The Social Return on Investment (SROI) monetizes material outcomes of relevant stakeholders as a result of target programs, discounts to prevent overvaluation and divides the aggregated sum to input all in terms of financial value. There have been constant attempts to measure social impact in South Korea utilizing this variation of cost-benefit analysis ratio, SROI, by an impact evaluating agency and in academia.

The SROI methodology is a principles-based approach which allows an individual accredited practitioner to assess the target programs comprehensively. Such subjectivity is a mixed blessing. An advantage of the principles-based approach is that it is easier to customize the methodology to be applicable to heterogeneous social program models than rules-based approach which array the indices that are standardized to assess specific sectors. However such discretion can also impose risks. Since the fixed principles are minimized, the SROI practitioner must be extra cautious not to over or under estimate in the assessment process.

Another differentiating characteristic of SROI methodology compared to other social impact evaluation approaches is that it involves monetization process. This helps funders understand the efficiency of their contribution intuitively. Meanwhile, this also causes excessive subjectivity to be involved inevitably. Searching for the optimal financial proxies is extremely difficult due to limited resources and accessibility to research reports and the practitioner has to determine the best alternative.

The ecosystem of social enterprises in South Korea is still quite nascent with innovative business models yet to be tested. Accordingly, the methodology which can tailor this diversity was more in need and that is probably why the SROI approach more prevalent until now in South Korea.

To complement the concerns over individual practitioner’s judgment, The SROI Network has embedded an adjustment stage in the evaluation process. Standardization of discounting is also a unique element of what The SROI Network proposes compared to other social impact evaluation methodologies which calculate SROI.

Although the naming of SROI methodology may seem to restrict its definition of assessment to financial cost and social benefit analysis only, SROI methodology as a whole provides much wider range of implications than the mere ratio. For instance, the monetized value of how much each stakeholder contributes over the course of years is expected to help the internal management to make strategic decisions.