Guidelines for Social Return on Investment

Although many managers today run their businesses without sufficient information on the impact of their actions on the environment, and many guidelines have been proposed since the early 1990s, there is no framework to quantify the value of a company's impact on people and the environment. An analysis is offered of the patterns that emerge from 88 social pro forma statements developed by Global Social Venture Competition entrepreneurs from 2000 to 2002.The patterns were developed from business plans by start-up companies from a wide range of industries. To address implementation issues influencing the credibility and standardization of social impact analyses, the Standard for Social Return on Investment (SROI) analysis was developed as a way to measure these methods and their implementation.To illustrate the SROI calculation, the version used by the GSVC is employed. The SROI analysis includes four steps: (1) the collection of ongoing social performance data; (2) the prioritization of data important enough to track; (3) the incorporation of data into management decision-making and reporting; and (4) the valuation (to understand what amount of social value is created or destroyed, and where resources should be allocated). The SROI analysis helps managers and investors accomplish three critical tasks: plan, manage, and assess. To determine the true value of SROI, companies must create SROI analyses based on actual performance. The findings indicate that the process of calculating an SROI, actual or projected, may help companies identify opportunities to create social value and increase financial value. Also, the price of a projected SROI similar to those illustrated in this study ranges from zero to a few thousand dollars, and some benefits may stem from analysis of projected SROI even without ongoing tracking efforts. The quality and consistency of the SROI analyses is important for their value to companies, investors, and the public. (CBS)