Social Impact Investing

it helps identify the critical sources of value and so streamlines performance
management.
Despite these benefits, on the con side there is concern that monetization lets the
consumer of SROI analysis off the hook by too easily allowing comparison of the end
number at the expense of understanding the actual method by which it was arrived at—
a comparison which would be an apples to oranges comparison in nearly every case.
The SROI methodology has been further adapted for use in planning and prioritization
of climate change adaptation and development interventions. For example, the
Participatory Social Return on Investment (PSROI) framework builds on the economic
principles of SROI and CBA and integrates them with the theoretical and
methodological foundations of Participatory Action Research (PAR), Critical systems
thinking, and Resilience Theory and strength-based approaches such as Appreciative
Inquiry and asset-based community development to create a framework for the planning
and costing of adaptation to climate change in agricultural systems [10] PSROI thus
represents the convergence of two theoretical tracks: Adaptation prioritization, planning
and selection, and the economics of adaptation. The main divergence, then, between
SROI and PSROI is that while SROI typically analyzes pre-defined interventions,
PSROI involves a participatory intervention prioritization process that is antecedent to
SROI-style economic analyses.
Potential limitations
Benefits that cannot be monetised: There will be some benefits that are
important to stakeholders but which cannot be monetised. An SROI analysis
should not be restricted to one number, but seen as a framework for exploring an
organisation’s social impact, in which monetisation plays an important but not an
exclusive role.
Focus on monetisation: One of the dangers of SROI is that people may focus
on monetisation without following the rest of the process, which is crucial to
proving and improving. Moreover, an organisation must be clear about its
mission and values and understand how its activities change the world – not only
what it does but also what difference it makes. This clarity informs stakeholder
engagement. Therefore, if an organisation seeks to monetise its impact without
having considered its mission and stakeholders, then it risks choosing
inappropriate indicators; and as a result the SROI calculations can be of limited
use or even misconstrued.
Needs considerable capacity: SROI is time- and resource-intensive. It is most
easily used when an organisation is already measuring the direct and longerterm
results of its work with people, groups, or the environment.
Some outcomes not easily associated with monetary value: Some outcomes
and impacts (for example, increased self-esteem, improved family relationships)
cannot be easily associated with a monetary value. In order to incorporate these
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