Social Return on Investment
SROI, or Social Return on Investment, is a framework which seeks to analyze the total value of a social purpose enterprise, an enterprise which pursues both the business goal of generating profits and the social mission goal of its parent organization. The SROI framework considers the value created by the social purpose enterprise in its pursuit of each of these two goals, then combines these values to arrive at a complete understanding of the social purpose enterprise’s entire impact on society. It then compares the value created for society to the value invested by society, from both private and public sources, arriving at a Social Return on Investment.
This model measures return on investment from three distinct perspectives. First, it examines the financial value created (or cash generated) by the social purpose enterprise. This model also examines social savings resulting from the increased tax revenues and the reduction in use of public assistance programs by target employees. These savings are compared to the total investment in the social purpose enterprise to determine the return on investment.
Author : Jed Emerson – redf.org
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