From Outcomes to Financial Value: How Do We Select Credible Financial Proxies?

SROI chart explaining outcomes, evidence, validation, and financial proxies

One of the most debated and often misunderstood parts of Social Return on Investment is financial valuation. How do we assign a value to something like student agency, community empowerment, cleaner rivers or the preservation of traditional knowledge? And once a value has been selected, how do we know that it is credible?

The first principle to remember is that a financial proxy is not the price of an outcome. It is an estimate used to represent the relative importance or economic significance of a change that does not have an observable market price. For example, placing a monetary value on increased confidence does not mean that confidence can literally be bought or sold. The proxy allows that outcome to be included in the analysis alongside other outcomes and compared with the investment made.

Good valuation therefore requires us to establish that the outcome occurred, mattered to stakeholders, and is represented by a proxy that is credible, transparent and relevant to the context. The table below illustrates how this could be approached for the questions raised during the Social Impact Dialogue.

Outcome/Program	Possible valuation approach and example	Relevant evidence sources
Access to job linkages	Estimate the increased probability of obtaining employment and multiply it by the additional net earnings generated. Avoided job-search costs, such as travel or intermediary fees, may also be included.	•Programme placement and retention records • Employer records • Participant tracer studies •Comparison-group employment rates • Periodic Labour Force Survey
Improved employability without immediate employment	Use the cost of accessing an equivalent package of career counselling, interview preparation, certification and placement support. Alternatively, estimate the probability of future employment and use a conservative forecast.	•Local market prices for comparable services • Government skilling data • Employer interviews • Periodic Labour Force Survey
Financial independence among scholarship recipients	Estimate incremental earnings associated with continued education, while also considering employment participation, control over income and reduced financial dependence. Compare recipients with a credible counterfactual such as eligible non-recipients or similar historical cohorts.	• Scholarship alumni surveys • Programme and educational records • Periodic Labour Force Survey •World Bank research on returns to education
Student agency	First measure agency using a validated scale covering areas such as voice, self-efficacy, decision-making and goal-setting. A proxy could then use the cost of equivalent mentoring, counselling or leadership development, or a wellbeing valuation approach.	• Validated student agency and self-efficacy scales •Cost of mentoring or counselling programmes • HACT Social Value Bank • Wellbeing Valuation Guidance
Reduced diabetes-related disease burden	Estimate avoided healthcare expenditure, avoided productivity losses or health-adjusted life years gained. First establish that behaviour changed and that the change reduced the risk or incidence of diabetes-related illness.	•Government health-system cost data • WHO health estimates •National health-economic studies
Community empowerment	Value specific changes such as increased influence over decisions, improved access to public resources, stronger collective action or control over community funds. Possible proxies include the cost of equivalent facilitation or the value of resources newly accessed.	•Stakeholder valuation exercises •Local service and facilitation costs • Wellbeing valuation studies
Traditional ecological knowledge	Value the practical outcomes enabled by the knowledge, such as reduced crop losses, improved water management, lower input costs or better biodiversity monitoring. The cost of equivalent technical support may also be considered.	•Community and farmer records •Agricultural and ecological data • Avoided-cost estimates • Replacement-cost data • SEEA Ecosystem Accounting
Rainwater harvesting	Estimate the value of additional usable water, avoided water purchases, reduced collection time, reduced pumping costs, improved agricultural production or groundwater recharge.	• Water-use and storage records • Tanker-water prices • Utility tariffs •Agricultural production records and earned incomes • Community time-use data
Urban parks and gardens	Value outcomes such as recreational use, physical and mental wellbeing, reduced heat exposure, improved air quality, stormwater management and biodiversity.	• Visitor and usage data • Health and wellbeing studies •Municipal drainage and maintenance costs
River cleaning and conservation	Value measurable changes in water quality, health, fisheries, recreation, flood protection, tourism or reduced water-treatment costs, rather than the number of kilometres cleaned.	• Water-quality testing • Public-health records and associated costs • Municipal treatment costs

What Can We Do Where No Reliable Proxy Is Available?

Where strong secondary data or market-based proxies are unavailable, SROI practitioners can use a participatory method called the Value Game. In a Value Game, stakeholders are not directly asked, “How many rupees is this outcome worth?” Instead, they are asked to compare the outcome with a set of familiar goods, services or experiences that have known monetary values.

By ranking and comparing these items, participants can indicate the relative value they place on the outcome. The facilitator can then use the monetary values of the comparison items to develop a reasonable valuation range. 

The Value Game is especially useful for outcomes such as:

• confidence;

• dignity;

• agency;

• empowerment;

• belonging;

• social connection;

• cultural participation; and

• improved relationships.

It should ideally be conducted with multiple participants, using locally relevant comparison items, and the results should be triangulated with qualitative evidence and other valuation methods wherever possible.

The purpose is not to produce a perfectly precise price. It is to make stakeholders’ perceptions of value visible in a structured, transparent and comparable way.

You May Also Read: Beyond the Ratio: Why SROI Needs Both Numbers and Stories

Triangulate More Than One Valuation Route

Where possible, compare the result generated through different methods:

• Market price: What is the observable price of the good or service?

• Replacement cost: What would it cost to provide an equivalent service?

• Avoided cost: What expenditure was prevented?

• Income or productivity gain: What additional income or productive time resulted?

• Stated preference: What would people be willing to pay or accept?

• Revealed preference: What do people’s actual choices and expenditure suggest?

• Wellbeing valuation: How strongly is the outcome statistically associated with life satisfaction?

• Benefit transfer: Can a value from a credible study be transferred to the present context?

If two plausible methods produce very different values, the reasons should be investigated and a conservative choice made.

Check Contextual Fit

A proxy should be assessed against:

• country and location;

• rural or urban context;

• age and gender;

• socioeconomic position;

• date and inflation;

• purchasing power;

• outcome definition;

• duration of the outcome;

• population used in the original study; and

• method through which the value was produced.

  
  

A UK Social Value Bank figure cannot simply be converted from pounds to rupees. HACT’s values are based on a particular population, dataset and wellbeing-valuation methodology. They can help us understand possible outcomes and methods, but Indian application requires contextual evidence and careful adaptation.

You May Also Read: Practical Considerations When Conducting an SROI

Test The Value With Stakeholders And Experts

Validation can include:

• presenting the proxy back to stakeholders;

• reviewing it with thematic experts;

• checking it against government or market data;

• comparing it with alternative proxies;

• testing whether the assumed duration is realistic; and

• asking whether the resulting total appears proportionate to the change described.

  
  

Stakeholder validation does not mean that the highest value suggested should be accepted. It means checking whether the proxy represents the outcome meaningfully.

Watch the full webinar here:

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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.