Ready to get started with a social value strategy for your
business? In this article, we’ll cover:
In our previous blog, we established that social value is the value
of a business’s decisions on the social, economic, and environmental well-being of its community. Whether your business considers the long-term effects of its production decisions on the local environment; develops a charity program that feeds
directly back into members of its local municipality; or provides resources for underprivileged entrepreneurs, it’s using a social value strategy.
The best roadmap for implementing this type of strategy is via the 7 Principles of Social Value:
“The core and result of any SROI analysis is a ratio describing the relation between what you have invested (the input) and the financial and social value of a change (the outcome) — measured in monetary value.” You
want to add value to your community, but you also need to be smart. Understanding the ratio of your value helps confirm the value-add your business initiatives created, and how sustainable it is for this target market over a longer period.
The Lind Foundation has outlined the equation for determining your ratio as the following:
Change that occurred x Financial value of that change — What we cannot attribute to us ÷ Cost to create the impact = Total impact
There are also two types of SROI strategies that can tap into this equation: Evaluative SROIs and Forecasted SROIs.
They are essentially self-explanatory, with Evaluative SROIs being conducted post strategy implementation, and are based on actual outcomes over a specific period. They’re beneficial when a project is in progress, allowing for the availability
of outcomes data.
A forecasted SROI is applied during the planning stage to pre-assess impact without outcome-related data.
Using the two types of SROI analysis together can offer a better picture of results for better planning in future.
Evaluating your SROI starts and finishes by applying the 7 Principles of Social Values. It starts with inviting in your stakeholders to help make decisions, and then confirming the results with them at the end of the initiative. It involves coming
up with a well-rounded theory of change, and then evaluating your results at the end based on the social, economic and environmental value it brought through both — ROI and social ROI.
The are a myriad of benefits of implementing, analysing and evaluating a Social Value or Social Return on Investment Strategy. They can influence public entities or large purchasers to shift future contracts, to include the elements of social value, thanks
to the evidence and support of data backed SROI campaigns. Or they can be used in strategic management to compare initiatives with proven monetary value, allowing them to evaluate the suitability of a new strategy to generating social returns and utilizing their resources in the most effective way possible.
It’s the way of the future, the question is do you want to be an early adopter?