​​​​​​​What you can learn from social return on investment

03 Apr 2017 Expert insight

Alex Hayes explains how to use social return on investment work to help your organisation measure its effectiveness.

Over the past few years at the Foundation for Social Improvement (FSI), we have been spending more and more time discussing and working on impact measurement and reporting with charities all around the UK. The sector is becoming increasingly savvy in this field and some charities are doing really innovative things.

However, as the focus on impact gains greater emphasis, it is vital that your organisation is not left behind. Our recent bi-annual Skills Gap Survey showed impact reporting as one of the top 3 skills gaps within small charities with 48 per cent needing upskilling.

Good impact measurement is critical at all levels of an organisation, enabling chief executives and trustees to know their organisation is delivering their charitable purpose, for front-line staff to know how to use resources effectively and highlight achievements and for fundraisers to develop and strengthen relationships.

The buzz within impact measurement seems to be around social return on investment, or SROI. Essentially SROI is a way of measuring a broad concept of the value (social, environmental and economic) of the impact you have. It doesn’t have to be communicated financially (e.g. for every £1 spent on this project we deliver £4.19 of social value) but it almost always is.

It can be an incredibly powerful and compelling way of telling your story as an organisation, especially in a competitive market where commissioners are looking for value for money. However, it will not be right for every organisation and I have seen a number of reports where charities have claimed their social return is incredibly high; my initial reaction is often dubious. It can also be an expensive and timely process to complete.

Whilst it may not be right for you (and there are loads of great ways of demonstrating impact without SROI), the principles of it can prove a useful tool for anyone considering how they better measure and communicate their impact, and importantly use it for crucial strategic decisions. There are seven principles to SROI to be aware of:

Involve Stakeholders

Keeping your beneficiaries at the centre of your impact measurement is one of the most important things to consider with any data collection. Does their voice come through and are you adapting your data collection methods sufficiently to be able to ensure accessibility?  What other stakeholders gain a benefit from your work and how are you engaging with them?

Understand what changes

Once you have a model in place like a theory of change, you can use this to understand what changes you are trying to make. Your data collection should check these and you should also see there have been any negative or unintended outcomes. All of this data can be used to tweak or adapt your services accordingly.

Value things that matter

In SROI this means adding financial proxies, but if SROI isn’t right for you then we would recommend telling your story with outcomes (the changes you make for your beneficiaries) and not the number of people you see or the quality of the service you deliver. We often see charities focussing on outputs and feedback on the quality of their service but a more compelling story is to show the changes (both hard and soft outcomes) you achieved.

Only include what is material

It is important to be proportional in your impact measurement, making sure that the process doesn’t take away from your work with beneficiaries or put excessive pressure on staff. You should try and collect data when you are already interacting with beneficiaries.

Do not over-claim

As mentioned, we have seen a number that don’t fulfil this. Be realistic and proud of the differences you make. Over-claiming will put people off anyway.

Be transparent

Given the increased scrutiny on our sector, it is vital to be transparent with impact data and use this to show the value we add to society and the changes we make to society’s most vulnerable. This will help you to build relationships with a range of stakeholders including funders and commissioners.

Verify the result

Once you have begun to collect and analyse your data and are confident of its validity, make sure it is used correctly. For example, trustee boards should be considering outcomes achieved against resource requirements when undertaking strategic reviews to ensure that their organisation has the maximum impact.

The top tips I would provide anyone looking at impact measurement are:

  1. Start with a model to understand the change you make (often a theory of change)
  2. Tell your story through outcomes
  3. Audit your monitoring and evaluation to ensure you are collecting data on the right outcomes
  4. Collect a mix of data – both qualitative and quantitative
  5. Consider your audience when reporting – what messages are they most interested in?

Alex Hayes works on consultancy and development at the Foundation for Social Improvement (FSI).

Civil Society Media would like to thank the FSI for its support with this article.

The FSI offer free and heavily subsidised support to small charities (those with a turnover up to £1.5 million) including full day training courses in Demonstrating Your Impact.

The FSI also offer expert and in depth consultancy in a range of topics including both impact measurement and impact reporting.

For more information visit www.thefsi.org or e-mail [email protected]

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