SROI Benchmarks and Comparisons

SMI’s primary goal is to determine the magnitudes of value that get provided for the disadvantaged.  To do this, we use SROIs, which measure the value provided for each dollar invested in the programs that provide that value. SROIs are reported as ratios, such as 3:1, meaning that $3 in value is created for the disadvantaged for each $1 donated or invested. Some benchmarks are helpful in deciphering and comparing SROIs.

  • Simply transferring money from a donor to a beneficiary should produce an SROI of, say, .9:1, meaning $0.90 of value is received by beneficiaries for each dollar donated, assuming it costs some money to raise funds (or collect taxes), administer the funds, identify beneficiaries, and transfer money to them.  Often outright transfers are not made if donors feel there is a risk funds will be used to do unwise things, like buy drugs.
  • Based on our experience, we suspect SROIs in the range of .7:1 to 6:1 are the norm.  For example, World Bank SROIs for education worldwide seem to be in this range.1
  • In the financial world, a return of 200% or a 2:1 ratio (meaning investors doubled their money) over a 10 year period (equivalent to a roughly 8% APR) is considered a good return (we sometimes light-heartedly suggest that if you cannot get a 10-year return on donations of 200%, invest the money in the stock market and give the results to the poor in cash).
  • SMI suspects that the SROI of most large-scale government human service programs is less than 2:1, especially when you include the costs of collecting taxes to fund the program and program administration.
  • It is our understanding that the highest large SROI program in the US is the GI Bill and that it had an SROI of 7:1. Veterans received about $7 in additional lifetime income benefits for every dollar invested in their education.  We suspect that the average incomes of recipients would have been around $20,000 per year in current dollar terms.
  • It is useful to think of the impact that differences in SROIs have on individual beneficiaries.  Suppose one project has an SROI of 5:1 and another has an SROI of 2:1. This means that a typical beneficiary receives $5,000 from each $1,000 donated to the first project, $3,000 more than she receives from the second!
  • High SROIs do exist for human assistance programs.  As one unusually high example, SMI has found one major program with an SROI of around 30:1 for U.S. workers earning $25,000. 

A study by a nationally recognized consulting firm examining affiliates of an adult volunteer-based literacy program in the United States showed that for every dollar invested in the program (focusing on students who had an average annual income of around $25,000), there was a $33 return in economic value. In a subsequent two-year effort, SMI confirmed results of this order of magnitude by using stratified samples from a component of this same charity.

  • Our clients sometimes ask how the SROI we report for their organization or program compares with that of similar organizations.  This information provides context to our SROI estimates and may be useful as our clients use our SROI estimates to raise funds, assess the effectiveness of their programs and consider possible productivity improvements.  We offer to try to help organizations obtain this comparative information, either from us or other sources, in a cost-effective manner, subject to the condition that we will report aggregate or average SROIs wherever possible and otherwise will not identify by name individual organizations evaluated to avoid disgracing any particular organization.
  • SMI is looking for SROIs of over 5:1 for individuals earning less than $7,000 a year. We have identified several of these, including some in the 15:1 range or higher.

 1. See, e.g., Psacharopoulos, George; and Harry Anthony Patrinos. 2002. "Returns to Investment in Education: A Further Update," World Bank Policy Research Working Paper 2881.