Social Return on Investment: Exploring Aspects of Value Creation in the Nonprofit Sector
In response to the lack of adequate metrics measuring value creation by nonprofits, this article addresses issues related to the understanding and measurement of Social Return on Investment (SROI).
The authors begin by introducing the challenge of calculating SROI and identifying three types of value creation generated by social purpose enterprises; these include: Economic, Socio-Economic and Social. The focus of the balance of the chapter is on value creation taking place at the Socio-Economic level and the documentation of that value creation through the application of an SROI framework. Complete with tools (such as a Social Cost Survey used by REDF) and a comprehensive analysis, this is a thorough introduction to SROI.
This article is made available as Chapter 8, on page 131, in Volume 2 (Investor Perspectives) of REDF Box Set: Social Purpose Enterprises and Venture Philanthropy in the New Millennium.