Commercialisation of microfinance
Social return on investment and its relevance to microfinance
Integrating measurements of the social return on investment into microfinance
Authors:
D. Thys; D. Tulchin; C. Ohri
Publisher:
Small Enterprise Education and Promotion Network , 2005
The term "social return on investment" (SROI) generally refers to a method of measuring social benefits. It is expressed as social performance as a ratio to an input, typically capital. SROI is also a tool by which microfinance institutions (MFIs) can demonstrate their social value, which is presumed to be important to attract socially responsible investors to participate in microfinance as well as to allocate different levels of socially responsible investment to those MFIs offering varying risk and social/financial return.
The purpose of this Progress Note is to introduce key concepts of SROI to the SEEP Network and broader microfinance communities, discuss factors contributing to SROI emerging on the microfinance agenda, explore SROI’s value to microfinance institutions, describe some SROI tools with examples, and suggest next steps for microfinance practitioners in developing/promoting SROI within the microfinance industry.
The Note recommends the following actions:
- add the topic of SROI to more microfinance conferences
- encourage work with the socially responsible investment (SRI) community to identify their priorities and interests in social return and social return measurement.
