For Funders and Social Investors, social impact measurement can provide a means to:
- Examine the full range of impacts a potential investee will create across wider social, environmental and economic outcomes, recognising positive and negative impacts
- Build capacity that aims to help organisations improve as well as prove their effectiveness.
- Frame the discussion on where these outcomes are relevant to the investor.
Investment is about deploying capital in order to generate more effective production of goods and delivery of services. When it works, the benefits can accrue to the investor, the investee, to customers and to wider society. Equally, we need to remember that investment can also generate greater social value, which is not necessarily captured in traditional financial flows. This social value may accrue to customers or to beneficiaries, but may also be generated to a sufficient degree so that some of this value can be attributed – or returned – to investors. This is what we mean when we talk about Social Return on Investment (SROI) for investors – helping investors understand the social value they create through their investment activity. This supplement explains how SROI can be used by investors if they want to integrate SROI approaches into investment decisions and is designed to be read in conjunction with A guide to Social Return on Investment.