In a country where 650 million individuals are under the age of 25, the potential for economic growth is immense yet underutilized. Arun Nalavadi, Executive Director, Sustainability and Livelihoods at Magic Bus India Foundation, draws on over 40 years of experience, merging corporate acumen with a passion for social impact. With a history of senior management roles, including his tenure as Country Manager at Accor, Arun has dedicated the last decade to advancing youth empowerment in underserved communities.
In this riveting article, he explores how Social Return on Investment (SROI) serves as a critical framework for measuring the true impact of non-profit initiatives in India. As the nation grapples with a workforce largely unprepared for the demands of the modern economy, Arun advocates for SROI as a pivotal tool for driving transparency, accountability, and meaningful social change, ultimately ensuring that every effort counts towards a sustainable future.
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Opinion by Mr Arun Nalavadi, Executive Director – Sustainability and Livelihoods, Magic Bus India Foundation
India, home to 650 million people under the age of 25 and 845 million under 35, holds one of the largest youth populations in the world. This demographic advantage presents a powerful opportunity for economic growth. By 2050, the nation's workforce is projected to swell to 1.08 billion. Yet, despite this potential, only 2% of the 12 million youth entering the workforce each year are adequately skilled, and fewer than 10% of graduates are considered employable, according to the World Economic Forum. This stark gap demands a rethink of how we approach skill development, ensuring it aligns with the evolving needs of the 21st century.
A key solution lies in equipping youth from underserved communities with life and employability skills, which opens the door to transformative opportunities. These skills enable them to transition into sustainable employment, enhancing their sense of agency and significantly contributing to increased family incomes. This financial upliftment enables youth to make informed decisions about their careers, helping them break the cycle of poverty and lead dignified lives. Empowered individuals then serve as role models and catalysts for positive change, driving further development and progress within their communities.
To ensure the long-term success of such initiatives, tools like Social Return on Investment (SROI) play a crucial role in measuring impact. SROI provides a more holistic assessment by evaluating the social, environmental, and economic value generated by investments. It reflects social value in terms of increased household income and employment stability. Unlike traditional ROI, SROI goes beyond financial returns, incorporating stakeholder perspectives and focusing on long-term outcomes, offering deeper insights into an organization’s true impact.
By embracing SROI, organizations can highlight their true human impact, foster meaningful employment, and empower the youth—ultimately creating more impactful and sustainable social interventions for a brighter future in India.
Scope of Social Return On Investment
In India, the scope for impact is immense. SROI can be used to measure how interventions are driving long-term outcomes in poverty reduction, education access, and employment. It helps identify the social value of young people learning life skills and employability skills in monetary terms. It enhances nonprofit decision-making by guiding resource allocation to the most impactful programmes, ensuring efficient use of funds. It also has the potential to improve stakeholder engagement through clear communication of measurable outcomes, fostering trust and collaboration. SROI data supports strategic planning by aligning initiatives with community needs and enables effective advocacy by providing compelling evidence for policy influence.
SROI can be measured in two ways: evaluative and forecasting. Evaluative SROI looks at the actual outcomes of completed projects, while forecasting SROI predicts potential impact during the planning stages. This dual approach allows organizations to reflect on past work and create data-driven strategies for future efforts.
Principles and Challenges of SROI
SROI is based on seven core principles: engaging stakeholders, understanding change, valuing what matters, focusing on what’s material, avoiding over-claiming, ensuring transparency, and verifying the results. These principles help ensure SROI provides a reliable reflection of the social value generated by nonprofits.
In India, the adoption of Social Return on Investment (SROI) by nonprofits is hindered by several barriers, including training gaps and financial constraints. Key challenges include the difficulty of quantifying social values in monetary terms, identifying appropriate proxy variables for intangible impacts, and effectively engaging stakeholders. The high costs associated with SROI assessments can be prohibitive for smaller organizations. Additionally, a lack of targeted training and awareness about SROI limits understanding and skills among nonprofit staff, while inadequate data collection systems hinder reliable analysis. Addressing these issues through capacity building and funding support is crucial for enhancing the adoption of SROI and maximizing social impact.
Despite these challenges, one study by the Indian School of Business (ISB) found that for every INR 1 invested in a skills development programme, INR 5–6 worth of social value was generated in terms of increased household income and employment stability. This shows the potential returns nonprofits can highlight with an effective SROI framework.
Collaboration and Technology: Enabling the Future of SROI
India’s nonprofit sector is seeing growing momentum around SROI, driven by collaboration and technology. For example, the Tata Institute of Social Sciences (TISS), in collaboration with over 100 NGOs, developed a shared SROI framework for skill-based programmes. The results indicated a 10-12% higher income for programme beneficiaries compared to control groups that did not participate.
The use of technology can make SROI more accessible to nonprofits of all sizes. Impact assessment is crucial for understanding and demonstrating the value, efficiency and effectiveness of a programme. By using tools like Social Return on Investment (SROI), organizations can quantify their activities' social, environmental, and economic benefits. This showcases their achievements and builds trust and credibility with stakeholders, including funding agencies and CSR donors.
Organizations are increasingly using mobile data collection platforms to streamline their monitoring and evaluation processes. AI-driven analytics platforms are also being developed to simplify SROI calculations by automating data analysis and providing real-time insights. A study by Accenture found that Indian nonprofits using such technology reported a 30% reduction in time spent on evaluation activities, freeing up more resources for direct impact work.
The Future of SROI in India
The future of SROI in India lies in its ability to drive sustainable, measurable change. By developing standardized metrics, nonprofits can create consistency across regions and sectors. For example, the Ministry of Skill Development and Entrepreneurship has piloted an SROI approach to assess the long-term impacts of vocational training programmes. Early results show that trained individuals have a 40% higher likelihood of securing formal employment than their untrained counterparts.
At its core, SROI is about measuring what truly matters: the lives we change, the futures we build, and the communities we strengthen. By incorporating SROI into their impact assessments, nonprofits in India can ensure that every effort is making a lasting, measurable difference.
As nonprofits in India embrace SROI, they enhance transparency and accountability by clearly demonstrating the social value of their work. This openness builds trust with stakeholders and helps allocate resources more effectively. Ultimately, SROI empowers organizations to showcase their commitment to real, sustainable change, ensuring that impact is not just promised but measured.
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