Expert View: Social return - Talking up your non-financial value

The Office of the Third Sector is promoting social return on investment as a method of measuring the value delivered by agencies in the sector.

This gives charities the opportunity to prove their success in terms of social outcomes, rather than financial ones; art therapy and play schemes are good examples of activities that deliver exceptional non-financial value. But it is bad news, because SROI calculations generally rely on unverifiable assumptions, and proving the value of social outcomes can cause major headaches for charities.

I suspect most charities are aware of the problems with SROI, but rather than protest about the methodology, they have found creative ways to show good returns. From my own study of published SROI calculations, I can now reveal the main methods you can use if you want to jump on this bandwagon.

First, calculate the value of any possible outcome your project might conceivably deliver. For example, if you run an arts project for homeless people, calculate the value of clients' reduced drug use. Don't worry if reducing drug use was not really an aim of the project, or that a proper academic study would struggle to establish a link between making art and using less heroin; no one will question your assumptions in detail.

If you have trouble thinking of possible outcomes, umbrella body the NCVO has produced a helpful publication called True Colours: uncovering the full value of your organisation, which explains how you can calculate every possible ounce of value.

Second, claim some notional savings. The way to do this is to look at the services your clients might use if your service was unavailable. They might go without, or use something worse - but you need to show a saving. Find the most expensive service your clients could conceivably use, deduct the cost of your service and claim that as part of your social return.

These methods produce excellent SROI numbers, but using them could give you an attack of conscience. If that is the case, I can suggest an alternative approach: tell anyone who asks about the SROI of your work that, although you could demonstrate exceptionally high returns, you prefer to use more reliable evaluation methods.

Simple outcome reports will do the job for smaller and newer services, and more rigorous impact evaluations for larger and better-established services. For all types of service, I suggest using satisfaction surveys to show whether the people who use a service actually value it.

- Daniel Currie runs a management consultancy for the voluntary sector.

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