Measuring What Matters: Making Social Impact Count in India’s Nonprofit Sector

The term Return on Investment (ROI) is widely used in business to assess financial gains generated for every rupee spent. While this works in profit driven contexts, it doesn’t capture the core purpose of nonprofits, which is to create social, not financial value.

Think of ROI like a speedometer; it tells you how fast you're going, but not whether you're headed in the right direction.  

Nonprofits aim to improve lives, whether through health, education, dignity, or empowerment. To measure this broader impact, we must go beyond rupees and embrace tools like Social Return on Investment (SROI) which is like a compass, helping us track value that matters.

Quantification of impact in the social sector is crucial. Why?

India’s population of 1.4+ billion comes with vast inequalities in health, education, gender, and livelihoods. With lakhs of NGOs and hundreds of government schemes in action, quantifying impact helps answer a vital question: What’s working?

• It justifies funding decisions in a resource constrained sector
• It prioritizes high impact interventions, especially in critical areas like rural healthcare or skilling
• It helps avoid wasteful duplication and builds trust with donors, government, and communities

What is Social Return on Investment (SROI)?  

SROI is a framework that goes beyond financial returns to calculate the social, environmental, and economic value generated by a program. It asks: For every ₹1 spent, how much social value is created?  

Unlike financial ROI, the returns from social investment benefit the whole community, not just funders. These “returns‟ can be easy to quantitatively measure like increased income, community tax savings, etc.) or hard to measure in monetary terms (e.g. increased self-esteem, empowerment).  

Development Impact Bond (DIB) pilot by a prominent NGO

It was an innovative funding model that ties funding to outcomes. This model involved three players: a primary investor who funds the program upfront, a service provider who delivers results, and an outcome funder who pays only if targets are met.

Result?

The program surpassed its enrollment target by 116% and learning outcomes by 160%, delivering exceptional value for investment.

Two Proven Methods to Measure Impact

Outcome Harvesting: This qualitative method is used when it’s difficult to predict results in advance. It works backward: collecting evidence of change and determining how the intervention contributed to it.  

“Children GOOD Project”

The project engaged 321 children and community representatives to document transformation stories across project sites. This participatory process captured key shifts in leadership, behavior, and collective community actions that traditional surveys might miss.

Why it matters: Areas like child rights, gender justice, or grassroots movements, Outcome Harvesting reveals intangible but powerful shifts such as increased agency, civic participation, and community mobilization.  

Randomized Controlled Trials (RCTs): RCTs are the gold standard for impact evaluation, offering rigorous evidence by comparing outcomes between a treatment group and a control group. Though resource intensive, they’re increasingly used in India to test interventions at scale.  

“ESSENCE program”

An RCT conducted to test whether coaching Accredited Social Health Activists (ASHAs) community health workers in depression care improves mental health delivery in rural regions of India. The team will assess the effectiveness of this coaching on ASHAs’ well-being, motivation, and work performance through a two-arm randomized controlled study, as well as measure the effect of the intervention on patient-level engagement and satisfaction as well as patient health outcomes.  

Why it matters: Ideal for testing scalable solutions in health, education, and development programming.

Quantifying impact in the social sector is especially important in India because of the country's scale of need, resource constraints, and accountability demands. When nonprofits or social enterprises can show quantifiable impact, especially through methods like RCTs or outcome harvesting, their programs are more likely to attract scale funding, influence public policy, and inspire replication.

Source: The Better India, Templeton World Charity, Children of India