Issues in Using Social Return on Investment as An Evaluation Tool

Abstract

Social return on investment (SROI) is an approach built on cost benefit analysis and is used in the evaluation of projects with social benefits, as an alternative to cost benefit analysis and theory-based evaluation. This paper provides an analysis of SROI as an evaluation tool compared to theory-based evaluation, based on an evaluation of a community based mental health rehabilitation program in regional South Australia. The paper describes the process of constructing a SROI impact map and identifies the issues at each stage. Establishing the resources used, the activities and the outputs appears relatively straightforward. Arriving at an agreed theory of change is much more contested, even when using a high level of involvement of the service beneficiaries. The single greatest difficulty is to find the indicators and the financial proxies to value the outcomes. Outcomes such as improved wellbeing are difficult to value. It is particularly difficult to establish the level of outcomes immediately after or during an intervention. The paper concludes with an analysis of landscapes where SROI is unlikely to fit.

Social return on investment (SROI) method to evaluate physical activity and sport interventions: a systematic review

“…The concise format of the value created for invested money in the form of a ratio is a strength of the SROI method: it is an effective communication tool and can provide external accountability [47]. However, because of a large heterogeneity in the application of the SROI method, it is not possible to use solely the ratios to compare and identify the intervention generating the greater social value [13,[16][17][18][19]48].…”

“…Outcomes were not calculated in the SROI ratio if they were not also monetised, yet they were still presented as relevant information in the studies. Reasons for not monetising outcomes included the difficulty with identifying a relevant financial proxy and insufficient evidence for an outcome to be properly valued [16]. The most monetised outcome group was Personal Resources (in 82% of the studies), followed by Community Resources (in 41% of the studies) and Regional Resources (in 35% of the studies).…”

“…Traditional frameworks of economic evaluations include costeffectiveness analysis (CEA), cost-utility analysis (CUA) and cost-benefit analysis (CBA). Over the past decade, the social return on investment (SROI) framework has received increased attention within the public health domain [12][13][14][15][16].…”

“…SROI is a framework used for understanding, measuring, and reporting the social, economic and environmental value created by an intervention, programme, policy or organisation [17]. It has its foundations in traditional economic evaluation [16,18,19] and is recognized for providing a holistic framework in its inclusion of entire social impact and a strong engagement with the stakeholders [13,15,17,18,20].…”

“…The next step is attributing values to the outcomes, referred to as the monetisation. Monetising the social outcomes of an intervention is one of the main challenges of the method as some may be difficult to monetise (e.g., subjective wellbeing or improved self-esteem) [16,23]. To do so, financial proxies are used: they provide an estimate of financial value for outcomes or benefits that have no market value.…”