The Progress Foundation announces the launch of a tool for measuring the social impact of investments in the community: SROI (Social Return on Investment). It is intended for companies that want to evaluate and report the effectiveness of their social investments in a systematic and rigorous way.
In the context of the European Commission’s new directive on corporate sustainability reporting (CSRD), companies that meet two out of three criteria – net turnover of more than 40 million euros, assets of more than 20 million euros and 250 employees on average during the financial year – are obliged to make non-financial reports starting in 2024. These reports include more than 1000 types of data from the environmental, social and governance fields. In the social domain, more than 430 types of data are included, ranging from internal workforce policies to the community impact of the company’s activities.
The Progress Foundation has adapted the SROI (SOCIAL ROI) tool for Romania during 7 years of social impact measurement and reporting, accumulating vast experience and expertise in this field. SROI analysis quantifies the social, economic and environmental benefits of projects, turning them into monetary values. This methodological framework assigns a monetary value to the social, economic and environmental benefits created by an organization, based on cost-benefit analysis. The extent to which investments with social impact are economically efficient is thus evaluated, offering companies a clear ratio between costs and the generated impact, facilitating effective communication with stakeholders.
“There is a growing demand for more transparency in non-financial reporting from boards of directors, investors, civil society and regulatory bodies. Communicating the fact that you have invested a certain amount of money in social, educational or environmental projects also brings with it responsibility for the results obtained. To say what is the impact generated by the amount invested, to evaluate the initial and final state of the beneficiaries involved, to evaluate where the intervention was most effective denotes CARE, both for the company’s finances and for the communities that the companies support,” says Camelia Crișan, Executive Director of the Progress Foundation.
SROI emphasizes value created, translating community benefits into financial value. Unlike ROI (Return on Investment), SROI considers the benefits brought to the community and translates them into financial value. Therefore, it allows the calculation of a ratio that balances the costs and the results obtained; for example, a ratio of 1:2 shows that for every monetary unit invested, the social value created is two units.
“The Progress Foundation evaluates all the interventions it makes using SROI. We have projects with a low degree of maturity where the SROI ratio is 1:1.85 RON, but also mature projects where the SROI is 1:7.96 RON. Which means that for every RON invested, the impact is approximately 2 RON, respectively 8 RON. In this way, we know if the proposed activities are effective in relation to the needs of the target groups, and our partners have an order of magnitude of the impact on society that they exercise beyond their core business. This type of reporting comes as a response to the requirements of double materiality that the new directive on non-financial reporting requires from companies, especially in terms of the social dimension,” explains Camelia Crișan.
