day-to-day project management and as a tool to evaluate results. As a communication tool, SROI offers a common language between those who are familiar with the value of a project, program, organization or policy, and stakeholders with less information or understanding.
An SROI analysis assigns financial values to social and environmental change wherever possible. Since it is a story and not a number, the value presented is then combined with of change that cannot have a dollar value assigned them, so that a complete expression of value creation is communicated. The story should show how you understand the value created by the activities you are engaged in, how you can demonstrate the value of your efforts and how you manage the value created.
Calculating SROI
SROI illustrates the value of change to individuals, families and community circumstances by expressing the value of that change in a dollar value wherever possible. An SROI is a combination of social, financial and environmental value. It's designed to ensure the perspectives of all stakeholders are taken into account.
Social value is created in many different ways, for example:
- Increased community cohesion
- Improved education levels
- Improved quality of life
- Increased self-confidence
- Environmental improvement
- Increased job prospects
- Expanded social networks
- Increased social inclusion
- Improved health
The ways to give a dollar value to a portion of social value created include, but are not limited to, the following five broad categories of change:
- Cost reallocation by diverting need for public support or human services so another Calgarian can access that same support or service or by connecting an individual with a service they wouldn't have otherwise accessed;
- Increases in household income.
- Increases in taxes paid to any level of government.
- Cost savings resulting from reduced public support or service provision.
- Improvements in personal well-being that are difficult to express in monetary terms, but equally as important (e.g. improved well-being, self-confidence etc.).
Examples of social value indicator creation
FCSS and partners have been identifying indicators of social value creation, or financial proxies (values), since 2008. This resource is now available for use in the development of SROI analysis. The intent is to gradually expand the list of financial proxies as more case studies are completed and to have this as a resource for the human services sector in Calgary and across Canada. All potential partners are welcome to contribute to this initiative.
This is a link to an inflation calculator. In the case of needing to use older indicator data, this inflation calculator can be used to determine the value of an indicator today.
Is SROI complicated?
SROI does not have to be complicated to be effective. In fact, FCSS is supportive of the simplest, straight-forward approach possible so its funded agencies can present a compelling story of their work's value to all interested audiences.
Why FCSS is interested in SROI
Emphasis on social service agency reporting on outcomes and impact is only expected to increase. FCSS believes the work of its funded agencies improves the lives of Calgarians. SROI can be an effective tool to assist agencies to express their work's value.
Project planning, evaluation of results and communication of achievements – these three elements are the foundation of excellence in program delivery, on-going quality improvements and clear reporting of results. The real benefit of SROI becomes clear when it is used as a planning and strategy framework and the analysis is used to evaluate results.
Ultimately, FCSS shares the same goal with all of our funded agencies, to achieve improvements in the circumstances of individuals, families and communities across Calgary. SROI analysis is one tool among many that can assist with understanding the impact of our efforts.
How this work in SROI began?
FCSS supported two SROI Facilitated Learning Groups in 2008 and 2009. These groups brought together senior managers from social service agencies seeking to become more effective at demonstrating their social value proposition.
Case studies from these Learning Groups are posted on this web page. FCSS involvement in the SROI learning groups is part of an ongoing strategy to support agency skill-development in order to effectively respond to increasing and varied demands to report on programming results and impact.
Case studies
Future support for SROI developments
FCSS Calgary is exploring with other local, provincial and national funders and other stakeholders the potential for establishing a national SROI network. This network would support the development of standards of practice, third party assurance of SROI cases and the sharing of learning and development of the methodology across the country.
Will SROI reporting become mandatory?
FCSS Calgary does not anticipate that conducting an SROI analysis will become a mandatory element for reporting back to us on annual agency activities. However, we will continue to encourage our agencies to consider including an SROI analysis into their evaluation and reporting processes because of the insight SROI offers into an agency's ability to create value far beyond the investment made into their annual activities.
Further information
For more information on SROI, contact FCSS Calgary or The SiMPACT Strategy Group at 403-444-5683 or simpactstrategies.com.
You can also contact FCSS.
