The economic returns of a project can easily be determined through financial statements. However, a project may also have a social impact but which cannot be determined using accounting books. So how does one calculate the social returns?

Social Return on Investment (SROI) is an accounting method that companies use to determine their environmental, economic, and social impact.  Companies can then use that data to determine what type of improvements they should implement so that they can implement better project management. Below is the formula for calculating SROI.

Factors to consider when calculating SROI

Calculating SROI will differ from one project to another, but there are key factors involved in the process.

• The resources that will be invested in the process, including costs involved.
• Tangible results or products that come from the project, or in other words, the output.
• The impact that the project has on the people. For example, the jobs created for the locals and the income they receive, which helps to improve their quality of life. The financial implications of this go further to facilitating the government’s ability to collect more revenue through tax as people’s income level improves.
• How adjustments in the inputs may influence outcomes.

Although these are the key considerations when calculating SROI, there is a lot more that goes into the process. For example, companies also have to consider social value principles when running a project. The social value principles are:

• Have a good understanding of the changes involved. Determine how the changes occur and pin-point both negative and positive changes. This is done by carefully analyzing the data gathered.
• Involve stakeholders so that they can give a better understanding of what is measured and valued in the society, and how the measuring takes place.
• Include material evidence or information to provide a legitimate and unbiased view that can help stakeholders to sum up a reasonable conclusion regarding the impact of the project.
• Value what matters by allocating resources efficiently between the different available options and also ensure that what you value aligns with stakeholder value.
• Maintain transparency throughout the entire process.
• Avoid overclaiming and instead focus on claiming value created by your activities.
• Verify the outcomes.