Tag Archives: outputs

Caught in a spin – can impact unlock a contract?

I have recently had the honour of being involved in the Investment and Commissioning Panel for the Impact Management Programme (IMP). Examining a range of exciting submissions from across the country, I have read how enterprising organisations are seeking funding from the Impact for Growth strand of the IMP to raise investment for their work or write successful tenders, and in many cases to seek contracts with the Public Sector.

A healthy number of these organisations have also secured previous ‘social investment’ to help with their contract readiness.

But experience leads me to query why an ability to manage their impact will make these charities, social enterprises and ‘ventures’ more likely to secure a contract with the Public Sector?

As Adrian Hornsby wrote in an article for the same programme in October 2017:

“ventures and commissioners ‘pass like ships in the night’; and with commissioners showing hesitancy around impact, and social investors inevitably following revenues back to commissioners, the question arises as to where the essential driver for impact management can be found.”

Adrian’s article added to my questioning; what would be the motivation for managing and explaining your social impact if social investors and commissioners pass the buck back and forth between them?

Having been involved in commissioning services from voluntary, community and social enterprise (VCSE) providers for many years, I wonder if the problem for commissioners goes deeper than just a ‘hesitancy around impact’…

Perhaps it is a wilful misunderstanding caused by austerity and the need to make financial savings and efficiencies caused by pressures on the public purse?

In their desperation to raise income to replace lost government money, public agencies are courting partners who they think will bring in additional funds, and not necessarily giving social impact the proper consideration that it should be given.

Essentially, they see social impact as a means to draw in money without fully understanding what social impact means.

Furthermore, we could be heading for a situation where the Public Sector descends into simply becoming a ‘regulator’, diminishing their commissioning role completely. With the reduced strategic contracting capacity of a local and independent organisation with responsibility for public benefit, who will encourage social impact when all society’s ills have to be addressed purely by free markets?

Back in the days of plenty when I worked for Salford’s New Deal for Communities programme, we could afford to work with our providers to understand their impact and the outcomes that they were generating for us. We could even afford to provide training in the tools and techniques which are now part of the IMP.

Now we live in a vastly different world. With the increasing squeeze on public budgets, I am witnessing an appeal from the Public Sector to charities, social enterprises and ventures to bring in other money – grant funding and social investment – for services and activities which were previously fully funded by the Public Sector.  But why would people with money invest in these services – unless there is something for them in it?

In Salford, the amount of money flowing from the Council to the VCSE sector through contracts and grants has reduced by over 40% in the last 5 years. Our research shows that the middle is falling out of the sector – small community groups which rely on volunteers continue to thrive, their members driven by a shared interest in tackling unfairness, poverty and inequality in today’s society; and the larger ‘enterprises’, many of whom are national organisations or Public Sector spinouts, continue to succeed in contracting.

This leaves small and medium-sized ‘ventures’ caught in a spin between the Public Sector pushing them towards grants and ‘social investment’ as means of enhancing dwindling budgets; and social investment providers offering support for them to be ready to contract with the Public Sector.

I believe that the Public Sector doesn’t really understand that ‘social investment’ must get a return, just like any other form of borrowing, and social investors don’t really understand the state of panic in the Public Sector.

So, should this be where impact management fits in?

Public Sector commissioners want services, and they want outcomes. They want people to have better wellbeing, better lives; and ultimately, they need people not to need public services so much.

Social investors want many of the same things, but these outcomes must be measurable and accountable. They need to understand the financial and the social return, they may need to see financial growth, but ultimately the investment should be repayable in both social, and often also financial, impact one way or another.

So, a better understanding and management of the impact that a charity, social enterprise or venture is creating will help bridge the gap between the investors and commissioners.

And, I believe that it is also essential for their survival.

The NeuroMuscular Centre (NMC) in Cheshire has been part of the GSK Impact programme for several years. Over a 10-year period, NMC has kept social accounts, covering both the impact that the Centre is having for service users, their families and other stakeholders, and how it is managing the organisation in financial terms to maximise that impact.

NMC has a greater understanding of outcomes and impact; continuous dialogue with service users, funders and commissioners which takes places to prepare the social accounts; and the ability to accurately describe their impact in tenders, funding bids, and publicity. All this has helped this organisation triple its turnover and move from a position of uncertainty to one of a secure and rosy future.

By embedding social accounting and audit as a means of impact management, NMC has broadened its financial base, grown in size, and secured its position as the leading provider of services for people with neuromuscular disease in the country.

And who should pay for this impact management? I believe that if commissioners or social investors want evidence of ‘impact’ they should also have to pay for the work evidencing the impact…

In conclusion, there will always be a need for social and community organisations to take the heat out of the public purse – social accounting and impact management are probably the best ways for them to achieve this.

Social investors and Public Sector budgets will come and go, but the people who need support from charities, social enterprises, and other community-based organisations will always be there!

Ultimately, I believe that the essential driver for impact management should, therefore, be to achieve the best possible outcomes for the people (and/or the environment) that an organisation supports, and in doing so making it relevant, investible and successful for the long term.

Anne Lythgoe, Social Audit Network (SAN)
www.socialauditnetwork.org.uk 

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Social impact: Success or failure? Nothing succeeds as much as learning the lessons from failure…

I have written several obituaries in my life.  It is not easy to describe what someone has done and what they have achieved in a few paragraphs.  It also raises the question of success – have these people succeeded in what they have done?  Have they attained their individual goals?  Can we consider their life as being a success – or a failure?

This got me thinking about what do we mean by success – what yardstick can we use; and, indeed, are the conventional yardsticks the ‘right’ ones?

In introducing this, allow me a couple of anecdotes.

A relative of mine is just graduating and his father was saying that he hopes he gets a job in the City of London and makes lots of money.  Why?  Because he will then be regarded by his peers and others as a ‘success’. 

Mmm…

About twenty years ago I met an elderly Irish priest in Central Java.  He had moved there donkey’s years previously and worked in what we used to call ‘community development’.  He worked with community groups supporting them to improve their and their children’s, livelihoods.  He did this very successfully but with little recognition.

Mmm…

These contrasting examples raise several points about what we mean by success. ‘Success’ (or indeed failure) is dependent on the definition of ‘success’ – and more particularly the parameters used to define ‘success’ which are often dictated by the society and culture that one is a part of…

Defining and measuring success is as important for enterprises as it is for people.  With enterprises, assessing success depends on the type of business as different types of enterprise use different measures for assessing their success or failure:

  1. With mainstream commercial business, recognising success is relatively easy. If a business is growing, if the turnover is increasing year on year, if the profit margins are widening; if shareholders’ dividends are increasing – then it is seen as a successful business.
  2. With a business that has a social conscience and a strong commitment to social responsibility, success can be assessed by the normal business measurements alongside how much money and resources are given for charitable or social aims.
  3. With a social or community enterprise, assessing success gets a bit more complicated. These are enterprises that use economic activity to benefit people and communities, provide value to society and are consciously not adversely affecting the environment.  Achieving these things is their core business – not just an add-on to a mainstream business activity.

However, in reporting on success/failure, a social or community enterprise has specific challenges.  One of the most immediate problems is to regularly report on how they affect people, communities, the environment, the local economy and the prevalent culture.

Social enterprises often consider that it would be good to do this – but why, as it is not a statutory requirement? And then how can it fit in with what they are already doing?  How do they know it is a good use of resources to report regularly? And how do they understand and demonstrate whether or not they are successful in achieving their main purpose? In other words, how do social and community enterprise assess their success or failure?

In the Social Audit Network (SAN), we have been grappling with some of these key questions. Social accounting and audit is the framework used by SAN.  In supporting social and community enterprises to keep track of successes and failures, we believe enterprises should be clear about what they do, how they do it and who is affected; collect qualitative and quantitative information; report on successes and failures; and get the report verified through a ‘social audit’ process.

The framework is flexible and should include evidencing data on outputs and outcomes, the different views and reported outcomes from all stakeholders, costs and reported benefits and targets.  The subsequent reporting brings together quantitative and qualitative information – including an internal report on the organisation’s approach and ethos.  It then discloses this independently audited information and invites the wider society to assess its success or failure.

Adopting the framework is not rocket science.  We think that it is a sensible approach to showing others an organisation’s progress (how it proves itself) and this then relays back into how it can improve as an effective organisation.  The verified report highlights and recommends new directions, changes, improvements; and all this can be fed into planning for the future.

By its nature, the recommended structure for a ‘social report’ encourages a range of data from different sources and goes beyond Key Performance Indicators (KPIs) – and such like. Indeed, a note of caution should be attached to ‘targets’ and KPIs.  We have found that targets are really useful if they are presented alongside other information.  But if they become the ‘report’, the focus moves away from overall improvements in quality to changing the actions to fulfil the target.

In essence, regular social reporting is crucially important – particularly for organisations whose social and community benefits are its raison d’etre.  Through this reporting, they can assess the degree of success (or failure) they are having in different areas of their work.

The success parameters applied by an organisation are multi-perspective and set by the organisation – but crucially these parameters are then tested by subjecting the social report to an independent audit

Subsequent systematic social reporting can then track the progress of an organisation, and in looking critically at that story people in the wider society, can assess themselves on the success or failure of that social enterprise.

So, going back to the wider anecdotes at the start of this blog… Success can be defined in different ways depending on values, the experience and the understanding of those trying to assess ‘success’.

Lastly, and perhaps as an addendum, we should not perhaps ignore the importance of failure.  I leave you with a quote from Kenneth Boulding (1910 – 1993), a British economist, educator, peace activist, poet, religious mystic, devoted Quaker, systems scientist, and interdisciplinary philosopher who wrote:

“Nothing fails like success because we don’t learn from it.  We only learn from failure.”

Mmm…

Postscript: In 2005 John Pearce wrote Learning from Failure which focussed on four social enterprises that had failed.  He wrote about why and how they failed and the lessons to be learnt from their experience. It was published by Co-active which I believe no longer exists.  If you would like a copy, write to alan.kay20@gmail.com.

Alan Kay – Social Audit Network (SAN)

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