When it comes to measuring social impact, two of the most widely used approaches are Cost-Benefit Analysis (CBA) and Social Return on Investment (SROI). While both aim to quantify the value created by social initiatives, they differ in methodology, focus, and practical use—particularly when it comes to decision-making and program evaluation.

At the Australian Social Value Bank (ASVB), we’re often asked how these methods compare and how our tools can support them. This guide will help you decide which approach works best for your goals.

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🔍 What is Cost-Benefit Analysis (CBA)?

CBA is the most established and widely endorsed method for measuring social value. It calculates a Benefit-Cost Ratio (BCR) by comparing the total monetised benefits of a program against its costs, offering a clear picture of whether an initiative creates a net positive impact on society.

Why choose CBA?

🔄 Forecast before you act: CBA can be used before a program is implemented (ex-ante or forecasting analysis), making it ideal for funding applications, business cases, and resource allocation decisions.

📊 Compare initiatives consistently: By expressing all costs and benefits—including non-market outcomes like wellbeing or environmental impact—in dollar terms, CBA allows for objective comparisons across different programs or policy areas.

💰 Demonstrate value for money: CBA supports the calculation of Benefit-Cost Ratio (BCR) and Net Present Value (NPV), both critical metrics for showing funders, boards, or governments that a program offers a positive return on investment.

🏛️ Meet government requirements: In places like New South Wales, a formal CBA is required for all business cases above certain financial thresholds, and is routinely used by government bodies like Treasury and Infrastructure departments.

🧠 Enhance transparency and rigour: CBA provides clear assumptions, evidence-based proxies, and standardised methodologies, ensuring consistency in decision-making—leading to better governance and public trust.

In short, CBA helps decision-makers prioritise programs that generate the greatest welfare gains, enabling evidence-based investments in what truly works. It’s the go-to methodology when public accountability and investment justification are essential.

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🤝 What is Social Return on Investment (SROI)?

SROI is an outcomes-based evaluation framework designed to help organisations understand, measure, and communicate the broader value they create. Like CBA, it uses a monetary lens to assess social outcomes—but it places a strong emphasis on stakeholder involvement and storytelling to provide a detailed picture of change.

Rather than comparing options or forecasting future benefits, SROI is typically used to evaluate the impact of a specific program after it has been delivered. This makes it ideal for organisations looking to assess the experiences and outcomes of their participants in depth.

Why choose SROI?

🧍‍♂️ Centres stakeholder experience: SROI places stakeholders at the heart of the evaluation, ensuring the voices of participants, staff, and community members are captured in defining what outcomes matter.

📈 Quantifies impact using proxy values: SROI applies financial proxies—often developed with stakeholder input—to assign value to non-financial outcomes like improved confidence, wellbeing, or social connection.

💬 Tells a compelling impact story: The narrative that emerges from an SROI is both qualitative and quantitative, helping organisations engage funders, boards, and communities by showcasing their social impact.

💡 Demonstrates change, not just value: By mapping a theory of change and capturing attribution, deadweight, and drop-off, SROI provides a structured way to understand how much of the observed change was directly caused by your intervention.

⚠️ Limitations of SROI: While valuable, SROI is not typically used to compare different initiatives and is not designed for pre-implementation forecasting. It also lacks the standardisation of CBA, as financial proxies can vary significantly depending on who develops them.

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🔧 How the ASVB Supports Both CBA and SROI

At ASVB, we make social impact measurement simple, credible, and consistent—whether you choose CBA or SROI. Our robust, evidence-based wellbeing values can support both methodologies, ensuring rigour, comparability, and credibility in your impact assessments.

Our wellbeing valuation dataset, the largest and most comprehensive in Australia, provides 83 outcome values across domains like health, housing, education, employment, crime reduction, social connection and community.

💡 Use ASVB in two powerful ways:

1. Run a complete CBA: Use the ASVB Social Value Calculator alongside our pre-defined indicators and data collection templates to conduct a streamlined CBA. This approach is ideal for programs focused on delivering outcomes that align with ASVB’s values, offering an efficient, government-aligned way to demonstrate value for money.

2. Strengthen your own CBA or SROI evaluation: If you’re running your own CBA or SROI evaluation, you can integrate ASVB’s wellbeing values at the point of monetising outcomes. This ensures greater rigour, comparability, and credibility—avoiding the need for custom financial proxies from small-scale surveys or assumptions.

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Why Use ASVB’s Wellbeing Values?

✅ Nationally derived using large datasets—ensuring rigour and statistical robustness
🔄 Consistent across projects, enabling comparison between initiatives and over time
🧠 Grounded in wellbeing economics, capturing true social value beyond just financial returns
⏱️ Saves time and resources by eliminating the need for primary research or proxy development
📈 Recognised by practitioners and funders as a credible source for impact monetisation

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🧭 Which Methodology Should You Use?

It depends on your goals:

• If you’re deciding where to invest or need to compare options, CBA is the gold standard—and often required for funding.

• If you’re evaluating a specific program’s impact with strong stakeholder involvement, SROI may be more suitable.

• For government grants or large-scale initiatives, CBA is not just recommended—it’s often mandatory.

ASVB gives you a practical, accessible way to meet these requirements with a simplified, government-aligned tool backed by robust methodology.

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🚀 Get Started with ASVB

Whether you’re forecasting outcomes for funding, evaluating an existing program, or exploring your social impact strategy, ASVB helps you measure what matters—with clarity and credibility.

📞 Contact us to discuss the best fit for your project
🎓 Join our next free webinar to see the ASVB in action

Let’s build a stronger case for social impact—together.

REGISTER FOR A FREE WEBINAR

Information from oecd.org

Are our lives getting better? How can policies improve our lives? Are we measuring the right things? The OECD Better Life Initiative and the work programme on Measuring Wellbeing and Progress answer these questions. They allow understanding what drives wellbeing of people and nations and what needs to be done to achieve greater progress for all.

Wellbeing research

For many years, focusing on people’s wellbeing and societal progress, the OECD has been looking not only at the functioning of the economic system but also at the diverse experiences and living conditions of people and households. Measuring wellbeing and progress is a key priority that the OECD is pursuing as part of the Better Life Initiative through various streams of research and on-going work. The OECD is pursuing an ambitious agenda with the aim to develop better wellbeing metrics, and is also providing analysis in order to bridge the gap between existing wellbeing metrics and policy intervention.

To find out more about the OECD Better Life Initiative visit their website.

Creating social value is no longer just the work of the community sector. As we attempt to “build back” our economies through infrastructure projects, everyone across the construction sector is being asked to embed social value.  But what is Social Value? And how exactly does one go about creating it through infrastructure?

Jacobs have released this blueprint to suggest a few options that might inspire you…

An excerpt from Before & Beyond the Build Executive Summary:

Many nations around the world have experienced long periods of positive economic growth, but the benefits of growth have not been distributed equally or fairly amongst all members of society. Some have benefited more than others, and high levels of intergenerational and income inequality, homelessness and poverty remain, even in historically prosperous nations.

Recognising the global challenge, in 2015 the United Nations launched its Sustainable Development Goals (SDGs). The SDGs called for worldwide action across governments, business and civil society to address 17 critical societal issues and were adopted by all UN signatories in the same year.

The growing economic and social divide, combined with a constrained funding environment, and changing societal expectations has forced governments, businesses and not-for-profits to re-evaluate the role they play in creating a fairer society; where development is sustainable and inclusive, and its benefits are shared more equitably amongst all members of society. We’re seeing a new wave of models and approaches, such as social procurement, social enterprise and impact investing, that place a greater emphasis on societal and human-centred outcomes.

Right now, we have an opportunity to look at infrastructure investments through a deeply collaborative and strategic lens and consider how we can leverage these new models and approaches to design, deliver/build and operate infrastructure in a way that could support us to tackle some of today and tomorrow’s most pressing challenges.

Infrastructure projects have a critical role to play in achieving the UN SDGs. A 2018 report by the University of Oxford and United Nations Office for Project Services (UNOPS) found that networked and non-networked infrastructure investment will contribute to achieving up to 80% of sustainable development targets. We also know there is around $68.5 trillion in planned infrastructure investment globally in the next two decades.

What if this infrastructure could be planned, delivered/built and operated to generate enduring social value, helping to address and overcome some of the most entrenched social issues in our communities?

There are many local, one-off, single discipline examples of innovative approaches to creating social value and positive community outcomes through infrastructure projects. What we need now is a connected and scalable approach to incorporating social value innovations into projects at scale to generate positive social outcomes and improve community wellbeing.

The need for change is urgent. Recent global events have shone a bright spotlight on the growing divide between different groups in society. As economic growth slows and governments try to balance funding constraints with the need for stimulus to help reboot their economies, there is a growing sense that now is the time to think differently about the way infrastructure is planned, delivered/built and operated to improve the wellbeing of all members
of society.

This paper presents a blueprint for generating social value through infrastructure investments, introducing five components that can be embedded across the project lifecycle: big data analytics, co-design and self-determinism, progressive infrastructure financing and funding, social procurement, and robust measurement practices.

Of course, the blueprint is just the first step. The next step is to collaborate with willing partners to test and refine it and, ultimately, determine how effective infrastructure is as a vehicle for generating lasting social value for current and future generations.

The ASVB was based on the UK Social Value Bank, which was developed three years before us, in 2014.The policy context that largely drove the development of the UKSVB, namely the Public Services (Social Value) Act 2012, did not exist in Australia at the time.

The Social Value Act (SVA) required public sector commissioners in England to consider how they could improve the economic, environment and social wellbeing of their local area through their procurement activities. In other words, they needed to “consider” the social value that could be created at the start of their procurement process.

In our post-COVID economies, government’s around the world are trying to harness the additional social value created through social procurement to support their recovery, and the UK is no different.

In an attempt to level out the economic inequalities highlighted by the pandemic and diversify their supply chain, they have added a new policy note which now requires central government to go further than the SVA and explicitly evaluate social value, rather than just “consider it”.

To support this change they have launched a “social value in procurement model” which will be used by government departments to assess a supplier’s social impact.

They anticipate the new approach will mean more opportunities for SMEs and social enterprises to win Government contracts by demonstrating the full extent of the social value they would generate.

Whilst value for money will still be paramount, a bidder’s social value score will be incorporated into the assessment of contracts.

[This information has been taken taken from a press release from Julia Lopez MP from Cabinet Office published on 24 September 2020. Full details of the story can be found here.]

So whilst in Australia the requirement to demonstrate social value is not yet embedded in policy, the ASVB can be utilised to demonstrate the additional social value your organisation will deliver, when competing for government contracts.

To find out more please get in touch info@asvb.com.au.

You might be aware that the ASVB is based on a model that was developed by the UK housing sector, the UK Social Value Bank. The tool was developed in response to their Government’s introduction of the Social Value Act in 2012.

The UK Social Value Act requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. This made being able to demonstrate social value, alongside cost effectiveness, a priority for the UK housing sector.

We don’t have an equivalent Social Value Act here in Australia but we are starting to see our State Governments seek these additional benefits through their social procurement initiatives. At this stage, it is most prevalent in initiatives that involve large government investment, such as the development of infrastructure.

TENDERING ON SOCIAL IMPACT

Companies involved in development and construction are already being asked at the tender stage to outline their strategies to deliver social impact. It is one of the criteria that their bids are being assessed on.

There are a couple of  main strategies that these companies are using to embed the creation of social impact in their tenders.

PURCHASING SOCIAL VALUE

The first is to include their own social procurement strategy within their organisational approach. This means that they commit to purchasing goods and services from social enterprises that contribute positive social outcomes as part of their standard business operations.

For example, they may contract a social enterprise, who is an inclusive employer, to clean up waste on their construction sites and divert usable resources away from landfill. This approach would include environmental outcomes as well as employment opportunities for people with a disability who are hired by the social enterprise.

Using this strategy, the company may set a target amount or percentage of overall spend that they will direct toward social enterprises throughout their supply chain. Or, as in the example above, they may outline specific partnerships and the amount this contract will cost them.

CREATING SOCIAL VALUE

The other strategy is to embed formal training and job creation initiatives within your own organisation’s activities, as part of your bid. This approach has already been successfully used in a number of large scale projects.

Generally the construction company will partner with a vocational education provider to up-skill a group of recruits to fulfill specific positions on their work site. Depending on the target cohort of the program, it is likely additional supports will be required to achieve sustainable outcomes. In the case of supporting highly marginalised young people, new migrants or ex-offenders for example, it is best to partner with skilled NGO who has experience in supporting people with additional needs through training and into sustained employment .

COMPETING ON SOCIAL VALUE

Currently, these types of approaches are being submitted with training and employment outcome targets, which may suffice for now. However, as the market matures and competition increases, an approach like the ASVB will be able to make a real difference.

By simply taking the amount of money you intend to invest towards your social impact initiative, and estimating the number of jobs you will create, the ASVB will allow you to forecast the social value that could be created if yours were the successful bid.

This is a cost-effective strategy that can really strengthen your proposal, by including the dollar value of the social impact that would be delivered by this component of your tender.

From the government perspective, or whoever may be procuring high value services, the ASVB will allow you to compare different social impact strategies to help inform your decision making knowing which bid offers the greatest likely creation of social value.

Of course once successful in winning the tender, the ASVB is the obvious choice to report back on the actual social value created from your social impact initiative.

We believe that the ASVB can make a real difference in this context by helping to encourage money being allocated towards projects that create more social value. In response, we are now starting to offer one-off impact valuation statements that can be used to support your tender. If you’d like to discuss this opportunity, please get in touch at info@asvb.com.au.

AUSTRALIA’S BLACK SUMMER

For many, it’s been an incredibly rough start to the year. First there were fires – we saw 12 million hectares of our country burn, at least 32 lives and 2,700 homes lost with more than an estimated one billion animals killed. Bushfires ablaze for literally months, with many drought-stricken areas having no option but to let the fires burn….heartbreaking.

So what did we do in the face of disaster? We did what we always do as Australians when facing a crisis, we dug deep…and the world got behind us.

UNPRECEDENTED FUNDS RAISED

A month ago it was estimated that donations to bush fire relief were approaching nearly $500 million. Just like the unprecedented fires, this was an unprecedented sum of money raised to help with recovery. The regulators were quick to warn charities that there would be an increased level of scrutiny on how that money is spent.

I draw your attention to this situation for two reasons. Firstly, I ask how do the regulators gauge whether funds have been spent appropriately? There is an expectation from donors that the majority of the money they give will be spent directly on people who are suffering from impacts of the fire. There is often an uproar at the level of funding that is spent by charities on “administration costs”, but surely most people understand that you need staff to deliver services?

So how much is too much to spend on “administration costs”, and how will the regulators make those decisions? Will they go through every line item and make an arbitrary judgement call that 20%, or 10% or 5% is an acceptable level of expenditure?

The Red Cross have been proactive and quickly responded with a break down of how the $150 million dollars they have raised from the bushfire appeal will be spent. Below the listed breakdown they include the line “Up to 10c in each dollar will be spent on admin support costs, and we’re working to keep it as low as possible”.

DETERMINING GOOD VALUE FOR MONEY

This 10 cent figure certainly sounds reasonable to me, but this is where I ask, doesn’t it depend on the social value being created by the service? If a Cost Benefit Analysis determines an overall net benefit to society, then surely that level of “administration cost” is acceptable? And conversely, if you are spending money on delivering services to people, but the benefit they experience from that service amounts to less than the cost, then that level of spending surely is not acceptable?

This is where I see the ability to run rapid Cost Benefit Analysis could be really helpful in making these types of assessments. With the development of some social values that are relevant to the outcomes needed by those impacted by the fires, modelling could be done before a program is even rolled out. This would at least give you a sense of whether a program offers good value for money before committing the funds and without wasting precious time or resources to be able to make this judgement call.

This approach could also be used by regulators after the fact. Using program data of how many people received a service, the average impact the service has on a person’s wellbeing and the costs to deliver the program. Then at least they would be making an informed judgement call in regards to ‘value for money’.

COMPETING AGAINST DONOR FATIGUE

The second reason I wanted to talk about this scenario is the ripple effect that now faces all the other NGO’s that are NOT involved in the bushfire recovery efforts – “Donor Fatigue”.

I myself am guilty of suffering from this syndrome. My family has three organisations that we donate to on a regular “subscription” throughout the year. We also have a number of charities that we make regular “one-off” donations to. This month when the Police Citizens Youth Club rang me seeking a donation, I actually said “No”, and the reason I gave was that I had donated to the bushfire appeal, as well as supported the farmers in my local area suffering from the drought.

Sadly, for the kids accessing PCYC programs, I’m sure this was not the first time the person on the other end of the phone had heard this “excuse” for saying no to their request for donations.

Why do I tell you this? Because it is a micro example of why trying to raise funds to keep a not-for-profit afloat, just got a lot harder. Competition in the sector, post bushfire disaster, has cranked up more than a few notches. So, what can you do about it?

To give you the best opportunity in the ring, you need to be able to demonstrate that your programs are effective and provide good value for money when compared to other programs. That’s where calculating the positive net social value generated by your program can make your case tangible, in a way that makes sense to potential donors.

It’s never been more important to be able to make your case clear, in dollar terms, than now.

WE GIVE THANKS

Despite the regulators warnings of increased scrutiny on how the millions of dollars of bushfire donations are being used, I personally have nothing but praise for the tireless efforts of the many agencies and people providing frontline support at the “pointy-end” of this disaster.

Whilst it is a sad fact that there may be a small number of immoral people trying to take advantage of other’s misfortune, who of course should be made an example of, I do hope that the decisions made under pressure by good people trying to get support on the ground quickly, do not receive undue criticism when considered with the luxury of time and hindsight. Let’s make sure that any assessment of how donations have been spent is done in a fair and transparent way.

IT’S TIME TO REBUILD

Our hearts go out to the many thousands of people across the country who are doing it tough right now: those who have lost everything, including family members, those who have seen unforgettable scenes, those trying to find the strength to move on, and those who are now struggling to keep the doors of their businesses open. Remember you’re Australian and we’re a resilient people, and we don’t forget our “mates”. Lean on the generosity of strangers and let’s rebuild together.

Governments in Australia are leading a dramatic shift in how they procure goods and services, embedding social procurement into their own supply chain practice and demanding similar of anyone who wants to work with them. This, in turn, is leading to businesses, of all sizes, adopting social procurement strategies and identifying ways they can adapt their business to include the creation of social benefits.

The social procurement space is years ahead of other approaches to creating social value, such as commissioning for outcomes and social impact bonds.

The Victorian and Queensland governments are leading this change in Australia with highly detailed targets for social procurement growth and guidance on how to go about it.

The Victorian Government wants to see the social benefits of their procurement benefiting those in most need in Victoria. Ensuring that where feasible, contracts for goods and services are delivered in Victoria by Victorian-based companies and enterprises.

Similarly, the Queensland Government has identified key target groups which they hope will benefit from their focus on social procurement. The policy commits the Queensland Government to:

• increase government procurement with Aboriginal and Torres Strait Islander businesses to three per cent of addressable spend by 2022
• requirement to invite regional and Queensland suppliers to quote or tender can be met by asking local social enterprises to tender for work, thereby addressing social needs as well.
• includes a commitment to increase government spending with genuine, quality social enterprises and to ensure that all procurement complies with the Disability Discrimination Act 1992

Benefits of social procurement

So, what are the potential benefits of social procurement for government and society:

• Social inclusion
• Employment and training
• Local sustainability
• Diversity and equality
• Fairtrade
• Service innovation

Social procurement can take different forms, which can be loosely grouped into direct and indirect approaches. Direct approaches involve purchasing from “for-social-benefit entities”, such as not-for-profits, social enterprises, Australian Disability Enterprises, Aboriginal-owned businesses, social businesses, worker or community-owned cooperatives and others with a focus on social outcomes.

Indirect approaches include social clauses in contracts with private sector providers, screening supply chains for ethical considerations, as well as embedding social enterprise in the supply chain of larger contracts (i.e. as sub-contractors). (Beyond Value for Money Social Procurement for Victorian Local Government (2017)

While these benefits and forms of social procurement are unquestionably positive for local economies and communities, it can be hard for those taking their first steps down this path, or small businesses, to understand if the benefits outweigh the additional time to implement a new approach or change to another supplier.

We know through our work here at the ASVB, that there are large wellbeing benefits attached to some of the focus areas of social procurement.

Increasing your social value contribution

Here are two examples where outlining social outcomes in your procurement can increase the social value your business is creating in the community you operate in.

The first example is where the procurement team request that an organisation who wins a tender bid will train a defined number of employees each year to gain Certificate I and Certificate II qualifications. They may already be doing this ad-hoc but not with a contractual obligation or consistent numbers each year. This simple change will ensure their enrolment program for staff becomes standardised and guarantees that this number of people will get the opportunity to complete these qualifications.

Through our value bank, we know this has a large social value attributed to it in terms of wellbeing uplift for the individual. If we wanted to maximise the social value from this training clause in the tender document, we could also stipulate that those who complete the qualifications are young people in the 16-25-year-old range. This is because the wellbeing uplift and associated social value for this outcome of completing training are of the highest value to young people.

The second example would be where the tender asked for a focus on targeting certain groups to join their workforce to deliver the goods or services in the contract. Our analysis shows there is a significant increase in the wellbeing uplift and social value attributed to gaining full-time roles as opposed to casual roles. Secondly, for people with an injury, illness or disability, the increase in wellbeing and attributed social value is higher when they move into permanent part-time or full-time employment. By employing the same number of people but targeting who takes on these roles the overall social value created can be increased.

These two examples outline how slight changes in the contractual obligations can have dramatic effects on the amount of social value being created by an organisation or government procuring goods and services.

Conversely, where there are no social procurement stipulations in a tender, you can gain a competitive edge against your competition by including the social outcomes you will create in addition to the required goods or services. This will make your bid stand out, with your social impact being a major point of difference, above and beyond pure value for money.

Tendering for government contracts

Businesses who wish to tender for government contracts, now, and in the future, need to address social value clauses and targets set out in the tender process. Failure to address these requirements or being unable to clearly articulate how they will go about delivering social benefits will be at a competitive disadvantage in the tendering process. This does not mean you are guaranteed to win contracts ahead of competitors just because you outline your ability to deliver on social clauses and targets, as it is only one part of the procurement matrix and scoring process. However, it does provide a clear competitive advantage where two companies are equally matched on price, quality and capacity to deliver. And of course, the next step on the journey includes competing on the amount of social value your bid will create!