Social return on investment for charities, explained

Social return on investment puts a value on the change a charity creates, set against the resources it uses. The result is often a ratio, such as a stated amount of social value for every pound invested, and it is only as strong as the evidence behind it.

By Adam Graver, co-founder of House of Marque. Published 5 October 2026. Last updated 5 October 2026.

Social return on investment, usually shortened to SROI, is a way of measuring and valuing the change an organisation creates. It looks beyond the money spent and received to the difference made in people’s lives, and in communities and the environment.

A widely used UK guide, produced by the Office of the Third Sector and the Scottish Government, defines it this way: “Social Return on Investment (SROI) is a framework for measuring and accounting for this much broader concept of value; it seeks to reduce inequality and environmental degradation and improve wellbeing by incorporating social, environmental and economic costs and benefits.”

In plain terms, SROI asks what changed because of the work, who benefited, how much that change is worth and what it cost to achieve.

What it is not

It is not a guarantee. A ratio describes what happened in a defined period for a defined group. It does not promise the same result next year.
It is not a league table. Ratios from different charities are rarely comparable, because the scope, the evidence and the assumptions differ.
It is not only a number. The story behind the ratio, the people involved and how the value was reached matter as much as the figure.
It is not a replacement for good reporting. It adds a lens. It does not remove the need for plain accounts of what the charity does.

The seven principles

The same guide sets out seven principles that an SROI assessment should follow. They are worth knowing even if you never commission one, because they describe good practice in showing impact.

Involve stakeholders. The people affected help to decide what counts and how it is valued.
Understand what changes. Work out how change is created and test it with evidence.
Value the things that matter. Use financial proxies to give weight to outcomes that markets do not price.
Only include what is material. Leave out what would not change a reader’s decision.
Do not over-claim. Claim only the value the activity itself created.
Be transparent. Show how the analysis was done so others can judge it.
Verify the result. Have the findings checked by someone outside the work.

The stages of an assessment

An SROI analysis moves through six stages. The names below are from the guide.

The six stages of an SROI analysis
Stage	What happens	What can go wrong
1. Setting the scope and identifying stakeholders	Decide what the assessment covers and who is affected by it.	A scope so wide that evidence is thin everywhere.
2. Mapping outcomes	Describe how the work leads to change for each group.	Assuming outcomes without asking the people involved.
3. Evidencing outcomes and giving them a value	Gather data on what changed, then assign a value to each outcome.	Weak data, or values that cannot be defended.
4. Establishing impact	Adjust for what would have happened anyway and for other contributions.	Claiming all the change as your own.
5. Calculating the SROI	Set the value created against the investment to produce the ratio.	Presenting the ratio without its assumptions.
6. Reporting, using and embedding	Share the findings, act on them and build measurement into the work.	Producing a report that sits unread.

What makes a ratio credible

A ratio is credible when a sceptical reader can follow how it was reached. That depends on four things.

Evidence. Data from the people affected, not only from the charity’s own records.
Stated assumptions. Every judgement written down, with the reason for it.
Honest limits. A clear statement of what the assessment does not show.
Outside checking. Someone outside the work has reviewed the method and the figures.

A ratio without those four is a claim, not a finding. Funders have seen enough inflated numbers to read an unsupported one with caution.

How to start without a formal assessment

You do not need a commissioned study to begin working in this way. Four habits move a charity towards the discipline of SROI, and each can start this month.

Name the change. For each programme, write one sentence on what is different for a person after they have used it.
Ask the people involved. Talk to a handful of beneficiaries, volunteers and referrers about what changed for them and what mattered most.
Record it at the time. Capture a few simple facts when the work happens, such as who attended and what they reported afterwards. Memory fades and people move on.
Note what else contributed. If other services, family or the person’s own effort played a part, say so. It makes your claim more believable, not less.

After a year of this, you will have material for a stronger funding bid, a better trustee report and a clear view of whether a formal assessment is worth the investment.

Questions funders and trustees tend to ask

Whatever method you use, expect the same questions. Prepare an answer to each before the meeting.

Who benefited, and how many? Be specific about the group and the numbers.
What changed for them? Describe the difference in their words as well as yours.
How do you know? Say what evidence you collected, from whom and when.
What would have happened anyway? Show that you have thought about it.
What did it cost? Include staff and volunteer time as well as money.
What will you do differently as a result? A measure that changes nothing is a report, not learning.

A charity that can answer those six questions clearly is in a stronger position than one with a confident ratio and no reasoning behind it.

Using it well

In funding bids

A well-founded SROI figure can strengthen a bid by showing that the charity understands its impact and has tested it. Put the figure next to the evidence and say what period and group it covers. A funder who can see the reasoning will trust it more.

In trustee reports

Trustees can use SROI to compare the value of different programmes, with care. It helps to answer which work creates the most change for the resources used. Keep the report short, state the limits and pair the number with a story.

In supporter communications

Supporters respond to specifics. A clear statement of the value created per pound invested, over a stated period, is persuasive if it is true and sourced. Always say who carried out the assessment and when.

Do not use a ratio in a way that implies a guarantee, and do not compare it with another charity’s figure unless the methods match. The Fundraising Regulator expects communications to be sensitive and clear, and an over-claimed number does neither.

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Common mistakes

Over-claiming. Taking credit for change that would have happened anyway or that others contributed to.
Thin evidence. Building a ratio on a handful of conversations or on assumptions nobody has tested.
A single-year view. Counting only the first year of an outcome that lasts, or assuming it lasts forever without evidence.
Hiding the method. Publishing the ratio without the steps that produced it.
Using it as decoration. Adding a figure to a bid with no link to the charity’s story or its strategy.
Starting late. Trying to collect evidence after the work has finished, when the people are hard to reach.

Can a small charity afford it?

A full formal assessment takes time and skill, and it is not the right tool for every charity. For many small charities, the principles are more useful than a formal ratio.

Involve the people you help. Write down what changes for them, and how you know. Be careful about what you claim. Those habits give you most of the benefit, at little cost, and they prepare the ground if you decide to commission a full assessment later.

Where it fits in your marketing

Impact evidence is the strongest material a charity has. It belongs in the strategy, the board report and the story you tell supporters. Our charity marketing strategy guide shows how to build measures into the plan, and our trustee guide explains what boards should ask to see.

Strategy alignment links the charity’s objectives to measures that funders and trustees can trust. Adam Graver has worked on SROI projects across the People’s Postcode Lottery charities and the Lord’s Taverners, and the discipline of evidence informs how we plan. Meet the founders.

Frequently asked questions

What is a good social return on investment ratio?

There is no good or bad ratio in itself. A ratio depends on the scope, the group, the period and the assumptions, so figures from different organisations are rarely comparable. The test is whether the reasoning is clear, the evidence is sound and the limits are stated.

How long does an assessment take?

It depends on the scope and the quality of the data available. A focused assessment of one programme takes much less time than a charity-wide one. Starting data collection early, while the people involved are easy to reach, saves the most time.

Can a small charity afford one?

A full formal assessment is a significant commitment and is not right for every charity. Many small charities get most of the benefit from applying the principles: involve the people you help, evidence what changes and avoid over-claiming.

How do funders use social return on investment?

Some funders ask for evidence of impact, and a well-founded SROI figure can support a bid. They look for clear reasoning, stated assumptions and honest limits. An unsupported or inflated ratio can weaken a bid, so evidence matters more than the number.

Is SROI the same as a cost benefit analysis?

They are related. Both compare benefits to costs. SROI is designed to include outcomes that markets do not price, such as wellbeing, and it puts the voices of the people affected at the centre of the method.

Who should carry out an assessment?

Someone with experience of the method who is not part of the work being assessed. The principles ask for verification of the result, so a check by someone outside the project is part of good practice.

Can we put the ratio in our annual report?

Yes, if you can show how it was reached, state the period and group it covers and say who carried out the assessment. Avoid language that implies a guarantee or compares unlike things. Tell the story alongside the number.

Sources

A guide to Social Return on Investment, Office of the Third Sector and Scottish Government, hosted by Bond. Read 5 October 2026. www.bond.org.uk/wp-content/uploads/2022/09/cabinet_office_a_guide_to_social_return_on_investment.pdf
Communications and advertising, Fundraising Regulator. Read 5 October 2026. www.fundraisingregulator.org.uk/about-fundraising/topics/communications-and-advertising

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