| One of the most essential elements of socialmarkets is calculating the social value of non-profit work.
Social value can be measured in simple dollars, for example the fuel savings from a conservation effort. Social value can also include less tangible factors, for example the higher culture offered by an art museum.
Calculating social value can be complicated, but it can be expressed simply using SROI (Social Return On Investment):
"This project gives X dollars of social return for every dollar invested."
socialmarkets lets the input of its users change a listing's SROI over time, but the initial SROI comes from the details of the listing itself - most importantly, from the listing's outcomes.
Take the example of a soup kitchen with an annual budget of $10,000, and an outcome of serving 4000 meals. If current social data estimates a social value of $5 for each meal served, we can calculate an initial SROI like this:
Social Return = $5/meal x 4000 meals = $20,000
Investment = $10,000
Social Return on Investment = $20,000/$10,000 = $2 of social return for every $1 invested
This is just a simple example of an SROI calculation. Data for the social returns of less tangible outcomes is often far less clear. In addition, a listing can have different outcomes, and different odds of successfully reaching them. See [this post] for more details on this topic. |