Wednesday, July 20, 2011

Social Return of Investment (SROI) Seminar

This is just some pointers I found useful from the SROI seminar conducted by Jeremy, from the ROI Network and FRC group director.

SROI is in actual fact a tool for the accounting for value; specifically the value created for positive social change.
It involves the measurement of a specific value created, based on a set of assumptions and matrices .

However, it is often difficult to determine what form of measurements will provide reasonably accurate results. And the following are the challenges that the people in the field often face:
1. Social investment is still just a drop in the ocean, compared to global financial/business investments;
Hence the lack of funding and resources supporting this field of research
2. Possibility of producing conflicting results with the use of different matrices;
The scientific judgement of whether an impact is good or bad, often crosses moral/ethical issues that may produce different conclusions
3. Identifying the real questions we should be asking; The extent of a measurement, the reasonableness or significance of a measurement or the cost-effectiveness of it, etc

What should be improved?
A. More consistency
Despite the challenges highlighted, it is rather clear that much more consistency should be seen. However, due to complexity of differing social business/enterprises from one to another, the consistency should be applied on principles instead of matrices.

B. Measurement of Value as seen from the stakeholders (The right questions to ask)
1. Identification of the stakeholders
2. Analyzing the benefits which they derive and what to measure
3. Valuation methodology of the change observed
4. Amount of positive and negative change observed
5. Materiality and judgement involved
6. Bench-marking the data against a scenario which would have happened anyway

C. Utilize forecast of value you can create with reasonable assumptions
Similar to the financial impact a business can create, a social enterprises should forecast the potential social impact it can create based on the strategies and plans set forth. This is to help social entrepreneurs provide a goal/target, while also enable them to communicate the enterprise's potential o relevant stakeholders.

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