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Social Enterprise Works was contracted by the Department of Health (DoH) Social Enterprise Investment Fund, through SROI-UK, in summer 2009 to support 5 diverse organisations to produce a forecast Social Impact Map and report using an approach called Social Return on Investment. The support aims to help organisations to improve mechanisms for measuring and demonstrating impact and is a requirement of SEIF funding.
This work builds on the experience of a pilot project to trial two approaches to demonstrating impact (SROI and LM3) with three food-related social enterprises in Bristol. The project was funded by The Commission for Rural Communities and ran throughout 2007.
Social Enterprise Works staff now integrate these approaches to demonstrating impact into advice work. We consider that it is essential for social enterprises to be able to credibly measure and communicate social impact and believe that existing tools can go further to do so whilst also becoming more accessible to the full diversity of social enterprises.
LM3 studies the flow of money through three rounds of spending: the income of the market, where this is spent, and where this is re-spent in order to measure the local economic impact of a project, activity or organisation.
SROI offers an approach to measure the economic value of the social benefits of an organisation. It does so by translating social objectives into financial measures. It helps organisations to understand, quantify and report on the social value they create. See the C3 website resources section to link to the SROI primer for a comprehensive overview.
The model of SROI has been developed by the New Economics Foundation, building on work initiated in the US. It has been amended for a UK audience and fits in closely with work on social accounting and auditing. The basic premise is that we know that socially driven organisation deliver a return on investment beyond the financial return but it is often difficult to demonstrate and communicate that impact. SROI captures the social environmental and economic value by identifying a monetised value for the social impact.
To give an example, when a previously unemployed person completes a training programme and starts a new job, not only does she increase her personal income but she also creates value to the government by paying taxes and no longer claiming welfare benefits.
