Tuesday, February 01, 2005

SROI - step by step

Got an email a couple of days ago asking for some help in calculating Social Return On Investment (SROI). I noted that a single SROI formula in nonprofits is kind of like the Unifying Theory in physics. It is everyone's wish to have one formula, and lots of people have ideas, but a single formula hasn't yet emerged.

That having been said, I knew that I really hadn't looked at the issue in about six months, so I set out to take a look at the current work. Found some good stuff, some bad stuff, some things that were too broad, some that were too narrow.

But I really liked the work done by the Center for Technology in Government in Albany. They have put together a step by step case for Return on Investment in Technology that includes a really excellent look at SROI as one of its appendices. It's simple, yet pretty complete.

Remember that SROI in some form or other is becoming more and more prevalent in funder thinking. They are asking (and now attempting to calculate) "Where can I get the most Good (G) for my investment (I) ?"

It's a question we need to be ready to both calculate and answer. This means we not only need to know the formula that is most realistic for our service(s), but also be able collect the data on a regular, reliable basis so that we have a statistical foundation to stand on.

I know that some still find it offensive (or overwhelmingly difficult) to try to measure good in dollars and sense or pounds and pence, but we live in the world we live in. Get ready.

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