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Last updated: 23 November 2008
The market place in which the third sector operates is becoming more sophisticated. With new social investment vehicles and increasing contestability for public services, customers are more interested than ever in getting the best value and securing positive change. Similarly, third sector organisations are showing a real appetite to prove their added value and succeed in these new markets.
The OTS has been reviewing SROI as a potential tool to build the evidence base of the third sector. This has included:
This development work has identified that SROI is one of a range of tools that exist to support third sector organisations to prove the impact that they have. Because of the breadth and depth of activity carried out by the third sector, there will continue to be a need for a range of tools to evaluate impact. Use of these tools is currently limited and there is a broader need to promote social reporting more widely within the sector and to increase understanding of the range of tools across the public sector and the third sector. In the longer term, it may be possible to begin to integrate social reporting approaches, which would require further widespread stakeholder agreement.
SROI is a framework to help understand the value of social change from the perspective of those changed. It tells a compelling story of change, which is a mix of narrative, qualitative and financial measures.
It provides for a financial proxy value of this change, which can be understood alongside traditional financial costs. It is transparent and consistent and aims to create a more tangible currency in social value that everyone can understand.
It can also help focus attention on particular activities and how well they are working to achieve social change.
For example, Fab Pad is a project run by Impact Arts. Fab Pad supports young homeless people to sustain new tenancies. Impact Arts believes that by engaging young people in making their new environment a home there will be less chance of them becoming homeless. The SROI evaluation carried out on Fab Pad revealed that for every £1 invested by the government in support, £8.38 of social return was derived in reduced health care costs, reduced welfare benefits expenditure and reduced costs of repeat homelessness.
As a result of their SROI, they have gained follow-on funding support for the programme, developed a higher profile with their main partners and funders, and have begun applying SROI to other aspects of their business as a strategic management tool.
You can find our more about Fab Pad on their website: