Social Entrepreneurs and The Social Return on Investment (SROI) Model – The Movement

Social Entrepreneur is a relatively new term that helps to define individuals and groups who are innovating solutions to poverty, hunger, homelessness, education and so much more. They are the founders of Method who create products that are better for the environment, the philanthropists establishing nonprofit corporations or foundations, and investors who provide microfinance loans to emerging economies.

The Skoll Foundation has an inspiring video about social entrepreneurs who “see potential when others see failure.”  The video showcases interviews with experts who explain the movement, but also advocate for greater support of these types of entrepreneurs.

Skoll Foundation

These entrepreneurs are solving local and global problems around the world and measuring their social return on investment or SROI.  SROI is an approach to measure impact on people, profit and the planet.

The SROI International Network is a membership organization out of the UK comprised of “researchers, consultants and other persons working in the field of impact measurement, or who have a demonstrable interest in promoting the SROI methodology.”

The SROI Network published on its website seven principles for SROI included below:

1. Involve stakeholders – Understand the way in which the organization creates change through a dialogue with stakeholders
2. Understand what changes – Acknowledge and articulate all the values, objectives and stakeholders of the organization before agreeing which aspects of the organization are to be included in the scope; and determine what must be included in the account in order that stakeholders can make reasonable decisions
3. Value the things that matter – Use financial proxies for indicators in order to include the values of those excluded from markets in same terms as used in markets
4. Only include what is material – Articulate clearly how activities create change and evaluate this through the evidence gathered
5. Do not over-claim – Make comparisons of performance and impact using appropriate benchmarks, targets and external standards.
6. Be transparent – Demonstrate the basis on which the findings may be considered accurate and honest; and showing that they will be reported to and discussed with stakeholders
7. Verify the result – Ensure appropriate independent verification of the account

For Philanthropic Strategists like me this is an exciting time in the world where the “do-gooder” is now an entrepreneur, a company, an investor or a philanthropist. This shift beyond the nonprofit sector alone can only mean one thing: greater social impact heard round the world.