Key Term

What is Social Return On Investment (Sroi)?

Definition

Social Return on Investment (SROI) is a principles-based method for measuring extra-financial value relative to resources invested. It measures change in ways that are relevant to the people or organizations that experience or contribute to it, telling the story of how change is being created by measuring social, environmental, and economic outcomes using monetary values to represent them.

Significance

SROI is crucial for modern philanthropy and impact investing as it provides a framework to evaluate and communicate the full value created by charitable activities beyond just financial metrics. It helps donors and organizations make more informed decisions about resource allocation by quantifying social impact in monetary terms, making it easier to compare different interventions and demonstrate value to stakeholders. This methodology has become increasingly important as donors and foundations seek to maximize their social impact and ensure their charitable giving generates measurable, positive outcomes for communities and causes they support.