What’s Your SROI? The Importance of Measuring Your Social Impact
Is your organization “effective”? How do you know? Do you measure the impact you have as an organization; both from an impact on the people you serve as well as the community at large? How is impact measured? Has your organization identified the appropriate metrics?
If you are like most nonprofits, these questions can be overwhelming and cause anxiety. But ask any executive director who has struggled with a Charity Navigator application or sat in front of Atlantic Philanthropies, the Robin Hood Foundation, or fought for local funding – beyond the ever-important anecdotal information of your mission impact, potential funders need to see that you are able to quantify your impact in a number of different ways.
SROI
Let’s first look closely at Social Return on Investment (SROI). SROI shows the triple bottom line – your organization’s traditional ROI along with the social impact of your work on the planet and its target audience.
Understand, when we discuss impact, that’s not the number of units or services your organization provides (which is known as outputs), it’s much more; it’s how you altered lives and changed communities in a positive way that creates real life and financial results (outcomes!).
Think: What would happen if your programs/efforts did not exist?
For example, one issue that I worked on frequently while at AARP was older adult hunger and poverty. We worked in partnership with organizations like Hunger Solutions New York, the Health & Welfare Council of Long Island, Long Island Cares and many more.
If we do nothing, (#)_______ older New Yorkers will fall into poverty and be unable to afford food, thus putting their health at risk.
If we spend $________ to fund _________ program, these (#)_______ older New Yorkers will be lifted out of poverty and generate $________ amount of economic activity in their communities.
Key Components of SROI:
- Track program spending.
How much does it cost to run program X? Don’t forget to take your human capital into account. - Identify “the right” metrics.
How many people are served during each cycle/month/etc.? Pinpoint the most compelling metrics that your organization can reliably track, preferably with the least manual effort (to reduce the likely margin of error). The goal is to move from anecdotal measurements, to real metrics that are tangible and measurable. - Research.
How many people are served during each cycle/month/etc.? Pinpoint the most compelling metrics that your organization can reliably track, preferably with the least manual effort (to reduce the likely margin of error). The goal is to move from anecdotal measurements, to real metrics that are tangible and measurable.
Communicating Your SROI (just as important!)
Strategic messaging and communication of your SROI is also critical. After all, what’s the point if no one can understand your impact?
Once the numbers are crunched and research is examined, carefully consider how to communicate your impact. More and more, infographics or concise, visually appealing statements that convey your impact are most effective.
In addition, the story of your organization’s impact must also be compelling.
And don’t sell yourself short – even if you don’t provide direct service or have a ‘tug at the heart strings’ mission – there is always an opportunity to craft something creative, factual and effective that complements your SROI.
You got this!
But in case you need a little help from friends, learn more about our Continuous Improvement Program (CIP) or reach out to have a conversation about your organization’s unique needs.
This article was originally crafted at the request of Cerini & Associates for their NFP Advisor publication and then the topic of a presentation at its Non-Profit Update event in June 2018.
