To implement the investment philanthropy approach, the Fund developed methods for measuring the social return on its investments and created an administrative mechanism to ensure that the analysis and reporting information to assess SROI would be available. The method defines social value in a way that can be measured and provides measurement procedures and analysis techniques. The Fund requires its grantee organizations to prepare and submit SROI reports that provide the results of these analyses to the Fund so that it can evaluate the overall value of its investments.

The SROI method uses a definition of value that covers a continuum from purely economic to purely social, with socioeconomic value in an intermediate position:

Economic -> Socioeconomic -> Social

Economic value is represented by a financial return on the Fund’s investment, reported as increased revenue, asset value, etc., from the grantee’s accounting report. This financial return is defined and measured according to the techniques for accounting and demonstrating profit creation that apply in the regular capital markets—i.e., the stock markets and private sector accounting methods. The SROI reports prepared by grantees include detailed financial statements equivalent to those produced by publicly traded companies in the for-profit sector.

Socioeconomic value is defined by creating methods to assign money values to social outcomes wherever possible. For example, increased employment opportunity for those who work in grantee organizations is a social value. Socioeconomic value is expressed in part by the increased taxes paid by those employed, as well as by reductions in welfare costs. Another social outcome of employment in grantee organizations, reduced criminal activity, is estimated by comparing arrest and conviction rates for employees with similar segments of the population. Reductions in arrests and convictions are monetized by counting the savings to the society of fewer convictions and incarcerations. An example of the calculations for social cost savings is shown in Table 5.

Table 5. Calculation of Average Social Cost Savings Per ¹⁹

X	Total Decrease (Increase) in Annual Visits	X	Cost Per Visit/Use	=	Total Decrease (Increase) in Annual Cost	/	# of Target Employees Responding to Question	=	Average Cost Savings Per Target Employee
Public Assistance Programs*
TANF	NA		NA	=	$ -	/	20	=	$ 0.00
General Assistance	NA		NA	=	$300	/	20	=	$15.00
Food Stamps	NA		NA	=	$3,362	/	20	=	$168.10
SSI	NA		NA	=	$5,004	/	20	=	$250.20
Social Service Programs
Food Banks	1,050		$26	=	$27,300	/	20	=	$1,365.00
Case Management	980		$41	=	$40,180	/	20	=	$2,363.53
Community Clinics	34		$86	=	$2,924	/	20	=	$146.20
Mental Health Treatment	222		$176	=	$39,372	/	20	=	$1,953.60
Housing Services (shelter, trans, housing, grp home	1,650		$62	=	$102,300	/	20	=	$5,115.00
Emergency Room	2		$211	=	$422	/	20	=	$23.44
Legal Services	4		$1,029	=	$4,116	/	20	=	$228.67
Sustance Abuse Treatment	2		$8,060	=	$16,120	/	20	=	$806.00
MediCal (includes employee and dependents)	10		$3,761	=	$37,620	/	20	=	$1,881.00
Criminal Conviction Savings									$1,327.43
Average Social Cost Savings Per Employee									$15,643,67

Social value is defined as the outcomes for society as a whole that are positive, but cannot legitimately be given monetary value. For these measures, alternative methods are used to generate some useful measure of return in nonmonetary terms. For example, a quality of life survey is part of the data collection method for employees and clients of the grantee organizations (see Figure 6 below).

While such a survey does not yield monetized values for an investment return, it does provide meaningful evidence of some social benefit. It has all the usual limitations of survey research data, but can supply evidence of social value creation that would not be available by other means.

Figure 6 - Survey Sample for Social Return Measurement²⁰