Category Archives: Social Auditing

A Flexible Approach to Reporting on Social Impact

In the last 10 years or so, numerous organisations have been set up to provide toolkits and offer support and advice on producing social impact reports.  The Social Value Act (SVA) 2012 was like an injection of steroids into the sector and we now probably have more organisations offering consultancy and information than we can usefully make sense of.

For many organisations seeking to report on their social purpose there is now a bewildering array of options to choose from – making it difficult to see the wood for the trees. The SVA and recent procurement policy guidance requires organisations to demonstrate their social value as well as reporting on their financial capability.

What many people probably don’t realize is that the antecedents for reporting on social value and social impact stretch back to the 1970s when the term ‘social audit’ was first used. Social Audit Limited was a company formed at that time to consider using ‘social audit’ to outline the effects of large factory closure on local communities.

‘Social auditing’ was then further developed by Freer Spreckley and his pioneering work with Beechwood College in Yorkshire in the 1980s, producing the first social audit toolkit.  In the late 1980s the Community Business Movement in Scotland extended this work to community enterprises – John Pearce and Alan Kay amongst the prime movers in this work – leading to the establishment of the Social Audit Network (SAN).

The 1980s was Thatcher’s decade, and the idea of demonstrating social value was counter to the strict Conservative Party policy of financialising pretty much everything.  A great deal of experimental work was carried out in Scotland between 1980 and 2003 when the Social Audit Network was officially launched; seeking to demonstrate that it isn’t just money that matters.

I recently attended the Social Value UK (SVUK) Members Exchange meeting in Birmingham (November 2016), where there were representatives from practitioner and social impact reporting services organisations.

I participated in a round table discussion of about 12 people at the meeting exploring how the information produced for the quality assurance and management of organisations could be integrated into social impact reports.

We know that some community and social enterprises already provide data to meet the requirements of quality assurance/management bodies such as PQASSO, European Foundation for Quality Management (EFQM), Investors in People & the Matrix Standard. A number of them use the SAN Social Accounting and Audit (SAA) framework and included this data into their social accounts.

We also know that some organisations using the SAN framework include Social Return on Investment (SROI) type analysis on some part of their activities  – most notably Birmingham Council of Voluntary Organisations (BCVO), All Saints Action Network (ASAN) in Wolverhampton and Five Lamps in the North East and Yorkshire.

There were probably as many consultants as practitioners at the Members Exchange meeting, and that left me wondering whether practitioners – particularly those that SAN has traditionally represented, voluntary and community organisations and social enterprises – are sometimes overwhelmed by the amount of information available to report on social impact and confused about which approach would best suit their needs.

In terms of finding a suitable approach to reporting on social value and impact, it seems to me that there are a few fundamental questions to ask;

  • What is the purpose of producing a social impact report?
  • Who is going to see it and what use can they make of it?
  • Does it need to be complex or could it be done relatively simply?
  • What detail is needed to satisfy the stakeholders?

Organisations that use SAN’s social accounting and audit framework like the flexibility to include an array of different tools in their reporting. They can draw on existing quality assurance/ management information AND include a SROI element to dig deeper into financial returns if they choose to.

The point is that the SAN SAA framework offers the flexibility to use different tools and data in the reporting of both performance and impact. 

Additionally, SAN uniquely has a network of accredited social auditors who can be contracted to audit the social accounts. At a time when demonstrating social value is becoming an increasingly necessary requirement, the independent auditing of the accounts is a vital component of verifying the authenticity and validity of the information, provided in much the same way as financial auditors do with financial accounts.

Sean Smith, SAN Director and West Midlands Regional Coordinator www.socialauditnetwork.org.uk 

Social impact reporting and marketing: a hazy divide?

“Marketing is manipulation and deceit. It tries to turn people into something they aren’t – individuals focused solely on themselves, maximising their consumption of goods that they don’t need.” Noam Chomsky

It is a powerful quote from Chomsky and not one that I entirely agree with as I feel that businesses have to promote and sell their products in the competitive environment which is part of our prevailing economic system.

The whole idea of marketing reminds me of a time I was wisely told by a colleague that there is often a difference between what people say they are doing and what they are actually doing.  This brings me to the main thread running through this blog which is the relationship between ‘marketing’ and ‘social impact reporting’.

In some ways it comes back to why should social and community enterprises regularly report on their performance and their impact on people, the environment and on the society in which they exist.  They do not have to.  So why do they?

Often social enterprises will say they are doing it in order to market what they do and to be able promote and ‘sell’ what they can provide – ‘selling’ it to investors or funders and other stakeholders.  This is quite legitimate and to be applauded but I would argue should not be the sole reason to report on social impact.

The last few decades have shown a huge and pervading expansion and emphasis on ‘marketing’.  Entrepreneurs starting out or wanting to expand will come up with a ‘product’ and then spend an inordinate amount of time, resources and energy to try and sell that product in the market.  Arguably, organisations with a central social objective should by definition not need to spend as much on this, as they should be responding to a social need and through their activities provide for that need to those that benefit from their work.

The area where social impact reporting and marketing meets manifests itself in Corporate Social Responsibility (CRS) reporting.  It is admirable and to be encouraged that businesses report more holistically and include the positive impact that they are having on the environment, on people and on the wider culture.  But this is basically philanthropy.  Their core business, if you like, is to maximise profit for their owners or founders.  They also have wider impacts but they remain secondary to their core purpose.

Social enterprises, on the other hand should be reporting regularly on their core business with is positive social change.  Social enterprises should be assessed and judged on how well they are achieving their central purpose and the impact they are having.

Social impact reporting should not only be used for marketing but also to contribute to planning, to the management of the whole organisations, to review what has worked and what has not, to understanding priorities, to involve processes that listen to stakeholders, to understand costs and outcomes of differing strategies, and so on.  It is about reporting and accounting and not just a way of providing marketing information.

Social Accounting and Audit takes organisations through a process that asks for a regular review of the mission, values and objectives alongside an analysis of stakeholders (all those individuals and organisations that can affect an organisation and are affected by it).  It requires an ‘impact map’ identifying outputs and outcomes to emerge from the activities of an organisation.  This is followed by collection of quantitative and qualitative data that is brought together in an annual set of draft social accounts.  The social accounts should seek to accurately reflect the performance and impact of the organisation during the past year.  This ‘account’ then is subject to an independent audit and the revised draft becomes the social report.  The process runs parallel to the financial accounting and audit process.

A social report for social and community enterprises is about proving what your organisation has achieved – backing up the claims with evidence; improving as an organisation as inevitably decisions on the future will be based around hard facts; and finally, and this is of increasing importance, about being accountable to all stakeholders.

It is important to recognise that the audit checks the thoroughness and veracity of reporting and does not pass judgement.  The judgement about performance and impact is left to stakeholders and the report should be openly disclosed to them.  They then make a judgement about the organisation.

Some organisations going through regular social accounting and audit consider the final report as of huge importance.  I would argue that going through the process is equally important.

It would be a mistake to think of social impact reporting only in terms of how it can be used to market the organisation.

The quote from Chomsky at the start of this blog reflects the cynicism around marketing – claiming that it is only about businesses trying to persuading people to spend their money.

Social and community enterprises are more about responsibly and regularly reporting on how they have effected change that contributes to benefits for people and the wider society.   In social reporting what an organisation says it does should be as close as possible to what it actually does.

Telling people about what an organisation does is one thing; but doing this in order to sell more and more products and services is another…

…and never the twain should meet…

Alan Kay

Social Audit Network (SAN) www.socialauditnetwork.org.uk

Measuring social impact ‘is like quicksilver in the hand’

I was at a conference recently about the future of Volunteering where discussion arose about how to measure its impact. Representatives from volunteering organisers complained about the problem of commissioners expecting longitudinal measurement of the social impact of volunteering, when this is something that varies and changes on a day to day basis. This made me think of Dorothy Parker’s quote about quicksilver.  ‘Leave the fingers open and it stays. Clutch it and it darts away’.

I learned that most people, especially the young, volunteer for a short period of time, or just for a one-off event. Tracking the difference that this has made for them and for society is nigh on impossible. (…and certainly would involve a huge amount of effort).

So if commissioners need to know the difference that something as ever-changing as volunteering is making, can this really be done? Should we clutch the quicksilver and try to make it fit into a box of metrics, or leave the hand open and watch it change?

The whole problem of tracking change over a long period of time is not being addressed by most social impact measurement approaches, which take a ‘snap shot’ or try to clutch at the truth of the impact (not always capturing the true picture and certainly not understanding it in the medium to long term…)

So I have two suggestions – one for the volunteering organisers and a follow-up for commissioners;

Organisers – look to the use of social accounting and audit, which at least tries to track social impact over time due to the regularity of the process… Use a repeated and robust measurement system as part of your daily business, and keep it there.

Commissioners – would you accept the ‘passporting’ of evidence about social impact. or learning from evaluation between projects if there was a robust social accounting system in place? Rather than expecting measurement in minute detail for a provider to receive payment, would you be happy if observed and assumed impact/outcomes could be shown in the longer term through independently verified social accounts?

Dorothy Parker’s original quote was about Love. I also learned that people volunteer because they care about something! Let’s not put them off by stifling this caring with form-filling and over-zealous counting of what they do.

Anne Lythgoe is Manager of Policy and Partnerships at Salford City Council and is supporting a partnership between the public and VCSE sectors in the City and Greater Manchester. More information can be found at www.salfordsocialvalue.org..uk

Anne is also a Director of the Social Audit Network. www.socialauditnetwork.org.uk

Twitter: @anne_lythgoe

Looking into the future development of social impact…

‘When eating an elephant take one bite at a time’ Creighton Abrams

Not without a great deal of hesitation, I want to try and look into the future and try and ‘see’ the future development of social enterprise and more particularly the role of social impact.  In attempting to predict how present trends will unwind in future years is a fairly dangerous game and one that is setting oneself up for a fall.  But here goes…one bite at a time.

As far as context goes we are living in an increasingly connected world with a globalised market.  Governments have shrinking control over the wider economy as large privately owned corporations play a more influential role in the shift from public sector to private ownership. Collective working and organised mutuality are frowned upon in the belief that society exists as the sum functioning individuals.

Over the next decades there will be increased inequality, a decrease in forms of united action by trade unions (or equivalent), welfare will become more dependent on philanthropy and at the behest of the super-rich, personal debt will rise and will continue to be used to control the mass of the population.  And despite the UK voting narrowly to stay in Europe there will be a rise in a destructive and xenophobic form of nationalism – dividing the ‘us’ from the ‘them’.

Amid this turmoil sits what can be referred to as the ‘third sector’.  This includes civic society, volunteering, business with social purpose, community development, clubs and societies.  In times gone by they might expect some form of support from the state as they aim to improve social and economic livelihoods.  In the future their funding will become more and more difficult and they will be pushed into working alongside and with private sector institutions.  Some of these institutions will be benign but some will expect the third sector organisations they support to ‘toe the line’ and act in their interests.

Some of the more established, and it has to be said, bigger voluntary enterprises will survive and grow at the expense of smaller organisations.  This will happen as competition rather than collaboration is encouraged and sanctified by the dispensers of funds and capital.

However, within this bleak landscape, I think there will be a counter swing at a local level.  As services to communities are gradually withdrawn, local people who are concerned with their community’s future will react by forming local multi-functional community based enterprises intent on improving the ‘good’ of the community.  The future of ‘social enterprise’ will be community.   It will be based on local mutual self-help and in a way that erases the divide between ‘economic’, ‘social’ and ‘environment’ impacts.  Instead it will try to address all these three aspects for the benefit of their particular community.

Essentially, there will be a split in the ‘social enterprise’ sector – and indeed the term ‘social enterprise’ will become more and more meaningless.  There will be large competitive organisations taking on government contracts alongside the private sector and they will operate so well in the market place that the difference between them and privately owned businesses will be academic.  Then, in the alternative direction, there will be the community-based enterprises hanging on to socialist and collective principles in the belief that solidarity and a sense of belonging can provide for the good of all.

So where does ‘social impact’ fit into all of this?  Looking into the crystal ball of the future, it is necessary to consider the past.  In the mid-2000s, just as social accounting and audit was beginning to gain traction, along came a US import in the form of Social Return on Investment (SROI).  It burst on the social reporting scene but over the years it has been increasingly criticised as an approach.  It is changing its spots and recognising that monetisation of outcomes is not an absolute necessity in measuring the impact social enterprises have on stakeholders.

In the future this trend will continue and there will be a gradual realisation that the focus in this area should be on regular and systematic reporting by all organisations that want to demonstrate to themselves and others the positive social and environmental changes that happen as a result of their activities.

Over the next decade, the split in the social enterprise ‘movement’ will be mirrored in a ‘split’ in the world of social impact.  On the one hand there will be an industry around social reporting with an array of tools, structures and off-the-shelf aids to help organisations report on their social impact. Despite this there will be confusion and a call for standardisation.  I should imagine Social Value UK and others will be at the forefront of this call – and possibly quite rightly.

On the other hand, there will be community based enterprises, operating at a small and local level who will look to report not only on the impact that they have but also on the type of organisation they are, their ethical credentials, and the way they deliver their impact.

This is where the Social Audit Network (SAN) comes in.  SAN was set up to support organisations in the community sector.  It was established to help organisations account for how they delivered change as well as the degree of change that happened as a result of what they did. In the past and currently there has been an emphasis on this two-fold approach.

In the next decade, I think there will be a shift to emphasise the auditing of social reports – and not so much on how social reporting can be done.

As the decade pans out, more and more people will realise that social reports can be written in many different ways while the developing standards should be around the audit process.  You can evaluate enterprises that have a social purpose with clever consultants going in and writing a report.  This is not sustainable in the short term and actually dis-empowers the enterprise.  Far better to get the organisation to take charge of its own monitoring and evaluation and then get it externally verified through a thorough and well-constructed audit.

SAN currently has a set procedure for the audit.  A set of criteria has been developed based around the principles of social accounting and audit.  All reports will be expected to include:

  • What the organisation is all about (Vision, Mission, Values, Objectives, Activities, expected Outputs and outcomes) and who it works with and for (stakeholders)
  • What the social report covers and what was done (Method, Scope, Omissions)
  • A checklist on internal functions or key aspects (Human Resources, Governance, ‘Asset Lock’’ Financial Sustainability, Environmental, Local Economic)
  • Report on outputs and outcomes (usually relating to the Objectives and through them back to the overall purpose)
  • Key findings, conclusions and future recommendations

Where does this leave us?  I think the global outlook is pretty horrendous and capitalism continues to wreak havoc on communities, societies, cultures and the environment. The glimmer of hope is through community action which will include community-owned enterprises and businesses.  But they want to know they are making a positive difference.  How do they do this?  I would argue through adopting and gradually introducing a form of social accounting with an audit attached that provides external and peer review to help them regularly keep track of what they do and how they do it.

We shall not be able to eat an elephant with one gulp – instead it will have to be eaten in small bites… (I can avow it was certainly not the elephant that said this!)

Alan Kay Social Audit Network (SAN) www.socialauditnetwork.org.uk

The art of making social impact interesting…

Lots of people have heard of ‘social accounting and audit’ but they are not sure what it actually is and what it entails.  Rumour often has it that it is complicated and involved.  However, I would argue that it actually is quite simple…

…you re-assert what you, as an organisation, aims to do and how whilst at the same time identifying who you are working with and for;

…you collect information – both quantitative and qualitative – to see if you are meeting your overall purpose;

…you bring all that information together, usually (but not always), into a report; and then…

…you get it independently checked to provide the report with integrity.

Thus, four easy and simple steps with the last one being the ‘audit’.

I believe that there is no getting away from having to apply the first three steps.  In the last few years there are an increasing number of people and institutions reformulating these steps in different ways – adding to what seems like a confusing plethora of different approaches.  The contrary is the case – they are all very similar and all maintain the three steps albeit dressed up in slightly different packages.

In introducing some form of social impact assessment into your organisation, be conscious of where it is ‘located’ within your organisation.  Often organisations will tack it on as an additional activity as can be seen in the diagram on the left – an add-on that may persuade funders to continue to support the organisation.

Embed diagram

The real trick – and the thing that makes a difference in adopting an integrated social impact process, is to try and ‘locate’ social impact at the core of the organisation as in the diagram on the right.  This will mean that social impact assessment is an integral part of what you actually do.  This can then contribute hugely to planning, reporting, as well as decision-making – it can have multiple uses.

Moving social impact into the centre or your organisation requires a bit of thought and planning but it means that the process of collecting data becomes part of what you do and not seen as an ‘extra’ to what you do.  In many ways this relates to the way we learn which is epitomised by the Kolb Cycle (see diagram below) where we bring forward a concept, test it out, experience the change, then reflect on that experience and this leads back into new forming new concepts.  Social impact for organisations resides in the reflective part of the cycle.

Kolb's Experiential Learning Model

So far I have tried to show the process of social impact and where that process lies within an organisation that is trying to make social change.  But why would we want to do it?  For me it is really about seeing if you, as an organisation, are really making a difference.  And if you are, can you prove it and thus can you improve as a more effective organisation.

Within the world of social impact there is a lot written about measurement.  What cannot be measured easily is often ignored – but many of the social changes that an organisation with a central social purpose aspires to achieve, are difficult – if not nearly impossible to measure.

So should we be trying to measure them at all?  For the purposes of assessing the social impact you are making, is it not sufficient to assess as fairly as possible whether or not you are making a difference and to what degree?

Back in the 1970s I remember reading Zen and the Art of Motorcycle Maintenance.  Many people had it stuffed in their corduroy jacket pockets to take it out to impress people on trains and such like.  Despite using it as an accessory, it is an amazing book and much of it is about how we understand quality.  This is not an easy thing to do and the book illustrates how we seem to understand quality without being able to measure it – just like many things in life that we truly value. An illustrative quote typical to the book is…

Quality… you know what it is, yet you don’t know what it is.  But that is self-contradictory.  But some things are better than others, that is they have more quality.  But when you try to say what the quality is…it all goes poof!

So this leads us on to reporting your social impact – not only on the quantitative data which is relatively easy to understand – but also how to consider the qualitative data.  In the social accounting and audit process there is a recommendation to collect qualitative opinion and views from several different stakeholder groups.  This multi-perspective approach (which in academia is referred to as triangulation) means that if you are more or less getting the same sorts of views from different groups’ perspectives then you can be reasonably sure you are getting closer to the truth.

Let’s go back to the original title of this blog. How can we make social impact, not only more relevant by placing it at the core of the organisation, but also interesting to do and interesting for participating stakeholders?

I was recently involved in supporting the GENERATION Co-production programme and helped them keep social accounts on their outcomes.  This outreach programme worked with five separate arts projects across Scotland – all of them exposing young people actively to the creative arts.  The programme lasted almost two years and what was really interesting was that the social accounting process used the medium of art itself in collecting qualitative information from the young participants.  Instead of the traditional questionnaires/interviews/events/etc., young people were invited to draw pictures and ‘storyboards’ of their experiences.  They were then filmed telling their stories and all the information was put up onto a website.

This illustrates how the consultation with stakeholders can be integrated into the core of what the organisation is trying to do.  Similarly, different types or organisation can find ways to integrate the consultation process into the delivery of their initiative.  It is not outside the bounds of possibility for nurseries and schools to have evaluative games, for those holding training or events to have dialogue sessions on assessing change, for sports clubs to have physical challenges in obtaining feedback and so on.

This thinking and subsequent implementation means that the social impact process becomes part of what you do and not just an add-on.

At the end of the GENERATION Co-production programme the social accounts were, however, written up in a more traditional report form but they drew on the information collected on the website.  Both the final detailed report and the illustrative summary will be publicly available soon.

In conclusion, in working to encourage organisations to adopt a social impact framework we have to encourage them to pull the process of social impact into the centre of the organisation – a crucial and integral part of what the organisation is actually trying to do.  At the same time organisations should explore how to consult on the quality of their services in a way that is appropriate to what they do…Eureka!

Alan Kay, Social Audit Network (SAN)

www.socialauditnetwork.org.uk

Assessing social enterprise and their impacts? Are we looking at the right stuff?

With the rapid expansion of what is now really an ‘industry’ surrounding the measurement and assessment of social impact, it may be beneficial to reflect on whether or not we are looking to assess the ‘right’ things.  Are social enterprises, in particular, focussing their energy on the things that matter?

In this blog I would like to look at two things.

The first is the seemingly dogged emphasis on ‘impact’ and not always paying sufficient attention to the performance of an organisation.  Linked to this is a lack of attention to an organisation’s approach, its values and its way of doing things that make it different from other organisations – particularly privately owned businesses.

The second is much wider and I shall argue that the accepted and traditional triple bottom line impacts of social, environmental and economic should be questioned.  Arguably, social enterprises should be aiming to impact on people, the environment and society or ‘culture’.

So taking the first…and to do this I want to look at the history of social accounting and audit.  Back in the 1990s social and community enterprises, along with voluntary organisations tried reporting regularly and in a systematic way on their overall performance against their objectives.  In the mid-2000s, there was a pendulum swing away from performance and much more stress given to the impact an organisation has on its stakeholders.  This was largely linked to the meteoric rise in Social Return on Investment (SROI) and, I believe, driven by investors and funders wanting to get a bigger bang for their buck.  Reporting by social enterprises and similar third sector organisations focussed almost entirely on the outcomes for stakeholders and not nearly so much on how well the organisation performed given the context in which it was working, or on what type of organisation it was trying to be – its approach, its shared values and so on.

There are recent signs that this pendulum swing is beginning to move back and people are now also wanting to know if the organisation is performing well – not least of all the organisation itself.  There is also a need to know if it is a ‘good’ organisation to be seen to be investing in, to be working for and to be proud to support.

With Social Accounting and Audit (SAA) an organisation is expected to report not only on its outcomes and impacts on stakeholders, but also on its performance against its overall purpose and objectives.  Again, context is important as often organisations are operating under difficult circumstances and providing goods and services in often the most challenging of situations.

In addition, and using the SAA framework, organisations are obliged to report on their internal processes and values.  This is mainly through the use of a simple checklist called the Key Aspects Checklist which prompts the organisation to consider its own approach to 6 aspects common to all organisations:

  • how the people who work for an organisation are treated;
  • how the organisation is governed and how accountable is it;
  • how surplus is used and whether or not there is an asset lock;
  • its financial sustainability;
  • how it impacts on the environment; and finally
  • how it contributes to the local economy if it is community based.

Turning to the second thing I want to look at…the impacts.  Traditionally, it has been widely regarded that social enterprises have a ‘triple bottom line’ of social, environmental and economic impacts.  I am increasingly of the opinion that social enterprise should be using economic activities as a means to an end – the end being working towards social, environmental and societal impacts (see diagram).

environmental impact

Rather than perceiving the economy as an ‘impact’, the use of economic activities is what a social enterprise does – a means. But this is different from the final ends, which are impacts on individual and groups (social), impacts on the planet (environment) and impacts on the relationship between people and groups (society).  Thus, economic activities are a means to an end and not an end in themselves.

A social enterprise has to ensure that it impacts on people and their livelihoods in a positive way ensuring prosperity and well-being.  I am defining prosperity here, as being more than money and distinct from wealth for its own sake.

All organisations and people have an impact on the environment.  At the very least, a social enterprise can monitor that it does not have an adverse or negative affect on the environment.

 In this model society is defined as the relationships between people and groups.  It includes the culture of a society – the way we do things, the rules and behaviours and the expectations of how things should be.  All social enterprises operate in a societal context and social enterprises in particular should monitor and at least account for their impact on the wider society in which they it operate – their contribution to a culture that promotes fairness, equality and the ‘common good’.

Social Accounting and Audit is not rocket science.  It is a holistic framework that enables an organisation to report on all aspects of its performance and impact, internally and externally.  It is only in having this well rounded view that an organisation can be in a position to improve and at the same time be able to prove thus evidencing its achievements and its contribution to social change.

Alan Kay, Social Audit Network (SAN), www.socialauditnetwork.org.uk

December 2015

The need for social ‘audit’…

Is it me or is there a huge increase of almost epidemic proportions of social impact reporting amongst organisations and social enterprises that wish to explain the social difference they make.

This is to be welcomed, but it does raise the question of how much credibility we should attribute to these reports.  Some of them are well-researched and detailed, others are more grandiose in their claims – but surely there must be some way of ensuring they possess integrity and are a true representation of what the organisation has achieved and the social impact it has made.

Understanding what changes as a result of an organisation’s actions is important, but it is also important to know that the claims made, have integrity.  Thus, in the same way that financial accounts are given credence with an independent audit of the financial detail, it is clear that an account of the social change achieved by or organisation should be independently audited.  This would enable on organisation to be confident of its claims and would show it to be accountable to a wide range of its stakeholders as well as to the wider public.

Organisations often employ independent evaluators to assess the degree of change that has happened as a result of their activity.  This is fair enough, but it is expensive.  Should an organisation not, therefore, keep social accounts using a social book-keeping system comprising of output and outcome information – and then subject that account to a ‘social’ audit?  This would lie alongside the financial accounts and provide a more holistic picture of an organisation’s performance and impact.

The Social Audit Network (SAN) has be wrestling with these issues since the early 1990s.  Through the experience of working with grassroots organisations and believing that organisations themselves can be empowered by keeping a track of their own monitoring and evaluation, we developed a process of ‘social accounting and audit’.

Annually an organisation would produce a social account of its performance and impact.  This would then go to audit.  In the early development of the process, a single ‘social auditor’ was used and this worked up to a point.  However, a single person does not know everything and we plumped for the idea of having a panel of people – one who is a ‘social auditor’ and chairs the Panel meeting; at least one who knows the field of the organisation’s operation; and at least one other that knows the geographical area in which the organisation operates.  To keep the costs down only the chair gets paid and the others volunteer.

The independent panel meets with the organisation for one day, having received the Draft Social Accounts in advance, and goes through them in detail suggesting changes, revisions, etc.  There is a process which allows for feedback and discussion and also includes a random trail back to source materials and a checklist matching the draft against the eight social accounting principles (include here).

The Panel is not evaluating the organisation but, instead is assessing whether or not the Draft Social Accounts are credible.  Once revisions have been made the Panel issues a statement – similar to a financial audit statement – that says, in their opinion, the social accounts are a fair reflection of what the organisation has achieved in terms of its performance and impact over the last social accounting period.  The accounting process and audit is then built into the life cycle of the organisation.

In assessing the operations and activities of complex organisations over, say, a year, can be complex and result in long and complicated reports that have to be audited.  For this reason often an organisation will write a summary version that is more widely distributed.  However, this summary could not be written as an accurate document if the evidence had not been included in a more substantial report.

The social accounting and audit process is not completely fool-proof, but actual experience shows that it is effective and can provide valuable and impartial feedback to an organisation that not only wants to prove what it does but also want to improve in its effectiveness.

SAN believes that the audit part of social accounting and audit is essential. If not, we are going to get swamped with detailed reports, purporting to explain the social, environmental and cultural change that has happened as a result of and organisation’s activities…without necessarily knowing if we, as the wider public, can take them seriously or not.

The social audit should not become a way of consultants and other companies making money.  It is about subjecting what one says about the performance and impact of an organisation, is true, meaningful and based on acquired and collected information – both quantitative and qualitative.  It would re-assure the wider public of the authenticity of ‘social impact reports’ and at the same time can be used to plan focus and future actions.

These are key reasons why social audit is badly needed – particularly for organisations with a central purpose around social change.

Lastly it has to be said that carrying through with social accounting and audit is not for the faint hearted…  An interesting early quote about ‘ethical accounting’ (which has much in common with social accounting) is…

“Ethical accounting is not for softies or funks. It takes guts to hang your dirty linen in public and to walk your talk.” Jorgen Giversen, former CEO of SBN Bank

Alan Kay – Social Audit Network (SAN) – www.socialauditnetwork.org.uk