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It can be argued that demonstrating social impact is very important, however most social entrepreneurs are not very good and showing this. While some just might not see the results for their social projects yet, others simply do not understand how to demonstrate this social impact. There are a few tools out there for organizations interested in evaluating social impact such as the Social Return on Investment (SROI) analytics model.

“Social Return on Investment is an analytic tool for measuring and accounting for a much broader concept of value, taking into account social, economic and environmental factors.”

SROI is commonly used to come up with figures for the social value (or social impact) generated by products and services, such as the example quoted by nef that: “£1 invested in high-quality residential care for children generates a social return of between £4 and £6.10.”

However, while SROI has been proven to have sound basis principles (particularly tested in the UK, which has a substantially large social enterprise market), there are many other models to test social impact. The challenge is making sure these models encompass realistic objectives in comparison to the diversity and stages of various social enterprises, and whether social entrepreneurs know how to correctly use them when measuring their businesses.

As presented in recent article in The Guardian:

Different approaches will be suitable for different social enterprises but there’s no excuse for not measuring your impact in some way. The growth in social investment and the introduction of the Public Services (Social Value) Act means that some social enterprises will be under increasing pressure to demonstrate their social impact to other funders and commissioners but that’s only part of the point.

The key issue is that, as social enterprises, we need to know what we’re trying to do and whether it’s working. If we, as people running social enterprise don’t have the time and resources to work out what we’re doing and how it’s making the world a better place, we probably don’t have the time and resources to run an organisation at all.

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