Social accounting should be about good organisational practice, not just a tool for measuring social value…

In his recent blog for the Social Audit Network (SAN), Alan Kay sent out a rallying cry to the social economy:

‘I think that social enterprises should be looking seriously and overtly at the degree to which they contribute to social capital.  This would mean putting in place how they build trust between people and organisations; how they encourage reciprocal working and mutuality; how they state and then live up to their values; how they support a commitment to a community and a sense of belonging; and how they actively create connectedness through informal and formal social networks.

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Resurrecting a positive role for the much-maligned notion of ‘social capital’

‘Social capital describes the networks together with shared norms, values and understandings that facilitate cooperation within or among groups’ (OECD, 2001)

I want to put out a call for the rehabilitation of what we understand by ‘social capital’.

Recent criticism of the essential concept of social capital has caused people to cast it aside – considering it a redundant approach.  Several influential academics on the left of the political spectrum have written books and articles criticising social capital. Their criticism became particularly virulent at a time when the World Bank formed a social capital strategy in their assistance to developing countries.

In short, the main thrust of the criticism was that the notion of social capital was being used as a substitute for not materially helping populations.  Communities were being told that…we know you are poor, downtrodden and disadvantaged but you have ‘social capital’ and you should be using that more.

The importance of social capital and its link to social accounting…

I have worked with a wide range of social and community enterprises over the years and I am becoming increasingly convinced that an understanding of social capital can help significantly in accounting for how a social enterprise has an impact on its stakeholders and wider community.

I must admit that I was sceptical about the notion of social capital when I first came across it back in the late 1990s.  But the more I found out about it, the more it appeared to make sense and nowadays I see social capital in all relationships between people, between organisations and between people and organisations.

The main refuge for social capital seems to be in the world of academia which abounds with articles and learned papers about what it is and how it works.  This theoretical analysis has not really been adequately translated into practice.  Arguably it should be, as I believe social capital can be useful in understanding community development, business relations, health and well-being and urban and rural regeneration.

In trying to get to grips with the concept of social capital, it may be useful to consider it within an historical context – albeit an overly simplified one…

Back in the 1960s there was a belief that communities could be developed through improving housing and the physical environment. In the 1970s emphasis was laid on instigating social change through the provision of what were called ‘basic needs’.  The focus in the 1980s was much more on helping people with developing their skills that would enable them to get a job – or a better paid job.  In the 1990s there were an increasing number of community initiatives that tried to mobilise groups encouraging community capacity building.  Linked to this was a recognition that organisational development can contribute significantly to community change.  More recently there was been more emphasis on social and community cohesion and this is where social capital plays a major role.

So what is this thing called social capital?

Back in the 2000s I wrote a chapter in John Pearce’s Social Enterprise in Anytown and described social capital as being ‘that intangible “something” that exists between individuals and organisations within a community; the connections and trusting contacts that people make while going about their daily business’.

Following the work of the CONSCISE Project and work since, six elements to social capital have been identified and these fall into three categories:

• Trust, social networks and reciprocity/mutuality are about the relationships between individuals and organisations;

• Shared norms of behaviour (values) and shared commitment and belonging are about more than one individual and/or organisation sharing values and sharing a way of thinking

• Effective information channels permit individuals and organisations to access information from outside and within the community

This can be summarised diagrammatically…

So how does all this work in the context of a community enterprise keeping social accounts and compiling a social report?  (In this blog I shall use the term ‘community enterprise’ but much of what is said can equally apply to ‘social enterprise’ and voluntary organisations, and so on.)

One way is to carry out what we called a ‘stocktake’.  This assesses whether or not a community enterprise is committing itself to a social capital approach.  The Social Capital Stocktake is a tool that any social enterprise can use in a heuristic way to ascertain the extent and depth of social capital and its generation within a community enterprise.

Here is an example of some of the questions around trust that could be included in the stocktake.  The questions might be completed individually, then discussed in a group of those involved in the community enterprise with the aim of bringing about a ‘healthier’ score. (‘5’ means that one totally agrees with left hand statement; and ‘1’ means that one totally agrees with the right hand statement).

In general we trust the organisations we work with	5  4  3  2  1	We are not very trusting of other organisations
We think that the organisations we work with are very much trusting in us and feel we are reliable	5  4  3  2  1	We no not think that other organisations trust us to deliver and be relied upon
We trust our staff and Board members to do things well on our behalf	5  4  3  2  1	Relationships between people doing work for us and on behalf of us is not based on trust

Very often community enterprises (and indeed others within the wider social economy) do not acknowledge social capital and dismiss it as ‘common sense’ or ‘networking’ or ‘what we do anyway’.   I would argue that it is only when you take stock of social capital, that you begin to recognise it and understand its value to your community enterprise.

The above self-assessing stocktake could be part of a social report and could be used to recognise trends – while at the same time flagging up the importance of taking social capital into account in future planning.

The other side of this, is assessing levels of social capital within communities and then trying to work out whether not a community enterprise contributes to those levels.  This is much harder.  People have developed a series of questions asking residents in a community how they would respond to a certain situation and then from these responses make a judgment of the levels of social capital within a community.  Or alternatively others ask a series of questions to be answered by the wider community. Here is an example of some possible questions (the numbering applies as above).

People in this community are ready and willing to help others	5  4  3  2  1	People in this community are only concerned with their own lives
It is easy to get involved in community activity here.	5  4  3  2  1	It is difficult to get involved in community activity here.
People mix well across all social groups in this community	5  4  3  2  1	People don’t mix well across social groups in this community

Back in the early days of social accounting and audit and especially when the practice centred around community enterprise, there was an expectation for a community enterprise to assess and describe the socio-economic profile of the area served by the community enterprise.  In recent years, the guidance in keeping social accounts is to only include the community context and details on the community needs the enterprise will focus on.

There is also a question of attribution.  How does one know that the raised level of social capital in a community, say, can be because of the actions of the community enterprise?  This is difficult and it is best to assume that if the actions and objectives of the community enterprise are clear, and the levels of social capital reportedly rise, then it can be said that the actions of the community enterprise have at least contributed to the increase in levels of social capital.

All types of enterprises do not exist in isolation but as part of a web of interconnected relationships.   In getting things done and in making things happen they should be able to tap into contacts and use good relationships to carry out effectively what they want to do.

There are, however, limitations to what high levels of social capital can do.  It has to be used in conjunction with other forms of capital – financial, human, environmental and cultural.

Despite this, making an assessment of social capital generated and used by a community enterprise as part of a social report, I believe, is important.  An analysis of the form and nature of relationships a community enterprise has with other organisations is crucial and can show where it should focus in developing and enhancing those relationships.

This link between social capital and the actions of a community enterprise can be reported within a social impact report – benefiting the enterprise in terms of future planning and resource allocation; and its wider community in terms of more cohesion and enhanced inter-relationships.

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