Not every investment your nonprofit makes will result in a monetary profit — in fact, that’s sort of the whole point of being a “nonprofit.” Calculating your social return on investment (SROI) gives you a more comprehensive understanding of your organization’s inputs, impacts, and outcomes.
Explore our guide to social returns on investments to strengthen your nonprofit’s financial resilience.
What Is Social Return on Investment (SROI)?
“Social return on investment” is a framework that measures your organization’s community, economic, and environmental impacts. This data offers a comprehensive understanding of your organization’s success while also supporting transparency, internal reporting, and fundraising efforts.
Defining SROI in a Nonprofit Setting
While for-profit organizations focus predominantly on their monetary returns on investments (ROIs), nonprofits use SROIs to understand the broader scope of their real-world impacts. Comprehensive SROIs combine multiple nonprofit performance metrics to effectively track and report your organization’s success, even without a financial “profit.”
Why Donors Care
Measuring your SROI can also benefit your nonprofit funding strategies when applying for grants or seeking other financial assistance. Donors will want to know that their funds are being put to good use. Establishing your SROI through effective nonprofit reporting can prove your nonprofit’s value, distinguish your organization from competitors, and help you overcome other funding challenges.
Why Is SROI Critical for Nonprofits Today?
Understanding how to measure social return on investment can help your nonprofit build trust with clients, donors, and in your community. This is especially crucial in today’s complex socioeconomic environment, as the right metrics can support your nonprofit’s funding, growth, and public reputation.
Transparency and Accountability
The data you use to calculate your SROI establishes a clear paper trail of your nonprofit’s financial history. Beyond proving that your organization is using its funds responsibly, this data establishes better transparency and accountability when reviewing operations. It can also help you identify expenses or services that are draining your budget with minimal return on investment.
Connects Work to Measurable Impact
Understanding your social, economic, and environmental SROIs helps you identify the services and operations that have the most significant impacts. These insights can guide you when reevaluating your budget, allowing you to divert funds to areas where they’ll yield the best results.
Strengthens Case for Funding
As mentioned earlier, effective SROI reporting helps your nonprofit secure funding and support by establishing clear, real-world impacts. Use nonprofit data analysis tools to calculate specific metrics that potential donors and grant providers can easily understand, such as increased employment and community engagement. This way, donors aren’t just donating to your nonprofit — they’re donating to a proper cause.
3 Common Barriers Nonprofits Face
Common challenges in measuring SROI include data silos and inconsistent reporting. Understanding the most significant barriers when calculating SROI can help you identify them early on, thereby maintaining trust and accountability.
1. Fragmented or Siloed Data
Fragmented and siloed data is stored across multiple systems and locations, such as on different computers and hard drives. This can lead to key information being overlooked, potentially making your SROI and other nonprofit data analytics inaccurate. Nonprofit reporting tools help you avoid these risks by keeping all of your information in a single, secure system.
2. Difficulty Translating Outcomes Into Metrics
Most guides to social return on investment still use monetary values to estimate social and environmental impacts. Some nonprofit metrics, such as the monetary value of helping a client secure full-time employment, are relatively easy to track with tangible numbers. Other metrics, such as the social impact of helping someone find a community of friends, aren’t quite as easy to quantify. Nonprofit data analysis tools and proxies can simplify these processes for a less subjective understanding of your real-world impacts.
3. Lack of Consistent Reporting Practices
Inconsistent reporting can make it harder to track your nonprofit’s success and growth over time and even compromise transparency. Establish a clear standard for measuring your social return on investment, especially when dealing with proxies and other subjective data, to maintain continuity and maximize your insights.
How Case Management Software Supports SROI
Nonprofit case management software lets organizations map their outcomes over time while automating the process of preparing detailed SROI reports. For example, Casebook centralizes data to easily track, compare, and improve performance while boosting teams’ collaboration and access to data.
Tracking Services, Outcomes, and Progress
Case management tools track services and care plans in real time, letting caseworkers take immediate action and providing better insights into progress and outcomes. This can help you streamline operations on all levels, such as by identifying caseworkers’ most time-consuming tasks and the practices that actually motivate clients to make a change. It also allows you to identify both positive and negative changes resulting from your investment, such as improvements in safety, health, or environmental impacts.
Automating Performance Monitoring
Nonprofit software automatically tracks and records performance metrics, reducing the amount of data your team needs to manually enter while maximizing the insights available to you. Beyond keeping all essential metrics in one place, these insights can help you pinpoint your organization’s greatest strengths and weaknesses to refine your SROI over time.
Creating a Foundation for Measurement
Comparing your nonprofit’s performance metrics across different intervals can help you identify successes, setbacks, and other notable changes. This can help you adapt to your ever-evolving environment without losing sight of your SROI.
Making SROI Actionable With Technology
Beyond reporting, nonprofit technology can help you identify the best next steps to enhance your SROI and client outcomes. The right tools can save you time, provide greater clarity, and help you make more informed decisions, especially when properly integrated.
Real-Time Dashboards and Outcome Tracking
Case management tools use real-time notifications to keep caseworkers up-to-date on case progress and changes. This can expedite the entire case management process, from intake through final check-in, while keeping all key case information in one place.
Built-In Reporting Tailored to Nonprofit Goals
Customize your dashboards and reporting tools to align with your nonprofit’s unique mission and objectives. Pin your most essential metrics near the top of every nonprofit data analysis report so they are the first thing you and stakeholders see. You can also designate specific metrics to compare over time, such as the money spent on your investment and all other metrics related to your SROI.
Tools That Support Course Correction and Program Design
Casebook and other case management tools with real-time updates let you immediately respond to setbacks or issues with your program design. Pay attention to sudden dips or changes in your performance metrics, such as longer intake processes or decreased attendance at clients’ appointments. Tracking potential issues as they occur allows you to minimize their negative impacts rather than learning about them later on.
Inputs, Outputs, Outcomes, and Impact
Measuring your nonprofit’s social return on investment requires you to consider all components and stages of your operations. The key elements of the SROI framework include:
- Inputs: What funds and resources, such as grant money and staff hours, were invested into your operations and specific services? This is typically the number that your SROI needs to “beat” to consider your services financially successful.
- Outputs: What were the immediate results of that investment, such as the number of appointments completed? This metric estimates your short-term impacts, which are often easier to track and prove with tangible numbers.
- Outcomes: How did those outputs improve the lives of clients, households, and their greater communities? These numbers track your long-term impacts and may rely on subjective data and proxies.
- Impact: How does the final outcome compare to the potential outcome that would’ve occurred without your help? These numbers estimate how ‘better off’ clients are because of your intervention.
Practical Ways To Start Measuring SROI
Case management and nonprofit software can elevate your reporting and tracking processes, but you still have to start with a clear foundation.
Identify Metrics
First, establish a foundation to track your nonprofit’s success and changes, covering all four components of your SROI framework. Consider your key goals and stakeholders, including the demographics you’ll serve, to identify the best data to track over time.
Key metrics for measuring nonprofit SROI include:
- Client satisfaction scores
- Care plan progress
- Case closure outcomes
- Long-term client stability
- Fundraising data, such as donation growth and donor retention rates
Collect, Analyze, and Report Impact
Use nonprofit data analysis tools to collect, assess, and report key data without manually entering the data yourself. This lets you track performance across key intervals and pinpoint exactly how your investment contributes to success.
Share Insights
SROI data analytics are also excellent nonprofit funding tools. Report your successes using tangible numbers to key donors and stakeholders, building trust and encouraging them to donate again.
Quantifying Social Value
You can’t put a dollar amount on friendship, community support, or self-confidence, yet nonprofit data analysis often requires you to do so anyway. Understanding both the data and social aspects of SROI can help you effectively gauge your real-world impacts and communicate them to stakeholders.
Balancing Stories With Data
Your nonprofit’s best quarterly numbers won’t mean anything to someone who doesn’t understand them. Use stories and real-world examples to bring your key impact measurements to life and help donors, clients, and other stakeholders understand what your nonprofit actually does. Balancing stories with data covers both sides of the nonprofit’s social work with the people they assist.
Assigning Monetary Value
As discussed earlier, assigning monetary value is often necessary for calculating your SROI, even when results aren’t financial. Many nonprofit SROIs rely on proxies, which are generally agreed-upon financial values for non-monetary services. These estimate a dollar amount for the non-tangible improvements you’ve made in people’s lives, such as improved mental health.
Select an SROI Calculation Method
So, how do you measure social return on investment? There are several methods for calculating your SROI, including forecasting, evaluative, and continuous methods. As mentioned earlier, once you decide on a calculation method, use it consistently to achieve maximum insight and transparency.
Forecast SROI vs. Evaluative SROI
Forecast SROI formulas use your nonprofit’s current data to predict growth and long-term impacts. This approach can offer key insights before starting new operations or workflows and help newer nonprofits establish their footing.
Conversely, evaluative SROIs only use your existing data without any forecasting for the most accurate insights possible. Evaluative SROIs are typically better choices for established nonprofits with consistent funding and outcomes.
Timing, Scope, and Evidence
Other variables to consider when calculating SROI include:
- Timing: Forecast SROIs typically occur before the investment, while evaluative SROIs occur after. Alternatively, some of the best SROI strategies track data continuously, combining the benefits of both approaches.
- Scope: Consider whether your SROI is only analyzing the success of a specific project or your greater organizational impacts. For example, will this change only affect a few clients’ cases, or will it benefit all clients?
- Evidence: Define which metrics and proxies your calculations will use to establish a clear precedent moving forward.
SROI Insights for Better Decision-Making
SROI insights can also help your organization make confident, data-focused decisions that support growth and trust.
Data and Program Design
SROI results can help you identify the best program improvement strategies by highlighting your workflow’s greatest strengths and budget drains. Even if you don’t take immediate action, these insights can be key for decision makers when reevaluating operations later on, such as when deciding whether to renew your current case management software.
Realigning Resources
Calculating your SROI highlights the incredible ways your nonprofit helps real people and communities — along with the services that are not as effective. The correct data can help you safely realign your services to maximize the resources you invest in, achieving real-world results.
Proving Value, Improving Outcomes
Using your social return on investment for strategy and program design can maximize your nonprofit’s growth and genuinely change people’s lives for the better. Nonprofits can use SROI to enhance their programs by streamlining time-consuming processes, improving access to data, supporting fundraising, and more, especially with the right tools.
Casebook’s case management software was designed to help nonprofits amplify what works, achieving the most significant impact possible for their clients. Learn more about Casebook’s platform to get started.