SROI is an approach to understanding and managing the value of impact of activities. It is a framework that accounts for value. SROI is based on a set of principles that are applied within a framework.
Activities are normally delivered by organisations. SROI does not analyse the value of the organisations, but activities. The impact of these activities is the change as a result of them that occurs in the world around us and the worlds of those that are involved in the activities. The value of this impact is an assessment of how important the changes are to those who experience them. SROI does not leave the value judgement of how important a change should be to whoever is doing the analysis or to the audience. Rather, SROI assesses how important each change is to whoever experiences them, and locks this value judgement into the analysis. The total of the value of the impact, is then the overall value of the activity.
SROI explores and accounts for values for people that are often excluded from markets. These values for individuals are excluded because they are not commonly used or widely recognised. Values for organisations or parts of public sector systems are often included though, because they are commonly used or more widely recognised. And so these values have disproportionate influence in decisions compared with individualâ€™s values. Not because anyone has decided they are more or less important, but because they have been used before or are more recognised. SROI treats these two types of values equally, in order to find out what is important. It includes both types of values in the same terms that are used in those markets â€“ i.e. monetary terms.