What are the benefits and challenges of using the SROI framework for social impact measurement?

The SROI framework recognizes that investments hold both social and financial value. It aids in identifying, quantifying, and conveying the social value of interventions by comparing costs and benefits to the status quo or alternatives. This framework follows a six-step process: defining scope and stakeholders, outlining a theory of change, substantiating outcomes and valuing them, determining impact, calculating the SROI ratio, and reporting, applying, and integrating results. It is adaptable to diverse activities (projects, programs, policies, organizations) for purposes like evaluation, planning, or advocacy.

Employing the SROI framework offers numerous advantages in social impact measurement. It enables the demonstration of activity value to stakeholders, enhances performance and accountability, boosts credibility and transparency, and fosters innovation and learning. The framework highlights social, environmental, and economic returns, identifies strengths and weaknesses, adheres to a rigorous and standardized methodology, engages stakeholders, unveils fresh insights and opportunities, and promotes feedback and dialogue in the process.

The SROI framework appears to be the favored choice without thoroughly exploring other viable options. Its main purpose is to identify programs with the potential to make the greatest impact. However, it seems to focus on looking backward and only serves a limited assessment purpose. Measuring and managing metrics that focus on key differentiators of the organization is a better approach. Organizations should aim to become data owners and collect the right and effective data, thus following SROI principles while continuously improving program outcomes. Relying on third-party assessors only proves impact and does not improve. By adopting a lean approach to data collection, organizations can become data owners and improve program outcomes.

SROI is not perfect. But I'd argue that on the last points about capturing unintended outcomes, intangible and biases, SROI is generally (a lot) better placed to tackle these than many other approaches. There's a whole principle of understanding what changes that explicitly demands the investigation of unintended (and negative) outcomes and the guidance then explains how to include this in the analysis. Furthermore, on the point of biases, a good SROI analysis requires clear evidencing of where and who's perspective we're actually including to account for value - and it does goes way further than "my" intended objectives. Even if of course there is still always biases going into any analysis, SROI actively seek more voices to validate.

Utilizing SROI framework requires a nuanced approach due to its inherent complexity. Despite this, when applied thoughtfully, it can provide valuable insights into the social impacts of organizational initiatives. But remember, SROI is about proving, not improving! Adhering to the seven principles of SROI alongside the framework can enhance the accuracy and credibility of social value assessments, promoting transparency, inclusivity, and verification in the process. The multi-dimensional nature of social impact calls for a holistic assessment approach, transcending a singular ratio or number. Effective use of the SROI framework encourages a comprehensive analysis, fostering continuous learning and improvement in social impact assessment.

By producing a $return ratio, a strength of SROI is that it can potentially enable comparison between programs or perhaps an indicative benchmark range for what social return could be expected from a type of program. However, this comparison benefit is only possible if other programs and organisations use similar SROI approaches and share the results.