The phrase SROI is intuitive. People who haven’t heard it before immediately grok that it speaks to the idea of quantifying the non-financial benefits created by a given entity relative to investment.

Beyond that, opinion seems to split into two camps, the Pro and the Con- with many people holding both opinions simultaneously.

Pro:

  • Evolution
    • It’s part of the professionalization of the field. It implies strategy, invites a conversation about how we can be more strategic.
    • When you hear “impact,” you think about the cost of measuring it. But “return” sounds like efficiency.
    • It’s of interest to investors or donors who bring expectations of more rigor.
    • Social enterprise has more business thinking [than traditional development organizations]. Attaching a value to social and environmental things, I think that’s a good thing.
  • A bridge to the finance world
    • It’s in alignment with the CFO or investor. I would be comfortable having that conversation [about social impact] using those terms. If you come with ‘social impact’ only, they’d say, “Why are you coming to me?” Today they don’t know how they fit. SROI helps them get into it.
    • It holds the potential to create a marketplace. I get a mental picture of a stock exchange for social value– it’s exciting.
    • In sum: “The promise to me of social enterprise is sustainability. The term SROI is about sustainability.”

Con:

  • A fuzzy straightjacket
    • I’ve never been sure how to measure it. It’s fuzzy…. tricky to wrap my head around.
    • It implies boiling things down to one or two metrics. Is that useful?
    • A quantitative goal is good I suppose, but there is not such a quantitative story in agriculture- if you try to use a clean, neat metric you might be overlooking some important impact- one that’s unexpected, unquantifiable, or that takes a long time to manifest.
    • I felt frustrated [in an social investment fund that quantified impact] with the way it limited the types of businesses we would invest in.
  • “Smells like Wall Street”
    • On the one hand, the term implies comparison of apples to oranges. Arts vs. environment would be ridiculous, but it has that connotation.
    • I don’t like the term, I wish it had not been coined. This is not vocabulary we should not borrow. The words bring a lot of baggage into this space that shouldn’t be there. We need an entirely new dictionary.
    • An alternative term without its own baggage is hard to find, but should be found.
    • In sum: It’s an interesting time for the field of impact evaluation, but the language can be dangerous.”

One eloquent statement came from a film entrepreneur:

“I think it’s a good thing that business is waking up, but shoehorning [social value] through another frame that was created to do something else I don’t think is right. The frame of ROI was created for efficiency, and the people in charge of it are given authority based on effectiveness in that area, not on moral leadership.”

And another from an impact investing veteran:

“It’s hard for me to come up with an example of any for-profit or nonprofit that isn’t a net negative [impact]. It really depends how you define ‘social.’ Peoples’ hedonic index goes up, so if you include pleasure, there could be a net positive. Many of the costs are borne by society…. I’m jaded, but the loudest probably get the most press. It’s very easy to be overcome by the PR. That’s partly why you want the SROI- stories are really powerful, so something that is more objective would be useful.”

And this veteran will have the last word for now: “It’s really hard to come up with a standard way of measuring, but I agree it’s worth trying.”