BigCat Research

SROI vs cost-benefit analysis: key differences

Short answer: Choose social cost-benefit analysis (CBA) when you must pick between options from the point of view of society as a whole, usually inside a government appraisal process. Choose SROI when you want to account for the value one programme creates for the people it affects, with those people helping to decide what counts. Both put money values on social outcomes, so the real difference is who sets the values and what decision the number feeds.

Disclosure: BigCat Research sells social impact analysis and SROI measurement services. We have tried to describe both methods fairly, and every factual claim below links to a source we opened.

Why the two get confused

The family resemblance is real. The guide to SROI published by the SROI Network and now hosted by the Institute for Social Value (formerly Social Value UK) says SROI "was developed from social accounting and cost-benefit analysis".¹ Social Value International lists cost-benefit analysis among the practices its Principles of Social Value draw on.² And both methods end in a figure that compares benefits with costs.

So a funder who asks for "the return on our money" could reasonably be pointed to either. Before picking one, write down what decision the number will support and who will read it.

What each method is built to answer

Social CBA comes from public economics. The UK Treasury's Green Book (2026 edition) describes it as estimating "the main social costs and social benefits of different options in monetary terms", and calls it the recommended approach for detailed comparison of shortlisted options.³ Costs and benefits are viewed from the perspective of UK society as a whole, not just the organisation proposing the spending.³ The European Commission's Better Regulation Toolbox describes CBA in similar terms: an attempt to measure all effects of a policy option in money and to select the option with the highest net benefit.⁴

The key word is options. A ministry deciding between widening a road and adding a bus lane needs to rank alternatives before any money is spent.

SROI starts from a single activity or organisation. The guide defines it as "a framework for measuring and accounting for this much broader concept of value", measuring change "in ways that are relevant to the people or organisations that experience or contribute to it".¹ It can cover a whole organisation or one part of its work.¹

Picture a community kitchen that delivers meals to older people. Its trustees are not choosing between three national policies. They want to know what changed for the people eating the meals and for the volunteers, and whether that change is worth what the kitchen costs to run. That is SROI territory.

The SROI guide itself puts the difference this way: SROI is designed as a practical management tool for small and large organisations rather than from a macro perspective, and it measures value "from the bottom up", while Green Book appraisal values costs and benefits to the whole of UK society.¹

How do SROI and CBA compare on each criterion?

Who decides what something is worth

This is the deepest difference, and it is easy to miss in a table.

In SROI, the first principle is to involve stakeholders in deciding what gets measured and how it is valued.² If the older people using the community kitchen say the daily visit matters more to them than the food, the analysis has to take that seriously. The guide calls SROI "a story about change" that includes case studies and qualitative information, not only a number.¹

In a Green Book CBA, practitioners value costs and benefits using methods the Green Book ranks as a hierarchy from most to least reliable.³ It lists market prices, generic prices, revealed preference, stated preference and wellbeing valuation.³ The EU toolbox names contingent valuation, the travel cost method, hedonic pricing and the shadow project approach, and says only contingent valuation is universally applicable.⁴ People's views still enter, through willingness-to-pay surveys for example,⁴ but, in our reading, they enter as data for the analyst rather than as a voice in setting the scope.

Each gains something. CBA gains consistency: options appraised for the same objective use the same Green Book rules and values, though the Green Book warns against comparing summary metrics across proposals with different objectives.³ SROI gains relevance to the people affected, at the cost of comparability.

What the headline number can and cannot tell you

Both camps warn against reading their ratio on its own.

The SROI guide says organisations make different judgements and work with different stakeholders, so comparing ratios alone between organisations is not appropriate; an organisation should instead compare its own ratio over time.¹ A systematic review of 40 public health SROI studies found ratios ranging from 1.1:1 to 65:1 and concluded that the ratios should not be compared to pick the intervention with the most value for money.⁷

The Green Book makes a parallel point for CBA. A single summary metric is "not enough to make a balanced judgement" about value for money, practitioners should not reject proposals for falling below a BCR threshold, and a proposal with a BCR under one may still be value for money if it has significant unmonetisable benefits.³

So if a board member asks "is 4:1 good?", the honest answer under either method is "it depends on the assumptions behind it". Our BIG 101 note on communicating the SROI ratio covers how to present the figure without overselling it.

Where each method is strong and where it struggles

Where CBA is stronger

• It has a settled public-sector rulebook, with a fixed discount rate schedule and named summary metrics, built for ranking options before a decision; SROI does not claim to rank across organisations.¹³
• Its society-wide perspective forces you to count effects on other public bodies, businesses, households and charities.³

Where CBA struggles

• The EU toolbox itself notes that CBA assumes everything can be monetised and that efficiency is the only objective; because monetising every impact is hard, it says most impact assessments blend CBA with multi-criteria analysis.⁴
• Monetisation "can be very complex", and the time needed depends heavily on how costs and benefits are valued.⁴

Where SROI is stronger

• It puts the people who experience change at the centre of deciding what counts.²
• It works at the scale of one programme or organisation and can be done in-house or led by an external researcher.¹
• A forecast SROI can be done at the planning stage and helps decide what to measure once the project is running.¹

A finished SROI report can be submitted for independent assurance against the Principles of Social Value.⁸

Where SROI struggles

• A review of 284 studies found lack of standardisation and lack of resources to be its main limitations.⁶
• The public health review found no consensus on who counts as a beneficiary, how to handle the counterfactual or what time horizon to use.⁷
• Judgement runs through the whole analysis; the guide says plainly that "there is no substitute for the practitioner's judgement".¹

Assumptions such as deadweight, attribution and drop-off move an SROI result a lot. Our BIG 101 article on those assumptions shows how.

Which one should you commission?

A few plain tests help.

You are choosing between policy or investment options for a public body. Use social CBA, or social CEA if the main benefits cannot be put in money.³ That is what the Green Book prescribes for shortlist appraisal in UK central government.³

You run or fund one programme and want to understand and report the value it creates for the people involved. SROI fits better, provided you can defend the financial proxies and you have, or can collect, outcome data.¹

You need to know whether the programme caused the change at all. Neither method answers that by itself. An impact evaluation asks "What difference has an intervention made?"; experimental and quasi-experimental designs answer it by comparing with a group or time period unaffected by the intervention, which serves as the counterfactual.⁵ Both CBA and SROI are stronger when they sit on that kind of evidence.

You want a rough sense of scale before committing budget. A forecast is the natural starting point (see forecast vs evaluative SROI); the SROI guide says starting with a forecast often makes sense because it puts the right data collection in place for a later evaluation.¹ Our free SROI calculator lets you test how deadweight, attribution and drop-off change an illustrative ratio. Treat its output as a sketch, not a finding.

If you are about to write a tender, the guide to commissioning a social impact assessment or SROI lists what the brief should contain. If the real question is whether SROI can replace your ISSB or GRI disclosures, see SROI vs sustainability reporting. More method guides are in our guides.

FAQ

1. Is SROI just a cost-benefit analysis for charities? Not quite. The SROI guide says it was developed from social accounting and cost-benefit analysis, and both use money as a proxy for costs and benefits, but SROI measures value from the stakeholders' perspective for one organisation or activity, while Green Book appraisal values costs and benefits to the whole of UK society.¹

2. Can I compare our SROI ratio with another organisation's ratio? Not on its own. The SROI guide says comparing social return ratios alone between organisations is not appropriate, because each analysis rests on different stakeholders and judgements.¹ Compare your own ratio over time and read the assumptions behind any other figure.

3. Is a benefit-cost ratio below 1 always a bad result? No. The Green Book 2026 says a proposal with a BCR below one may still represent value for money if it has significant benefits that cannot be monetised, and warns against using BCR thresholds to judge value for money.³

4. What discount rate should an SROI use? The 2012 SROI guide cites the Green Book public sector rate of 3.5% and calls discounting a controversial area.¹ The current Green Book sets 3.50% for years 1 to 30, falling to 3.00% and then 2.50% for longer horizons.³ State the rate you use and test alternatives in the sensitivity analysis.

5. When should we do neither and run an impact evaluation instead? When the open question is whether the programme caused the change. Experimental and quasi-experimental impact evaluations use an unaffected comparison group or period as the counterfactual to answer what difference the intervention made.⁵ An SROI or CBA built on weak causal evidence inherits that weakness.

Sources

Author: BigCat Research team. Last reviewed: 15 October 2026.