Social Return on Investment
As a nonprofit social enterprise, Louis Jean Foundation generates earned revenue, but we also receive donor dollars to support a variety of countries and program types. We use a concept called Social Return on Investment (SROI) to help us guide donor dollars most cost-effectively.
To calculate SROI, we take the total impact of a program in terms of new farmer income generated ($), and then divide it by the donor cost of operating that program ($). On a per-farmer basis, SROI is equivalent to the average incremental profit per farmer divided by the average donor subsidy per farmer. For example, suppose that last year, a country program served 100,000 farmers and generated an estimated $100 of new income per farmer.
How we use SROI
SROI is a powerful metric in that it enables us to combine impact and cost, to ultimately show how cost-effectively we’re achieving impact as a whole and within specific areas of operations. For instance, we aspire to generate at least $4 in incremental profit for farmers for every $1 in donor subsidy spent on our core program, which we believe is strong for the population we serve.
The biggest use of SROI at Louis Jean Foundation is to inform internal decision-making. As with all donor-supported organizations, we have limited resources and must make decisions as to how we deploy those resources to maximum effect.