Discounting Factors in SROI

An Infographic explaining discounted factors in SROI

One of the strengths of SROI is that it recognises that not all observed change can be attributed entirely to a programme. People's lives are influenced by many factors like family support, government schemes, economic conditions, personal motivation, and the work of other organisations.

If we simply valued every outcome observed, we would almost certainly overestimate the programme's contribution.

To avoid this, SROI applies a series of discounting factors that estimate how much of the observed value can reasonably be attributed to the intervention. The four most common discounting factors are:

• Deadweight: What would have happened anyway, even without the programme?

• Attribution: How much of the change was due to other organisations, family members, government programmes or external influences?

• Displacement: Did the programme create benefits in one area by reducing benefits somewhere else?

• Drop-off and Duration: How long will the outcome last, and does its value reduce over time?

  
  

Rather than making these assumptions behind closed doors, a participatory SROI asks stakeholders directly. For each significant outcome, participants are asked questions such as:

• "If this programme had not existed, do you think this change would still have happened?"

• "If yes, how much of it do you think would have happened anyway?"

• "Who or what else contributed to this change?"

• "How long do you think this benefit will continue?"

  
  

Participants are often asked to estimate these as percentages. For example, a group may feel that around 30% of the increase in employment would have happened anyway because of general economic opportunities, while 70% was genuinely due to the programme. Similarly, they may feel that family support or another government scheme contributed to part of the outcome, leading to an attribution adjustment.

These stakeholder estimates are not accepted automatically. They are triangulated with programme records, monitoring data, comparison groups (where available), secondary research and discussions with programme staff and subject-matter experts. Where there is uncertainty, conservative assumptions are generally preferred.

The purpose of discounting is not to reduce the programme's impact. Rather, it is to produce an estimate that is transparent, evidence-based and credible. A lower SROI ratio that carefully accounts for deadweight, attribution and other adjustments is ultimately far more valuable than an inflated figure that cannot be defended. In practice, these discounting factors are often what distinguish a robust SROI from one that simply monetises outcomes.

They ensure that the final value represents the change the programme actually created, rather than all the change that happened around it.

Watch the full webinar here:

https://www.youtube.com/watch?v=b7glYaklW6w

If you're looking to build your first SROI, the following open-access resources are the best place to start.

Resource	What it includes
Guide to SROI – Social Value International	The definitive step-by-step guide to conducting an SROI, from stakeholder engagement and Theory of Change to valuation, discounting and reporting.
Value Map Template – Social Value International	The standard template is used to map stakeholders, outcomes, indicators, financial proxies and impact adjustments across any SROI study.
Standards and Guidance – Social Value International	Detailed guidance on applying the Principles of Social Value, including materiality, stakeholder engagement, valuation and assurance.
Social Return on Investment (SROI) Sample Reports	Case studies, technical papers and practical examples across different sectors.
Global Value Exchange	A searchable database of indicators, outcomes and financial proxies that can support valuation, while always requiring contextual adaptation.

Recommended Reads

• 5 Things to Consider when using SROI