Social Return on Investment and Its Relevance to Microfinance

This document discusses the returns generated form social investments and various other aspects associated with it.The document deals with the following:

• The concept of social investment and Social Return On Investment (SROI);
• The method of measuring the benefits generated from social investment;
• The relevance of SROI in the microfinance industry;
• Difference between SROI and impact assessment.

The document highlights SROI and the value creation framework created by social investments. It also elucidates the various factors that associate social investments with microfinance, classifying them into the following categories:

• Broad factors:
  • Increased demand for accountability and transparency from the donors;
  • Growth in socially responsible investing.
• Microfinance specific factors:
  • Insufficient donor funds to meet the growing demand;
  • Need to define and differentiate the MFI performance.

Further, the document describes the tools to measure SROI, including the following groups:

• Group-1 - the different techniques used include:
  • Process validation;
  • Balance scorecard;
  • Global reporting initiatives.
• Group-2 - the techniques used include various quantitative equations and formulae developed to measure such returns.