Social Return on Investment (SROI) is a framework that measures the social, environmental, and economic value generated by an intervention, program, or policy, expressed in monetary terms. Unlike traditional ROI, which focuses solely on financial returns, SROI captures non-financial impacts (e.g., improved well-being, reduced inequities) to provide a holistic view of value creation.
You're probably thinking, "That sounds a lot like cost-benefit analysis (CBA)." Well, kind of.
SROI focuses on what people actually care about (stakeholder priorities) and turns social good into dollar values (e.g., trust = fewer lawsuits, happiness = productivity gains), while also telling the story of how the project changed lives. It’s numbers plus human impact.
CBA, however, primarily assesses economic efficiency, monetizing both costs and benefits (e.g., healthcare savings, productivity gains) but often treating social impacts as secondary. It explicitly aims to quantify both tangible and intangible factors by assigning them a value.
Scenario: A hospital spends $1 million on a diabetes prevention program.
Social Return on Investment (SROI):
Fewer diabetes cases → Saves $800k in avoided treatments (based on $5,000/year per patient × 160 prevented cases).
Participant stories woven into the analysis → "John lost 20 pounds and now plays with his grandkids" (narrative). “The program helped me lose weight and feel hopeful about my future.”
Community Impact: “Local gyms saw more seniors joining classes, reducing isolation.”
Mental health gains → Valued at $200k (using therapy cost equivalents for reduced anxiety/depression).
Cost-Benefit Analysis (CBA):
Program costs: $1,000,000 (staff, classes, outreach).
Medical cost savings:
$800,000 (avoided diabetes treatments, based on $5,000/year per patient × 160 prevented cases)
$116,900 (reduced hospitalizations/ER visits per participant, based on Year 1 savings in search results)
Productivity gains:
$100,000 (fewer sick days and absenteeism, estimated from reduced complications)
Key Difference:
SROI: "We saved money and improved lives."
CBA: "We saved money. Period."
The process of calculating SROI is methodical and involves several key steps:
1. Define Scope & Stakeholders
Scope: Specify the program/intervention (e.g., diabetes prevention) and its timeframe.
Stakeholders: Identify affected groups (patients, families, providers) and engage them to define priorities.
2. Map Outcomes
List positive/negative outcomes (e.g., fewer hospitalizations, improved mental health).
Use a theory of change to link activities to outcomes (e.g., coaching → lifestyle changes → diabetes prevention).
3. Evidence Outcomes
Collect data: Surveys, interviews, or program records (e.g., 100 patients avoided diabetes).
Monetize: Assign financial values using proxies (e.g., $5,000 savings per avoided diabetes case).
4. Establish Impact
Adjust for:
Deadweight: Outcomes that would’ve happened anyway (e.g., 20% of patients might have improved naturally).
Attribution: % of outcomes caused by your program (e.g., 70% credit to the intervention).
Drop-off: Reduced impact over time (e.g., 10% annual decline in benefits).
5. Calculate SROI Ratio
Example:
Adjusted value: $800k (after deadweight/attribution adjustments).
Investment: $1M → 0.8:1 ratio (or 80% return).
6. Report & Verify
Narratives: Include quotes (e.g., “The program saved my life”).
Sensitivity analysis: Test how assumptions affect results (e.g., what if deadweight is 30% instead of 20%?).