Measuring Social Return
The Scottish Government highly values the contribution of the Third Sector to increasing sustainable economic growth in Scotland. Impact measurement such as social return on investment (SROI) will help the third sector to become increasingly enterprising and will be a valuable tool in demonstrating the effectiveness of the Third Sector and the positive impact it can have on the lives of people around Scotland.
The Scottish Government has supported, between 2009 and 2011, a project to develop, promote and support the use of a standard form for measuring social return on investment (SROI). SROI is a way in which an organisation can look at what it does, measure the difference that activity makes to people's lives, and tell a robust story about that difference or impact. It uses financial comparators or 'proxies' to report on the impact made.
The project :
· developed widespread awareness and knowledge of SROI among third sector organisations, funders, commissioners and accounting bodies;
· promoted the increasing adoption, acceptance and use of SROI as a reporting method by third sector organisations;
· supported increasing numbers to have the ability and understanding to take forward SROI on their own behalf;
· enabled third sector organisations to demonstrate their impact clearly;
· assisted funders and commissioners to make more intelligent investment or purchasing decisions;
· increased the accessibility of SROI for all parties; and
· ensured that the SROI methodology is robust, while taking on board the best of other impact measurement methodologies, such as social accounting.
The project was run by a consortium led by Forth Sector and SROI UK, with sub-contractors Haldane Associates, the Association for Chief Officers of Scottish Voluntary Organisations (ACOSVO), the Social Enterprise Academy (SEA), the Social Audit Network (SAN), the new economics foundation (nef), New Philanthropy Capital (NPC) and Charities Evaluation Services (CES).
The commitment to develop the measurement of social return was made within the Enterprising Third Sector Action Plan, published by the Scottish Government in June 2008. Included within the project was a major engagement programme, with seminars, workshops, pilot studies and informational articles, as well as the production of an interactive website, indicator bank and training programme. The legacy from the SROI Project in terms of information, support and guidance (including a number of case studies) for funders, commissioners and third sector organisations is now available through Forth Sector Development's Social Impact Scotland website ( www.socialimpactscotland.org.uk) together with information on a range of other social impact measurement tools.
The SROI project was run alongside a complementary project, Measuring Social Value, which commenced in November 2008, funded by the UK Government's Office of Civil Society (OCS) within the Cabinet Office. OCS's project, in particular, had responsibility for the standardisation of the approach to using SROI, and the production of guidance on that basis. A joint evaluation of the OCS Measuring Social Value Project and the Scottish Government's SROI Project was recently completed by Hall Aitken.
Over recent years, the third sector has been growing, concurrently with demand for the services and additional value it provides. In this context, it is becoming increasingly important to find tools with which the impact of third sector work can be valuated, measured and proven. A range of tools is available, of which two have become increasingly significant over recent years: Social Return on Investment (SROI) and Social Auditing and Accounting (SAA).
In 2005, a European-funded EQUAL project with match funding from the Scottish Government commissioned Forth Sector Development to take forward a pilot project on SROI, resulting in the report Investing in Impact, published in 2007. The report concluded that SROI could be a valuable tool to assist the third sector in measuring and demonstrating its own value and impact, but suggested that more needed to be done to improve time and resource efficiency and accessibility. On that basis, and in the context of increasing interest in SROI from across the sector and throughout the UK, the Scottish Government chose to support and improve SROI within the SROI Project.
What is SROI?
SROI is an impact measurement tool which looks at the complete story of an organisation's outcomes using a combination of narrative, qualitative and financial measures.
It provides a financial proxy value of the impact made by an organisation or programme, which can be understood alongside traditional financial costs. It is transparent and consistent and aims to demonstrate the social value of activities in a tangible way that everyone can understand.