Download a full PDF version of the report Alliance of Sector Skills Councils - Evaluating economic impact
Social Impact is the effect that the work of Third (or Public) sector bodies has in meeting the needs of its beneficiary group. Social Impact is commonly measured by considering Social Return on Investment ('SROI'), using reasonable measures of the values of outcomes to calculate an economic value for the effect. We use three basic models, shown below with examples, to evaluate social impact:
- Economic benefit created: where, either at a micro or macro level, there is an impact on earning capacity, consumption of benefits, reliance on welfare systems, on productivity, on tax revenues, or on trade or indeed wider social or environmental benefits (e.g. an intervention to assist a homeless person in training and finding employment creates additional tax revenues).
- Costs saved or not wasted: where the intervention results in a saving in the cost of other interventions, consequential costs, or increases the effectiveness of another intervention (e.g. an intervention to rehabilitate a drug user is likely to reduce the need for interventions by the health service and police allowing these resources to be redirected).
- Alternative or cheaper sourcing: the saving achieved where the intervention directly replaces another more expensive one (e.g. a charity provides information and research to government at a lower cost than a commercial research agency would charge, thus achieving a saving).
What does it tell me?
Social Return on Investment ('SROI') provides you with a measure of how effective your organisation is at generating measurable social benefits. Engaging with key stakeholders during this process will help you to develop your understanding of which outcomes are most valued by your beneficiaries and funders.
How will it help my organisation?
SROI can help you to:
- demonstrate the value that your organisation adds to funders in order to defend against cuts or argue for increased funding
- forecast expected outcomes from both existing and new activities and develop measures to assess your performance
- show that you have considered and can meet the Public Benefit test, which is now mandatory for all charities.
Background to Social Impact Measurement
This document provides a brief background to the development of social impact measurement tools. It also highlights the growing interest from charities and other Non-Profit organisations in using such tools to show the true value of their social activities, as well as how the subject of social impact measurement is forcing its way up central and local government agendas for reasons stated.
We hope you will find this a useful guide, particularly if you are considering the merits of utilising social impact measurement tools for your organisation.
Baker Tilly case studies – what our clients say
At Baker Tilly we are delighted to have supported Skillset Sector Skills Council and the Alliance of Sector Skills Councils in evaluating and developing measurement tools to help them to understand the impact their organisations have on society. Below are quotes from both of these organisations.
“Like so many charities we have been outcome-focussed, working for the interests of our beneficiary groups. We had not realised how great was the value gained by our work, and this has significantly changed how we view ourselves and relate to our funders. The material was practical, insightful and relevant: a support for our future thought and strategy.”
Executive Director of Policy & Development (Deputy CEO)
“...this gives a flavour of the immense impact that SSCs have on the UK economy in developing a skilled workforce....It has proved an invaluable foundation to our discussions with our funders”
View a range of SROI reports from Baker Tilly.
This document provides a brief background to the development of social impact measurement tools. Download the report