NPC’s paper explores the issues funders need to be aware of around social return on investment.
SROI for funders
Social Return on Investment (SROI) is a type of economic analysis that provides a framework for measuring social value. Putting a financial value on social outcomes can help funders to find out if an organisation is worth investing in, understand the impact that grantees are having, and identify where organisations need help.
For SROI to be really useful, funders have to consider whether they find value expressed in financial terms compelling, and whether their grantees’ other stakeholders will find an SROI analysis useful. Many organisations undertake an SROI to attract funding, but it is worth checking first that other potential funders would be interested in the charity’s results being presented in this way.
Funders can also apply SROI to themselves, as a way of understanding the value they add to their grantees beyond the money they disburse. Yet as funders’ impact can be difficult to quantify, they have to consider to what extent their full value will be captured by an SROI, and may choose instead to use elements of the SROI framework to highlight particular areas of impact.
In this paper, written specifically for funders, we seek to offer a starting point for discussion about how and when SROI is best used. It complements an earlier paper, aimed at a wider audience.
For SROI to be really useful, funders have to consider whether they find value expressed in financial terms compelling, and whether their grantees’ other stakeholders will find an SROI analysis useful.