Raising the profile of social enterprises: the use of social return on investment (SROI) and investment ready tools (IRT) to bridge the financial credibility gap

Abstract

PurposeTo evaluate the potential of social return on investment (SROI) and investment ready tools (IRT) in enabling social enterprises to address the credibility gap associated with their ability to build capacity and to adopt a more commercial/entrepreneurial approach to their activities.Design/methodology/approachThe differences that exist between social and financial returns in social enterprises are discussed. Reports the results of interviews conducted with key informants from the social investment industry in Scotland and England to explore their personal understanding or experience of SROI, the tools they use at present to assess social enterprise sustainability and capacity for growth and potential for investment, their likes and dislikes of SROI, and how they see SROI moving forward in a Scottish and/or UK context.FindingsThe results indicated that, should social enterprises find a way to overcome the resource implications of implementing SROI, this would enable them to become the preferred investment vehicle for new sources of social finance.Originality/valuePresents the findings from an MBA dissertation entitled “Is Measuring Social Return on Investment (SROI) a tool that can be used to raise the profile of social enterprises and help attract investment?” (Flockhart 2004) and includes preliminary findings from a pilot programme conducted by CEiS Ltd on the introduction of an Investment Ready Tool (IRT) for social enterprise.