Appendix C. Case 3: Social ROI
Limitations in the SROI approach
Some of the comparative indicators available for evaluating for-profit organizations are not available for this SROI approach. There are no comparable industry ratios and analyses for the nonprofit sector, although research in this sector is growing. In addition, the logic of management in for-profit organizations is different in crucial ways. Profit-maximization strategies are not necessarily useful or productive in the nonprofit sector. Consequently, careful attention should be given to assessing the appropriateness of the standard financial measures to this alternative use.
It is useful to consider the Fund’s description of lessons learned over the course of applying the SROI methods.21
The SROI analysis process is resource intensive. The average practitioner must be aware of the financial and human resources necessary when conducting an SROI analysis of their social purpose enterprise. Considerable resources were provided to support the work in the grantee organizations.
Engaging the practitioner is essential. This is not a "top down" process. It is imperative that practitioners themselves drive the process of identifying and setting the social indices by which they will assess the value of their life’s work and the returns generated by the investments they receive.
Table 6. Social Return on Investment Results22
21
Roberts Enterprise Development Fund. SROI Methodology: Analyzing the Value of Social Purpose Enterprise Within a Social Return on Investment Framework. San Francisco: The Fund, 2001, p.62
22
Sample SROI results accessed from Roberts Enterprise Development Fund’s Website at www.redf.org/pub_sroi.htm#methodology
