If you’re the type to doubt the value or utility of a good checklist I suggest you read The logic and methodology of checklists by Michael Scriven. Here’s an excerpt:

“The humble checklist, while no one would deny its utility in evaluation and elsewhere, is usually thought to fall somewhat below the entry level of what we call a methodology, let alone a theory. But many checklists used in evaluation incorporate a quite complex theory, or at least a set of assumptions, which we are well advised to uncover; and the process of validating an evaluative checklist is a task calling for considerable sophistication. Indeed, while the theory underlying a checklist is less ambitious than the kind that we normally call a program theory, it is often all the theory we need for an evaluation.”

SROI was pioneered by the Roberts Enterprise Development Fund (REDF) a San Francisco-based venture philanthropy fund that worked for years to fully develop and implement SROI. REDF applied its SROI methodology to non-profit organizations in its portfolio that operated social enterprises with the explicit mission of employing people with the most significant barriers to work. REDF stated that its work in this area was positive in many ways but they also experienced a host of problems with the approach. For example, the information on cost-effectiveness gathered and analyzed was incomplete and could not be compared to similar programs.

Now REDF has announced the release of an article by Cynthia Gair (REDF’s Managing Director of Programs) entitled SROI Act II: A call to Action for Next Generation SROI. In this article, REDF proposes what it calls “significant improvements” to existing SROI approaches.

While I applaud REDF efforts, I still believe, as I wrote months ago in “Should you do a Social Return On Investment Analysis”, that SROI is far from ready for prime time implementation. In fact, I believe you should not do an SROI analysis unless:

• You wish to test the assumption that publishing a high SROI ratio increases the likelihood of a social venture attracting funders or investors, or
•  You are trying to advance the use, applicability or robustness of the SROI method (for whatever reason), or
• You are a social venture with an investor or funder that insists that you do it (in which case it is a marketing cost), or

• You find yourself involved with a tested and validated service model AND have access to robust financial and social performance tracking systems AND are interested in supporting the replication of the service model AND have the resources to do so. 

There is general agreement among critics and advocates alike that SROI analysis is still in its infancy and that we may very well be years away from realizing any significant benefits to the approach and it seems prudent to recognize that there may actually be some harm in conducting SROI analyses prematurely; for example:

• Promising social ventures could be put at an unfair disadvantage in the marketplace if SROI analyses are done poorly and inconsistently across organizations with similar social and environmental goals
•  The dollars spent to undertake SROI analyses have an associated opportunity cost that should be recognized and considered. Social ventures or their funders and investors could possibly expend those resources to greater effect elsewhere.
•  Key impacts and/or costs are likely missing during an analysis which in turn could lead to poor decision making if the results of an analysis are fed into the managerial or strategic processes.
•  The sector could use SROI analysis in such a way as to develop an implicit set of metrics (a checklist of types of social value) that is not supported by evidence (for example, the REDF site uses measures of self esteem as one of its three examples of ‘social outcomes’, despite the fact that self-esteem is a poor indicator of outcomes in many populations).
•  If done poorly (or even if the perception is that it was done poorly) there are huge risks to credibility for the Social Venture, Investor(s), the SROI method itself and the service/business model being analyzed.
•  SROI analyses could lead to perverse effects or gaming in the system.

For a more detailed critique of SROI read my full article: Should you do a Social Return on Investment Analysis?