Understanding Social Value: The Importance of Including Stakeholders

Understanding Social Value: The Importance of Including Stakeholders

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Article: Understanding social value: The importance of including stakeholders by @SiMPACTStrat. Read more on #SROI http://3bl.me/wcz8py
Thursday, September 6, 2012 - 6:20pm

CONTENT: Article

By Anne Miller
September 05, 2012

Social Return on Investment (SROI) is an emerging methodology that seeks to measure the value of social impact. SROI presents the social impact of different initiatives into financial value terms, and presents this value in relation to the investments that lead to the social impact result.

Some individuals equate SROI to Cost Benefit Analysis (CBA), where the inputs into a program are considered in relation to the perceived value of the outcomes of a program. One significant way in which SROI differs from CBA, however, is that it explicitly focuses on the experience of stakeholders and represents value from the stakeholders’ perspective in the final analysis. The SROI methodology, like accounting, is a principles-based approach. The first principle, as set out by the SROI Network’s Guide to Social Return on Investment, is “involve stakeholders.”

The notion of involving stakeholders happens at every stage of the SROI process. When establishing the scope of the SROI and identifying possible stakeholders, identified stakeholders are to be consulted. When mapping the outcomes of the program at the core of the analysis, stakeholders are asked about their experience and the outcomes that have been the most important to them. As financial proxies are assigned, value from the stakeholder’s perspective is considered, and stakeholders are involved in identifying this value.

In determining the impact of the program (how much of the change from the program is due specifically to the program and not due to other factors) stakeholders are asked about the elements that contributed to the change that they experienced. Finally, the results of the analysis are shared with stakeholders to confirm the validity of the results and to ensure accountability.

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