Progress Note: Practitioner Understanding of Social Return on Investment (SROI)

Applying social return on investment to microfinance
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This paper discusses social return on investment (SROI) and its implications for microfinance practitioners.

SROI has contributed to the development scenario through increased accountability of non-profits. The focus on outcomes instead of inputs draws attention to the social performance of development institutions and their ability to measure results. It has also contributed towards growth in social responsible investing (SRI). Social return has the ability to:

  • Establish customer-centric service delivery for borrowers and investors;
  • Derive social performance;
  • Provide information to make informed management decisions;
  • Improve financial and social bottomlines;
  • Increase investment by appealing to social investors;
  • Establish transparency in documenting social performance;
  • Enable comparisons between organizations;
  • Connect social impact to investment inputs and monetize social benefits.

Finally, the paper suggests that SROI should aim to increase attention on MFI successes and investment in MFIs. It should seek to normalize investor participation in microfinance and develop standards for social return in microfinance. SROI should also incorporate new tools in management and investor decision-making.

About this Publication

By Thys, D. & Tulchin, D. & Ohri, C. G.