Measuring Social Value: The Gap Between Policy and Practice reviewed 30 charities and social enterprises of different sizes and in different sectors. It found that most did not have the data or the expertise to measure their outcomes in the depth required by SROI, which attempts to measure social impact in financial terms.
The report says the sector should instead be examined using simpler measures of social effectiveness.
Dan Leighton, a senior researcher at Demos and one of the authors of the report, told Third Sector that movement was needed from both the government and the third sector to create an effective environment for social measurement.
"The government likes SROI because it has the ability to create monetary values for social outcomes," he said. "But it is complicated and burdensome for charities."
He said the sector would need to recognise that some measurement was necessary and develop effective metrics to measure its outputs. But he said the government would have to realise it was unrealistic to apply the "gold standard" of SROI to many organisations.
He said that SROI remained a potentially useful goal for both sides to work towards in the future.