Social Return on Investment analysis, or SROI analysis, offers a way of measuring in quantifiable terms the non-financial value of an investment, such as its impact on society or the environment. SROI therefore provides philanthropists with a method for assessing the impact of their investment (over and above its cost), allowing potential donors to compare the relative efficiency of different charitable organisations and also alleviating philanthropists’ concerns of charity waste. SROI was pioneered by US Venture Philanthropy Fund REDF in the 1990s and, with increased interest in sustainability and social impact, it has grown in popularity and has recently been adopted in the political sphere. Relative to metrics for assessing financial ROI, SROI analysis is in its infancy - this Wall Street Journal article explores some of the teething problems and areas of controversy with SROI analysis, with the help of several leading executives and consultants in the third sector. One theme of the article is scepticism about the applicability of SROI analysis to decision processes: as Antony Ross of Bridges Social Entrepreneurs Fund puts it, “Social return (on investment) is not necessarily good at choosing between causes, although it can be useful to assess individual projects.”
Read the full article on The Wall St Journal here.
