Why Eviction Prevention Is Worth the Social Return on Investment (SROI)
Understanding the return on someone’s investment is nuanced: there’s the dollar-for-dollar return (if I invest a dollar, how much am I getting back?) but then there’s social return on investment (SROI) that looks at the investment from a much broader perspective.
What Is Social Return on Investment?
Social return on investment (SROI) is an analysis of how much positive impact is created by a nonprofit, translated into a dollar-to-dollar value. A dollar donated to or spent by a nonprofit may not necessarily bring in X dollars in X amount of time as one would see when discussing a company’s return on investment (ROI) -- instead, SROI gives nonprofits a similar framework in which to analyze the impact of their (and their donors’) investments.
How Do You Measure SROI?
The significance of nonprofit work and the return on investment cannot be necessarily tracked on a dollar-to-dollar basis because so much of the return has to do with long-term goals and impact. For example, while a corporation may be able to demonstrate that putting $50 into marketing will bring in $100 worth of goods and services sold in a quarter, a nonprofit probably won’t see an investment of $50 in social work and support for youth education bring in any money directly to them, and the impact, or return, may not occur for years.
By translating long-term socio-economic advantages into the traditional model of return on investment (ROI), it becomes easier for individuals to understand the value of supporting the creation and implementation of programs that help people and communities thrive.
In short, we measure social return on investment by giving monetary value to less tangible resources such as education and advocacy.
How Does Eviction Prevention Create a Positive Social Return on Investment?
If you purchase a rental property, the investment and return is somewhat straightforward: You expect that the rent paid by tenants will cover the monthly mortgage payments, insurance, maintenance and other overhead, plus a little more as it’s an investment and business. So it surely wouldn’t make sense that unpaid monthly rent would have any sort of positive return on that investment.
That’s where SROI fits in.
Eviction and rental non-payment are incredibly nuanced. There’s so much more going on when an eviction occurs, and the impact is much greater -- especially for the tenant -- than merely rent not being paid to the property owner.
In 2018, CommonBond worked with the research company Ernst & Young to understand how much is saved overall within a community when the investment is in education and advocacy rather than direct ROI. What we found was astounding.
The analysis brought back estimates that for every dollar invested in keeping a family in a stable living environment, $4 in social benefit is generated.
How Is There a $4:1 Social Return on Investment in Eviction Prevention?
Again, the eviction process is incredibly nuanced and isn’t as simple as someone not paying their rent.
There are immediate results for families: When an individual or family is evicted, the process—both legally and personally—can take time away from attending school or work. Income is lost for the time spent out of work dealing with an eviction, putting families even deeper in the hole financially and even risking their jobs altogether. It’s a cascade of negative impacts that compound. Additionally, when individuals and families are stably housed, it’s incredibly challenging to manage other areas of life: healthy food and medications take a backseat to rent and evictions, decreasing overall health and ability to maintain a healthy lifestyle. This leads to increased hospital visits, increased use of shelters, and increased use of other taxpayer funded resources. But if that cascade of instability is halted by investing in preventing the eviction altogether, the saved costs add up to greater social benefit.
It’s not just the immediate impacts experienced by individuals, either. Evictions also have long-term effects on families. In particular, housing insecurity has a lasting impact on children. A study by the Minnesota Office of Higher Education found that kids who experience housing insecurity have a more difficult time being able to graduate high school, which is directly tied to higher rates of dropping out and lower rates of attending college. The Bureau of Labor Statistics found an annual difference of $9,620 between the incomes of those aged 25 and older without a high school diploma versus those who have one. Basically, children who deal with homelessness and housing instability are more likely to experience homelessness and housing instability as adults. Eviction prevention gives them an opportunity to not only live in a more stable environment, but also break the cycle of homelessness — which in turn decreases a dependency on social services in their adult life.
So you can see, by helping individuals and families avoid eviction, there are greater community benefits. Communities where there are more services for affordable housing and eviction prevention see higher employment, more disposable income that is spent in the community, more tax-paid social services, and more.
How CommonBond’s Eviction Prevention Services Create Better Social Return on Investment
When donors support CommonBond and our eviction prevention services, they’re supporting stability, education and advocacy which have proven long-lasting effects — in fact, they create a savings of $4 in decreased social assistance costs per $1 donated. Our eviction prevention services are so much more than simply keeping someone housed: We support renters in various ways to help them to maintain employment and schooling opportunities, and keep their kids healthy and safe.
For more information about CommonBond Communities, and how you can volunteer at or donate to our housing communities, read more about our affordable housing solutions and how we help.