social return on investment

Introduction

Social return on investment (SROI) is a metric adapted from the traditional return on investment (ROI) and is used to measure social, environmental and economic gains that result from an investment. It captures a broader set of impacts given that it identifies those impacts beyond simply financial or business ones, putting often intangible concepts into a more tangible form, a dollar.

Ecotone collaborated with Rebuilding Together on an SROI impact analysis, building upon previously conducted impact measurement, analysis and stakeholder surveying work, to monetize the overall social value of every dollar invested in Rebuilding Together. The monetization process was done conservatively to avoid risk of overclaiming impact as well as giving consideration to impact that cannot be attributed to Rebuilding Together services.

To derive the SROI ratio, Ecotone combines evidence of impact with the estimated costs and monetized benefits. Ecotone identifies the key stakeholder groups to whom those impact benefits accrue. Ecotone utilizes a benefit cost ratio to communicate social value creation. This can be summarized by the following equation:

Why SROI?

SROI puts impact into an easily understandable unit, in this case—the dollar. Analysis of impact is otherwise often difficult to understand, or relies on outputs, which leave the understanding of impact up to the interpretation of the reader. For example, the number of homes receiving home repair modifications is a signal of impact generated, but it can be interpreted differently by different people. By assessing those outputs through SROI analysis, we know that they mean healthier people, increased safety, increased independence and generational wealth. Check out the results of Rebuilding Together's SROI analysis below: