Governance & Policy
Social Return on Investment (SROI)
Definition
Social return on investment is a principles-based method for measuring and accounting for the value created by an activity, expressed as a ratio of monetised social, environmental and economic outcomes to the investment required. Developed from cost-benefit analysis and REDF's work in the 1990s, and codified by Social Value International's seven principles (involve stakeholders, understand what changes, value what matters, only include what is material, do not over-claim, be transparent, verify the result), it produces both a narrative of change and a headline ratio.
References
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This reference provides supporting context for how “Social Return on Investment (SROI)” is defined and used.
Overview
How it is used
The method structures social enterprise reporting, funder evaluation, public commissioning business cases and impact verification in social investment.
Why it matters
SROI is the most widely taught attempt to put social value on the same ledger as financial cost — imperfect monetisation being better than invisible value.