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A ‘social return on investment’ (SROI) analysis allows the social impact on society to be represented in monetary terms.

‘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.’

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