‘The benefits are obvious,’ says Olivia Rauscher, who researches SROI in her role as Head of Impact Analysis at the Competence Center for Nonprofit Organizations and Social Entrepreneurship at the Vienna University of Economics and Business Administration. An SROI analysis quantifies an organisation’s social impact in monetary terms, making it comparable to financial costs and allowing specific ratios like ‘3:1’ to be determined. Here, this means that every one franc invested generates three francs of social value.
Complex analysis
According to Rauscher, working out the monetary value is the easiest step. The complexity lies in the preceding steps: defining stakeholders, establishing the causal chain, depicting the impact map, and collecting, measuring and assessing the impact. The resulting monetary value is derived from the condensed insights from these preliminary tasks. As straightforward as this sounds, Rauscher stresses the importance of always considering the analysis in its entirety, as the process provides valuable insights into the actual impact. What’s more, not all impacts can be represented in monetary terms – or can only be represented with difficulty. She recalls a project by an international NGO dedicated to street children in Romania: ‘We conducted surveys locally. A key impact was that the children felt a sense of family, of love and security,’ says Rauscher. The research team looked for ways to put a value on this. ‘But we eventually decided that monetising this dimension wasn’t appropriate due to ethical research considerations.’ However, the team still captured the impact and presented it in the analysis. In most cases, the impact can usually be monetised. Sometimes it’s easier than you think. ‘For example, you might expect it to be hard to put a value on human life, but it is standard practice in the insurance industry.’ Similarly, processes have also been established in the accounting sector for calculating the depreciation of a car.
The impact of analysis
This standardisation is generally lacking for SROI – which poses a challenge Nevertheless, the results of an SROI analysis can still help organisations to identify which measures are effective. This can influence their strategy, but it also carries a certain amount of risk. An organisation might decide to no longer pursue a measure because its impact can’t be shown in monetary terms. Or they might focus on the cases that are more straightforward to present because the impact is easier to achieve. ‘This can lead to mission drift,’ she says. But mission drift can also occur with other methods of analysis if the focus is on high output rather than purpose. Rauscher believes one of the main strengths of SROI analysis is its ability to consistently pinpoint attribution. For example, a change that would have occurred anyway without the measure is not counted towards the impact.
A strong message
SROI can strengthen the position of organisations involved in the social sector. They can interact with their donors or supporting organisations on an equal footing and attach a monetary value to the impact of their work. Olivia Rauscher: ‘This means your message and negotiating position are stronger than if you simply say that you’re doing well.’
