How to do SROI analysis, your step-by-step guide.
One of the best ways to measure the success of a project or an initiative is by measuring the outcomes – how the effort and resources invested translate into making a socially relevant impact. What is then needed is an effective methodology that cuts through the fluff and arrives at evidence-based data, exhibiting the efficacy and success of your impact project.
It is precisely why calculating Social Return on Investment assumes great significance. An SROI analysis is your window to gauge the ‘social, human, or environmental’ impact created by your project and assigning measurable value to it. It serves as a tool to analyze what value, in monetary terms, has been created or destroyed and for whom.
You could be a multinational corporation, a local NGO, a community group, or an individual wanting to lead an impact project – an SROI analysis can be carried out to suit a vast range of impact projects. It is a framework that helps you understand how does the ‘social or environmental’ impact created by your project translates into monetary terms.
For example, for a local NGO leading a project aimed at developing public spaces around West Java, an SROI analysis will help in measuring the monetary value achieved by the stakeholders of the project for every dollar spent.
This leads us to the method behind calculating the SROI.
Social Value International proposes six stages of an SROI analysis. We’ll list them out below and go over them in separate chapters.
Stages in SROI calculation
Establishing scope and identifying key stakeholders
Evidencing outcomes and giving them value
Calculating the SROI
Reporting, using, and embedding
This chapter will provide an in-depth understanding of the first stage of the SROI analysis.
SROI Analysis: Stage 1
Establishing scope and identifying key stakeholders
As the name of the stage suggests, the primary step in an SROI analysis is to identify who all will be part of the exercise (the stakeholders) and what will the analysis cover (the scope).
This stage involves:
- Establishing the scope, that is, what all will the analysis cover
- Identifying the parties involved in the exercise
- Assessing their role at various stages of the analysis and their mode and degree of involvement
1.a Establishing scope
This involves setting up clear-cut boundaries about what all is perceived as feasible to be measured during the SROI analysis. You will need to have a clear idea about the purpose of the analysis and what resources are available.
During this stage, it becomes imperative to define the priorities for the measurement exercise. For example, what are the outcomes the NGO plans to achieve from developing public spaces near West Java and how will it impact the stakeholders and others involved in the project.
Following are the things to consider while defining the scope of an SROI analysis, as proposed by SVI
- The purpose of the SROI
- Who is it for?
- The background of the organization – its aim and objectives and the impact it sets out to achieve
- Resources available
- Who will undertake the SROI?
- Activities that will be in focus
- Period of the analysis
- Whether it is a forecast analysis, a comparison against a forecast, or an evaluation?
For example, for SROI measurement, the NGO decided to conduct the analysis in-house given the shortage of funds. It was also decided to consider its year-round activities and file the SROI report in the next six months, well in time to share the findings with another potential investor. This is how the NGO broadly defined the scope of its SROI analysis.
Again, this leads us to another point, will it be a forecast analysis – one which set outs the ground rules for capturing the outcomes and measuring them – or an evaluative one which takes all the available data at hand after the completion of the project and sets out to measure the value generated.
A mix of an ‘evaluative’ and a forecast-based approach can help in developing a strong framework for calculating the SROI. ‘Forecast’ SROI analysis will help in defining and capturing the outcomes and associated data which can then be evaluated during the SROI analysis.Tip: At this stage of the analysis, it is important to keep a dedicated record of all the planning. Mapping the progress of the analysis is also significant. Assess new information, incidents, and adjust your scope accordingly. Click To Tweet
1.b Identifying Stakeholders
Next comes the need to identify the stakeholders – all those who will be impacted or impact the outcome that is being analyzed. You would also want to list out the nature of the outcome/s for each stakeholder – negative or positive; intended or unintended.
In the case of ‘Redefining West Java’ project, the following could be the stakeholders:
- Local government
- Local residents
- Local civic body
The NGO will need to decide who all to involve as stakeholders in the analysis and why. The reasons for excluding others will need to be documented. For example, should families living 5 kilometers from the public spaces be involved or only those residing 3-kilometers away?
Tip: You may need to include all those stakeholders that you think may experience material changes as a result of the activity. All those stakeholders linked to relevant and significant outcomes of the project should be included in the analysis. Therefore, this calls for a consultation with all the parties involved.
It must be kept in mind that the impact or outcomes generated out of the activity or the project can be the ones that were foreseen (intended) and those which weren’t (unintended). The latter can be both negative and positive in nature and therefore can affect various stakeholders. As a result of the outcomes, some new stakeholders can emerge as important with a need to be included in the analysis – this would require redesigning your scope.
For example, the development of public spaces around West Java may attract more investors and builders to the region, as result, those bearing the brunt of this shift in other areas could be included as stakeholders.
The stakeholders that you included must experience changes linked to the activity in your scope. Including a stakeholder that is relevant to the project but isn’t linked to any material outcome is as much of an issue as excluding an irrelevant party with material outcomes. All your decisions must be backed by solid logic and reasons.
1.c How to involve the stakeholders
Now is the time to find ways in which you can involve your stakeholders in the analysis and decide how much of involvement would suffice. Stakeholders’ involvement can help in understanding the strengths and weaknesses of the activities that are being analyzed and may provide useful information for further improvement.
For example, the NGO can decide to hold a weekly meeting with its investors and representatives from the local government and civic body whereas it may engage with residents and get their feedback via email.
Collecting information, suggestions, feedback directly from stakeholders is always a better approach. The involvement with your stakeholders depends on the information that you receive. You may stop or ease down a bit when you no longer receive new information or believe to have heard all the main points from your stakeholders.
Tip: Irrespective of the type of SROI that is being conducted, forecast, or evaluative, you can plan in advance to engage with your stakeholders and collect relevant data not just for the current stage of the analysis but for several at once. This will help you avoid going back to them every time, resulting in the efficient management of time and resources.
This brings us to the end of Stage 1. We will be detailing the rest of the stages as proposed by SVI in the upcoming weeks.
The source for this information is SVI’s SROI analysis guides. If you have any questions, feel free to contact us at firstname.lastname@example.org