Social Impact Investing

5. Do not over-claim
Only claim the value that activities are responsible for creating
6. Be transparent
Demonstrate the basis on which the analysis may be considered accurate and
honest, and show that it will be reported to and discussed with stakeholders
7. Verify the result
Ensure appropriate independent assurance
Monetisation Principle
The translation of extra-financial value into monetary terms is considered an important
part of SROI analysis by some practitioners, and problematic when it is made a
universal requirement by others. Essentially, the monestisation principle assumes that
price is a proxy for value.
While prices represent exchange value – the market price at which demand equals
supply – they do not completely represent all the value to either the seller or the
consumer. In other words, they do not capture economic surplus (consumer or producer
surplus). They also do not include the positive or negative value (i.e., externalities) for
others who may be affected by an exchange. Moreover, prices will depend in part on
the distribution of income and wealth: different distributions result in different prices
which result in different proxies for value. Hence market prices do not always accurately
reflect what people value.
Proponents of SROI argue that using monetary proxies (market prices or other
monetary proxies) for social, economic and environmental value offers several practical
benefits:
it makes it easier to align and integrate performance management systems with
financial management systems;
it aids communication with internal stakeholders, especially those responsible for
finances and resource allocation, and with those who prefer quantitative to
qualitative ways of learning;
it induces transparency since it precipitates the clarification of which values have
been included and which have not been included;
it permits sensitivity analysis to show which assumptions are more important in
that the result is more affected by changes in some assumptions than others;
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