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How to Measure Social Return on Investment (SROI): A Practical 2026 Guide

Corporate Social Responsibility (CSR) and social impact programmes are entering a new era where accountability and measurable outcomes are becoming essential. For many years, organisations assessed their impact using basic indicators such as the number of beneficiaries reached or the number of activities conducted. Although these metrics helped demonstrate effort and scale, they rarely captured the true value created by these initiatives.

Today, expectations from regulators, investors, and stakeholders have evolved. The focus has shifted away from simply asking how much money was spent to a more meaningful question: what value was actually created through that investment.

This change has brought Social Return on Investment (SROI) into the spotlight as a key tool for impact measurement. SROI provides a structured way to measure and monetise the social and environmental outcomes generated by a programme in relation to the resources invested. As transparency, accountability, and measurable impact become increasingly important, SROI is emerging as one of the most reliable frameworks for demonstrating genuine social value.

Why SROI Matters in 2026

The demand for credible and transparent impact measurement has increased significantly in recent years. In India, regulatory developments such as the SEBI BRSR Core framework now require large listed companies to obtain third-party “reasonable assurance” for their social and sustainability metrics. This means organisations must present reliable and verifiable evidence showing that their CSR initiatives are producing measurable outcomes.

At the same time, the growth of impact investing and the adoption of global sustainability reporting standards have raised expectations around transparency and accountability. Simple claims such as “lives impacted” or “communities served” are no longer sufficient. Investors, regulators, and other stakeholders now expect organisations to support their statements with structured methodologies, reliable data, and transparent reporting.

SROI helps address this challenge by translating social outcomes into economic value. It enables organisations to demonstrate that their initiatives are not only well intentioned but also effective, measurable, and capable of creating meaningful change.

Understanding Social Return on Investment (SROI)

Social Return on Investment is a framework designed to measure the extra-financial value created by social or environmental initiatives. While traditional Return on Investment (ROI) focuses strictly on financial profit, SROI evaluates the broader social, environmental, and economic benefits generated for communities and stakeholders.

The results of an SROI analysis are typically expressed as a ratio, calculated using the following formula:

SROI = Net Present Value of Outcomes ÷ Total Investment

For example, if a programme produces an SROI ratio of 4:1, it means that every ₹1 invested generates ₹4 of social value.

This ratio offers organisations a clear and straightforward way to communicate the effectiveness of their programmes to boards, regulators, investors, and funding partners.

The Six Key Steps of the SROI Framework

The SROI methodology follows a structured six-step process guided by the principles developed by Social Value International. These steps help organisations translate programme activities into measurable and meaningful impact outcomes.

1. Define the Scope and Identify Stakeholders

The first step is to clearly define the scope of the analysis. Organisations must determine which programme will be evaluated, the time period covered, and the assumptions that will guide the study.

Equally important is identifying the relevant stakeholders. In the SROI framework, stakeholders include anyone whose life is influenced by the programme. This may include:

Direct beneficiaries

Families and households

Local businesses

Government agencies

Partner organisations and NGOs

By identifying stakeholders, organisations ensure that the analysis captures the full range of impacts generated by the programme.

2. Map Outcomes Using a Theory of Change

A Theory of Change explains how programme activities lead to meaningful social outcomes. It connects three important components:

Inputs – The resources invested in the programme, such as funding, staff time, or infrastructure.

Outputs – The immediate results of programme activities, such as the number of training sessions delivered or participants enrolled.

Outcomes – The actual changes experienced by beneficiaries, such as improved income, better health, or increased confidence.

While outputs show what the programme did, outcomes reveal what actually changed, which is the core focus of SROI analysis.

3. Assign Financial Proxies to Outcomes

Many social outcomes do not have a direct market price. For instance, improvements in confidence or reductions in stress cannot easily be assigned a monetary value.

To estimate their worth, SROI uses financial proxies. These proxies assign monetary values based on comparable economic data. Examples include:

Reduced mental health issues valued through avoided counselling costs

Reduced crime valued through savings in legal and incarceration expenses

Improved nutrition measured through lower healthcare costs

Increased income calculated through wage improvements

Financial proxies are often derived from government data, academic research, or recognised economic databases.

4. Apply the “Honesty Filters”

To ensure credibility and prevent exaggerated claims, SROI analysis applies four key adjustments often referred to as honesty filters.

Deadweight – The proportion of outcomes that would have occurred even without the programme.

Attribution – The share of outcomes influenced by other organisations or external factors.

Displacement – Whether benefits created in one area resulted in negative effects elsewhere.

Drop-off – The gradual reduction in impact over time as benefits diminish.

Applying these adjustments ensures that the final SROI ratio reflects genuine impact rather than inflated results.

5. Calculate the SROI Ratio

After estimating outcomes and applying adjustments, the next step is calculating the SROI ratio using the formula:

SROI = Net Present Value of Outcomes ÷ Total Investment

At this stage, analysts often conduct sensitivity analysis to test the reliability of their assumptions. For example, they may examine how the results change if employment rates or income estimates vary.

This process helps strengthen the credibility and reliability of the final findings.

6. Report and Integrate the Findings

The final step involves reporting the results and integrating the insights into organisational decision-making.

An SROI report communicates results to external stakeholders such as regulators, investors, donors, and partners. Effective reports combine data with real-world examples to illustrate how the programme created meaningful change.

Internally, SROI findings can help organisations refine their strategies. If certain programme components produce greater impact per rupee invested, resources can be reallocated to maximise overall effectiveness.

When applied effectively, SROI becomes not just a reporting exercise but a strategic management tool.

A Practical Example of SROI

Consider a vocational training programme designed for youth in Gurugram.

Investment: ₹5,00,000 Programme: IT skills training Outputs: 100 students certified

Following the training programme, 70 participants secure employment, resulting in higher household income and improved well-being.

After applying standard adjustments such as:

20% deadweight

15% attribution

20% annual drop-off

The Net Present Value of outcomes is estimated at ₹26,40,000.

The final SROI calculation is:

₹26,40,000 ÷ ₹5,00,000 = 5.28 : 1

This indicates that every ₹1 invested generated approximately ₹5.28 in social value.

Because the analysis includes transparent adjustments, the result is both credible and defensible.

The Role of Technology in Modern SROI

In the past, conducting a comprehensive SROI study required extensive fieldwork and complicated financial modelling. This often made the process expensive and time-consuming.

Today, technology and AI-powered platforms are transforming how organisations measure impact. Modern tools can automate data collection, match outcomes with financial proxies, and generate analytical reports.

Platforms such as Relific, Sopact, and Impact Cloud allow organisations to integrate field data with analytics dashboards. This reduces reporting timelines significantly and helps companies align their CSR initiatives with regulatory requirements such as BRSR reporting.

However, while technology simplifies calculations, human expertise remains essential. Analysts must interpret the data and understand the social context behind the numbers

Preparing for SROI Audits

With increasing regulatory scrutiny, organisations must ensure their impact reports are prepared for audits. Important steps include:

Maintaining evidence for each outcome reported

Clearly documenting financial proxies used in calculations

Justifying assumptions such as deadweight and attribution

Reporting both positive and negative outcomes

Focusing on the changes that matter most to stakeholders

Auditors are not looking for perfect numbers. Instead, they prioritise transparency, evidence, and methodological rigour.

The Future of Impact Measurement

SROI reflects a broader shift in how organisations approach impact evaluation.

Rather than simply reporting activities, organisations are increasingly expected to demonstrate measurable outcomes and explain how those outcomes were achieved. This approach strengthens accountability, builds stakeholder trust, and supports better decision-making.

In a sector where the term “impact” is often used loosely, rigorous measurement becomes a powerful differentiating factor. Organisations that can clearly show what they created, how they measured it, and what they chose not to claim will gain greater credibility and long-term support.

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