Introduction to Social Return on Investment
Introduction to Social Return on Investment
Social Return on Investment (SROI) is a model used to quantify the social and financial benefits and value of a service, programme, policy or organisation to society. It is about value, rather than money.
SROI tells the story of how change is being created by measuring relevant social, environmental and economic outcomes and uses monetary values to represent them. The monetary value of outcomes is expressed in relation to the size of the total investment.
Most SROI studies of recreational physical activity measure changes in social outcomes resulting from participating and volunteering.
SROI methodology
SROI methodology is built on well-established evaluation approaches and health and environmental economics, focused on answering five key questions, and based on eight principles.
Five key questions
| Who changes? | Taking account of all the people, organisations and environments that are affected significantly. |
| How do they change? | Focusing on all the important positive and negative changes that take place, not just what was intended. |
| How do you know? | Gathering evidence that goes beyond individual opinion. |
| How much is you? | Taking account of all the other influences that might have changed things for the better (or worse). |
| How important are the changes? | Understanding the relative value of the outcomes to all the people, organisations and environments affected. |
Principles of Social Value
The Principles of Social Value help guide decisions that consider broader impacts such as equality, wellbeing, and environmental sustainability. They are widely accepted standards for social accounting. (See Social Value International for more information.)
| Principle 1: Involve stakeholders | Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders. |
| Principle 2: Understand what changes | Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes, as well as those that are intended and unintended. |
| Principle 3: Value what matters | Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders’ preferences. |
| Principle 4: Only include what is material | Determine what information and evidence must be included in the calculation to give a true and fair picture, so that stakeholders can draw reasonable conclusions about impact. |
| Principle 5: Do not overclaim | Only claim the value that activities are responsible for creating. |
| Principle 6: Be transparent | Demonstrate the basis on which the analysis may be considered accurate and honest and show that it will be reported to and discussed with stakeholders. |
| Principle 7: Verify the result | Verify the results with stakeholders and consider independent assurance. |
| Principle 8: Be responsive | Use the findings to improve social value creation and management decision making. |
Calculating and interpreting an SROI
Calculating an SROI involves establishing the total value of the outcomes of a service, programme, policy or organisation. This includes understanding the different individuals and groups impacted and stories of change.
The final stage of an SROI analysis is to calculate the SROI value or ratio using the following equation.
Equation 1: Calculating total impacts
The result of an SROI is commonly expressed as a ratio, 1:1 or a statement, such as: For every $1 spent on recreational physical activity there was a $2.12 return to NZ.
The SROI ratio result is the ‘total value of all impacts’ divided by the total value of all monetised inputs. For each unit of currency invested, x units of value are produced. A value above 1 means more value is being generated for society than the investment required. A value below one means the cost of investment is greater than the value produced for society.
Although the headline of an SROI study is often the ratio, it is important to consider the overall social value and the relative importance of activities in creating outcomes for different individuals and groups. For example, a programme may produce a high social value but also have high costs.
What should I do with these results?
SROI studies can help the sector to better articulate their value proposition and advocate for resources and funding for recreational physical activity. The value of play, active recreation and sport provides an example of how to do this.
Sport NZ National SROI study 2022
The 2022 Sport NZ National SROI study was undertaken to better understand, demonstrate, and communicate the contribution of recreational physical activity to the wellbeing of people living in this country. It also included research to understand the value to Māori participating as Māori, explored within a Te Ao Māori worldview.
The study found that recreational physical activity in Aotearoa New Zealand generates considerable value to society. The headline result was for every $1 invested in recreational physical activity in 2019, $2.12 worth of social value was generated for individuals and society. The study also identified other benefits not included in this monetarised comparison.
Undertaking an SROI study
Sport NZ doesn’t expect sector organisations to undertake their own SROI studies because they can be costly and complex, as there are a variety of SROI methods available. In many cases, sector organisations can use the national data alongside other project-specific evaluations to work out the value of their own programmes or initiatives. Case studies and examples with similar outcomes can also show the typical social value created.
However, if organisations want to undertake an SROI study on a programme or initiative, they need to have a thorough evaluation in place. This means collecting and analysing data before and after the programme happens. Because an SROI evaluation must show change for individuals over time, organisations and those involved in managing the study must be highly committed to completing the study.
Sport NZ is testing its own ‘Social Value Bank’ tool, to help organisations with SROI studies. Learn more about what you need to do by using the Sport NZ Social Value Bank tool in this guidance.
If you would like to find out more about undertaking an SROI study, please contact activenz@sportnz.org.nz.
Resources
Social Value Aotearoa a community of people working to better
understand and measure the impact of their work and is linked to the international SROI network.
Social Return on Investment | What Works – resources and information around SROI frameworks and approaches.
Sport NZ – How the play, active recreation and sport sector is changing or expenditure
