For this month’s Toolkit Thursday, I wanted to focus on a tool that communicates to stakeholders the tremendous value of the work charities and nonprofits do.
Who can use it? Nonprofits and charities looking to measure quantitatively the social value of their organisation’s work and report to funders or policy makers about how money invested in their social programs can produce very real gain.
What is it? A SROI (Social Return on Investment) Analysis can take many different forms but it ultimately is a way of calculating the quantitative social value of the broader impact a charity’s programming has in the community. For example, a charity that works with students at risk of leaving their studies at age 16, could point to the monetary community impact of graduating high school as a potential return on investment of their programming. A valuable metric would then be that for every $1 invested in this program, it contributes $10 back to the community through social value. Or for every $1 invested, translates to $1000 of additional lifetime earnings for students helped (in this fictional example).
When to use it? A SROI Analysis can be used for various reporting requirements to any stakeholder group. It can be especially valuable for reporting to funders to demonstrate how their investment is having measurable impact in the community. It’s important to be able to very clearly demonstrate the inputs and outputs of your programming to be able to show the connection between investment and return. There are some really good resources online that have identified studies that quantify these broader social returns. It is noteworthy, that there is a great deal of estimation in an analysis like this. It will be very important to point to your charity’s outcomes with certainty: are those results demonstrable, sustainable, and scalable?
Why? A lot of the time a SROI analysis is used for large government programs, as the sample sizes exist for generalisations about broad returns; but this doesn’t mean smaller charities and nonprofits can’t use a tool like this. A lot of charities have good data around qualitative returns (client surveys, for example), and this data is impactful and meaningful to the work that they do, but funders like to see measurable quantitative data as well. An analysis like this isn’t meant to replace the reporting you’re already doing, but to compliment it. To help shape narratives and tell stories about the bigger picture.