SROI

VOLUNTARY organisations using the Social Return on Investment (SROI) model can too easily inflate the results to make their work look good.

According to a report from the Third Sector Research Centre (TSRC), SROI is also often being used to compare the results of work between organisations, despite the fact that the results are subjective and unique to each body.

SROI is just one method designed to measure the impact of the work of voluntary organisations, however, it has received particular attention and has been promoted by some third sector organisations, public and private bodies.

It involves attributing a financial value to inputs and outcomes, and calculating these as a ratio, so if the SROI is 3:1, it means that every pound invested in the organisation generates a social value worth three pounds.

The report notes that, while aiming for rigour, the method leaves a great deal of space for personal judgement.

This makes it possible to inflate the value created and may also lead to misunderstandings about how to interpret the SROI ratio.

Although auditing tools and procedures to help standardise the way SROI is calculated have been developed, attention needs to be paid to how the results of SROI are used.

The report said that using it as a comparative tool for organisations competing for contracts and funding, is risking the reputation of the method.

One of the main limitations of SROI is that it is difficult to compare results between organisations.

While recent SROI guidance warns against using it for comparative purposes, evidence shows that this is the main motivation for many organisations to use it.

Malin Arvidson from TSRC said: “SROI is likely to become an increasingly dominant approach to measuring the impact of voluntary organisations due to support from various parts of the public sector. But analysis of SROI raises important questions about why and how we measure impact.

“SROI arguably provides a powerful tool to help organisations illustrate the value they create in a language that those outside the sector understand.

“But we need to pay attention to how results are used, especially as there is a tendency to adopt it as a comparative tool. Furthermore, if it doesn’t help us to understand why change happens then it may not help organisations to improve or replicate interventions.”