As a social enterprise, Solar Sister uses a market-driven approach, combining donor investment and earned revenues from product sales, to reach the most people at the least cost. Because Solar Sister focuses on last mile distribution, in remote, off-grid communities where costs are high but impact is transformative, our model also requires external investment.
So we need to understand how our model is impacting communities beyond a simply fiscal equation of return on investment. For this reason, a critical indicator that Solar Sister measures is our Social Return on Investment (SROI). Currently, for every dollar invested in our entrepreneurship model, Solar Sister generates $6.22 of value. But what does this six dollars represent and how do we calculate it?
Calculating Social Return
Solar Sister’s Social Return on Investment is calculated based on three core indicators:
- Entrepreneur Profits — Unlike other models that directly interface with customers, Solar Sister supports women entrepreneurs to reach the base of the market pyramid. Entrepreneurs earn income by purchasing products from Solar Sister at a wholesale price and selling them on at a mark-up. This estimated income is one component of how we calculate SROI.
- Customer Savings — Our data shows that customers experience substantial savings when switching from traditional energy services (ie kerosene, candles) to solar and clean cookstoves. We multiply these savings by annual clean energy sales to determine the economic benefit to the customer.
- Carbon Credits — Improved cookstoves generate a carbon credit value on the market. We multiply the value of those carbon credits, based on annual averages, by the number of cookstoves sold by our entrepreneurs per year.