What is Social Return On Investment (SROI)?
Similar to traditional businesses, social enterprises and social businesses involve investment.
Investments in social enterprises and traditional businesses can often include investments in time (social responsibility), investments in your energy and more importantly investments in your money. It can also include in human labour as well as different forms investments in capital.
Expecting a Return On Your Investment
With all these types of investments for both traditional businesses and social enterprises, there is of course an expectation that these investments will provide a return.
The major difference between a social enterprise and traditional business is that a traditional business aims mainly to get a financial return on that investment. A financial return often means shares within a company, a profit or various other forms of financial gains from that investment.
Social Enterprise & Social Return On Investment (SROI)
On the other hand, social entrepreneurship and social enterprises look further than that. They look for not only financial return on investment but also a social return on that investment.
Now a social return on investment can often mean returns with respect to a positive impact within the community in which the social enterprise works. It can also mean a return in terms of the impact the positive benefit the social enterprise has on the employees of the company as well.
Social returns on an investment can also include an environmental impact in terms of improving the sustainability of the ecological environment surrounding and impacted by the social enterprise.
So social enterprises include both: the financial return as well as that social return through social responsibility. Investors especially social investors are looking for both that financial return and also a stable and sustainable social return.