Social Return on Investment measures the social value that a Social Impact business creates by turning their impact into numbers that everyone can understand. This helps them tell a stronger story as well as expand their ideas about their own impact.
Social return on investment, also referred to as SROI, was coined in the early 2000s. This concept takes a common term of Return On Investment, and applies it to Social Impact that goes beyond the bottom line of that company and relates its impact to the community. This is a very individualized process that is based on information being gathered by the organization, research and data to support the value of that impact, and then a full report on how that impact is measured and applied. Below is the abstract of our most recent SROI study.
This innovative form of measurement is used to determine the extra-financial value (i.e., social and environmental impact not currently reflected in conventional financial accounts). This measurement is used to determine the additional value of investment related to the impact that a socially innovative businesses decision has to a community related to traditional resources invested. For example: Bridge to Justice, a social enterprise law firm in Boulder Colorado has an SROI value that shows for every $1 invested it has a $3.25 return to the community. This measurement can be used by a social impact business to evaluate impact on stakeholders, identify ways to improve performance and communicate value to the community.