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Measuring social impact is essential for organisations striving to create meaningful changes in people's lives. Without a clear and consistent way to measure outcomes, it’s challenging to understand the real value of interventions or to compare one initiative's success to another. This is where Social Return on Investment (SROI) and WELLBYs (Wellbeing-Adjusted Life Years) comes in, providing a comprehensive method for assessing and benchmarking social interventions. These frameworks not only quantify the changes created but also enable organisations to make informed decisions based on both social and economic value.
SROI is a recognized method for measuring the social and economic value of social interventions. It converts outcomes into monetary terms, allowing decision-makers to compare the value created for stakeholders by their interventions with the costs involved. This approach enables organisations to demonstrate how much "economic value" is generated for every dollar invested, but it also includes a use of social values (WELLBYs) that enables organisations to compare how widely different interventions with different target audiences and social challenges increase life satisfaction.
For example, an organisation running a mental health initiative may use SROI to assess not only the reduced stress or anxiety among participants but also the corresponding savings to the healthcare system or improved workplace productivity. Each of these outcomes is assigned a financial value through SØM, and the overall SROI ratio provides a clear measure of the intervention's effectiveness and the value created for people and society. If an intervention’s SROI ratio is 3:1, it means for every dollar invested, the community receives $3 worth of social and economic value.
This provides a comprehensive reporting, but also a systematic impact measurement that enables organisations to act proactively, if needed, while also giving them a compelling proof of their impact on people and society for investors, municipalities and other stakeholders.
Read more about Social Return on Investment
SROI allows organisations to benchmark interventions by providing insight into both their economic and social value. This means decision-makers can compare different initiatives based on the financial returns they provide (such as savings in healthcare costs or welfare support) and the social impact they create (such as improvements in mental health). This dual insight enables more strategic resource allocation, ensuring organisations can prioritize the most impactful and cost-effective programs.
WELLBYs, or Wellbeing-Adjusted Life Years, are part of the social value measured in SROI. They capture the subjective well-being changes generated by an intervention, particularly improvements in life satisfaction. This method relies on a straightforward question: “Overall, how satisfied are you with your life?” Participants rate their life satisfaction on a scale from 0 to 10, and any improvements in their score can be translated into WELLBYs. Despite its simplicity, this question is widely used, also by the OECD, to understand overall life satisfaction. Therefore there is a wide array of research and science papers on this questions, which strengthens the scientific rigour of the impact measurement.
For example, an initiative aiming to reduce loneliness among seniors might see participants' loneliness decrease. This decrease can be quantified into WELLBYs, thereby showing how the decreased loneliness impacts the participants life satisfaction with each point of improvement representing one year of enhanced well-being for one person.
Read more about Subjective Wellbeing Valuation and WELLBY
WELLBYs provide a common "currency" for comparing the effectiveness of different interventions, such as reducing anxiety in young people versus alleviating loneliness in seniors. By calculating the WELLBYs generated by each intervention, organisations can assess which initiatives create the most significant improvements in life satisfaction. This comparison allows organisations to prioritize interventions that generate the greatest well-being and social value for participants at the most efficient cost.
Benchmarking through SROI and WELLBYs allows organisations to scientifically compare different programs on the value they create for people and potentially also society. The approaches ensure that decision-makers can identify which interventions are most cost-effective and have the greatest social impact. By doing so, organisations can allocate resources more strategically and ensure that their efforts lead to measurable, lasting change.
For organisations new to impact measurement, SROI and WELLBYs provide a streamlined framework for measuring social impact and understanding both the budgetary and human value of their work. By utilizing one of these methods, organisations can not only prove the impact of their programs but also demonstrate how they compare to others, ensuring that every effort is directed toward the most impactful interventions.
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