SROI as a Method for Evaluation Research: Understanding Merits and Limitations

NPOs and their funders are increasingly drawn to the Social Return on Investment (SROI) method to evaluate the social impact of programs, organizations or organization networks. While many claims about the benefits of SROI have been expressed, various points of criticism have also been raised. On the basis of both current research and our own experience in conducting SROI analyses, we develop a comprehensive assessment of this method, which is structured along two dimensions: the observer's paradigmatic perspective, on the one hand, and positive or negative valuation, on the other. We identify two major merits: SROI analysis can provide legitimacy to NPOs or their funders, and it can assist in allocating resources. We identify limitations from three perspectives: From an interpretative-sociological perspective, criticism of commensuration and utilitarianism calls the method as a whole into question. From a technical-instrumental perspective, there are a number of difficulties that could however be overcome as the method matures. From an intermediary perspective, a number of limitations become apparent that, while inherent to SROI analysis, are no reason for abandoning it, as long as they are thoroughly understood. We conclude by providing suggestions for the responsible use of SROI analysis