SROI : In Search of a Verb

The concept of “social return on investment” is absolutely core to balancing the proverbial double (or triple) bottom line of social enterprise. It’s therefore no surprise that the need to accurately and consistently evaluate and express that value has been a topic of much discussion and hot debate. It’s a critical dialog–but I think the current conversation has a verb problem.

Much of the time, these conversations refer to SROI measurement. First off, only things that exist on an ratio scale can even BE measured. And I think we can all agree that there is no “absolute zero” on the scale of social good and that the “units” are hardly regular or continuous. (Seems to me we’d be lucky to even agree on an ordinal scale for something as context-dependent as social good.) So, in the strictest sense, measuring SROI is not even an option.

Organizations that acknowledge the stickiness of the measurement issue often claim to calculate SROI instead…It sounds less concrete perhaps, but often ends up just as arbitrary. One well-known (and arguably quite effective) US foundation literally uses a multiplier termed the “(Foundation Name) Factor” to calculate how much of the “measured” social change is attributable to their programs. Most SROI calculation schema I’ve encountered have produced this same unidimensional, artificial, even misleading oversimplification–though the amount of time and effort required to arrive there varies widely.

I’m in no way suggesting we stop looking for ways to wrap our heads around the effects of our efforts, but I think the obsession with quantification does not serve us well. So…

Should SROI be measured? Good luck with that.
Should it be calculated? Perhaps, when it fits.
Should it be demonstrated? Whenever possible.
Should it be explored? Always.

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The Social Change Drive-Thru

“Hi. I’d like a global micro-credit initiative, a large order of AIDS education a-a-a-nd…a maternal health clinic”
“Would you like to eradicate malaria with that?”

Sure, it sounds ridiculous. But the McDonaldization of society is has significant implications for social change in general and philanthropy and social entrepreneurship in particular.

Here’s an example: our most recent bucket–a partnership to provide cataract surgeries and training in Uganda–tipped this morning. (yay!) And we’ve already received numerous requests for photos, video, and other updates on the status of the program. (They’re not even on the plane yet, people!?) Nothing says “American” like instant gratification, eh?

This is exactly the attitude that the founders of Kiva perceptively tapped in setting up their program as a person-to-person loan experience. You select an entrepreneur (May I take your order?) make a loan (Sure. I’d like…) and within days or weeks start getting updates on the repayment of your loan and the success of that entrepreneur’s micro-business (Thank-you! Have a nice day.)

It’s apparent to all but the most casual observer that the cycle there is WAY shorter than the time it would actually take that particular $25 to make it through the system of international banks, national micro-finance institutions and local loan officers to the individual borrower (even if that pathway weren’t a morass of bureaucracy), let alone for that borrower to bring together all the other forms of capital (human, social, natural, etc.) necessary to launch and grow a business and begin repaying the loan.¬†Yet, many Kiva users were distraught (and even angry) to discover that the individual borrowers profiled on the site had actually been given loans months ago.

Granted, there are many other issues in the current conversation about Kiva (and microfinance in general)–interest rates, revolving-door loans, profit, and more–but the “revelation” about this time delay opened the can of worms.

So, which is it, America? You want an authentic giving experience (the exact dollars you contribute going to the exact project you chose to support) or you want to see photos of newly-sighted Ugandans within hours of your gift? You can’t have both.

Changing the world is not a drive-thru. (We have figured out, incidentally, how to put it on the dollar menu, though. Check it out.)