Displacement (or substitution effect) occurs when the benefits claimed by a project participant are at the expense of others outside the project. For example, if participant A gets a job following the project as a result of improved skills, but that job is at the expense of person B – who was not in the project and now loses a job (is displaced) – this leads to a net job change of nil. While displacement is difficult to measure, it is still useful to think through. Impacts, therefore, are the outcomes adjusted to take account for the difference made by your organisation.
Source: Measuring value: a guide to social return on investment (SROI) http://www.sroi-uk.org/component/option,com_docman/task,cat_view/gid,25/Itemid,38/