The importance of ownership in understanding social enterprise

I want to destroy ownership in order that possession and enjoyment may be raised to the highest point in every section of the community.
George Bernard Shaw

Over the years there has been a considerable amount of time and energy spent on discussing social enterprise – what it is, what it could be, what impact it has.  At times this has been quite a creative and stimulating experience, while at other times it has been negative and tiresome.

In all these discussions, I believe, not enough emphasis has been laid on ownership.  Who owns these social enterprises and are they accountable not only to themselves but also to the wider public?  Accountability is going to become more and more important for social enterprises as they take on public and community sector contracts and have to account for their actions to a variety of different stakeholders.

With private corporations, ownership is often a slippery beast.  The ownership of the ‘means of production’ can be difficult to determine as it is, at times, not fully declared – but is often the key to understanding why an organisation acts in the way it does.

Andy Wightman in his recent research and writings illustrates this in the following paragraph which refers to land specifically, but also can be extended to property and the ‘means of production’:

Land is about power.  It is about how power is derived, defined, distributed and exercised.  It always has been and it still is thanks to a legal system that has historically been constructed and adapted to protect the interests of private property.  ‘The Poor Had No Lawyers’ by Andy Wightman

Guy Shrubsole in his recent book, Who Owns England, writes that less than one per cent of the population owns about half of England and Wales.  This cannot be right if we are trying to create a fairer more equal society.

Faced with these glaring inequalities, perhaps the only way to fully understand them is to go back into history and trace the threads that lead us to where we are now.  Thus, indulge my historical and simplistic foraging…

Before capitalism, there was a feudal system in the UK where a reigning monarch could grant whole tracts of land along with a title as a reward to the aristocracy for some form of favour.  This ownership of land meant money could be made and inequality could persist – land being the primary source of wealth.

At the time of the British Empire, European imperialists conquered foreign lands and introduced a form of ownership applying European laws – in effect taking control of whole areas through the ownership of land.  As an aside, many tribes in Africa could not get their heads around the ownership of land as it was a concept that challenged their existing value system – land to grow crops, air to breathe, panoramic beauty where all things that existed for all the people and, prior to colonisation, could not be owned in our sense of the word.

In Victorian times ownership and property became all-important causing increased social and economic inequality as ownership of property would be passed on within families.  In fact, those not owning property were excluded from voting, which reinforces Wightman’s comments cited above.

In the mid-19^th century, the co-operative movement emerged as a way that goods and services could be produced for the benefit of the workers and the wider community, not just the factory owners.  Workers co-operatives were created so that they themselves owned the means of production.

In the last two centuries, many voluntary organisations and charities adopted a form of ‘trust’ where ownership was not held by an individual or indeed a group of people.  Rather, those organisations were run and managed by ‘stewards’ operating in the best interests of the organisation to provide maximum benefit to beneficiaries.  A similar structure was adopted by many housing associations.

In the 1970s, Community Co-operatives were established in the Highlands and Islands of Scotland responding to negative economic factors – such as depopulation, dwindling services and a lack of employment opportunities. This model was largely copied by Community Businesses – functioning business enterprises that were owned and controlled by local people for the benefit of those living in local communities.  In these cases, ownership of the business was held by the ‘community’ and not by individuals.

This now brings us to the current situation with social enterprises.  They are not public sector organisations, nor are they part of the private sector where individuals own organisations or companies.  Social enterprises sit somewhere between these two much larger sectors – and this, I would argue, is why ownership of a social enterprise is key to our overall understanding of what is and what is not a social enterprise.

Yvon Poirier, a French-Canadian pioneer within the social economy, explains the origins of the term ‘social enterprise’ stating that its meaning originally…

…relates exclusively to the type of ownership. By ‘social’, one means that the ownership is by humans (persons) and not by shareholders
Social Economy and Related Concepts Paper, 2012

He then goes on to explain that in the 1990s the term ‘social enterprise’ – particularly in the English-speaking world, took on a totally different meaning. The term ‘social’ in recent times has come to mean the purpose or sector of activity and not the ownership of the enterprise. 

This shift in meaning is significant as the end result of social enterprise activity has become more important than the type of organisation they are.  This has led to current thinking which stresses the dominance of social impact over how that impact is delivered and crucially linked to this, the ownership of the organisation.

In trying to understand the creation and evolution of social enterprise, we have become too bogged down in what a social enterprise does and what impact it claims. We are guilty of overlooking the issue of ownership and this is a situation I feel needs addressing.

In response to the ownership of a social enterprise, some activists have stressed the need for an ‘asset lock’.  This ensures that individuals do not, and will not, benefit directly from their involvement in the enterprise.  In a way, this skirts around the central issue which is about who owns the enterprise – indeed, who owns and thus controls, the means of production.  Ownership, in my view, should be more central to our understanding.

Many organisations that claim to be social enterprises are up-front about their social impact credentials, hoping that no-one will look too closely at the ownership of their enterprise. Of course, those private sector businesses with strong Corporate Social Responsibility (CSR) statements should be applauded – particularly if they genuinely report on what social benefits they provide and do not only use it as a marketing tool.

However, praising these private businesses for their CSR reporting does not qualify them as a ‘social enterprise’.  In my view, a social or community enterprise is about collective ownership maximising benefit to a wider society.

When thinking about social enterprises, the first questions to ask are, who owns it and what is the ownership structure.  This will help in understanding where that organisation is coming from and why it is acting in that particular way.  The key issue around ownership is whether or not the social enterprise is acting in a way that maximises social or community benefit, or is acting solely in the interest of the owners.

Collective ownership operating on behalf of a wider community ensuring future sustainability to benefit society has to be preferred to privately owned businesses masquerading as social enterprises.

In fact, I would go further.  I believe that all organisations that have a central social or community purpose should keep regular and transparent social accounts.  These ‘accounts’ should affirm the key things about the organisation, including ownership, and at the same time provide an indication of the social and community impact backed up by evidence.

And going even further, I believe that in order to give social reports integrity, they should be subject to an independent audit.  For information on a practical way forward, see www.socialauditnetwork.org.

You will have noticed the George Bernard Shaw quote at the start of this blog.  He used the word ‘destroy’ which indicates fairly drastic action.  What he is arguing for is the destruction of ‘private ownership’ as opposed to ‘collective’ or ‘communal ownership’ so that owning things and living contented lives is not in the hands of the few for their own purposes but is shared by the many for everyone’s benefit.

Alan Kay, April 2019

Alan was one of the original founders of the Social Audit Network (SAN) which encourages social and community organisations to keep regular social accounts and have them independently audited – www.socialauditnetwork.org.
Alan is retired but during his working life, he had more than 35 years of experience in community development and social enterprise sector in the UK and overseas. Alan’s background was in overseas development. Since returning to Scotland in 1988 he mainly worked with community-owned enterprises and social enterprises.  He remains loosely attached to Glasgow Caledonian University as a Senior Visiting Fellow of the Yunus Centre for Social Business and Health.
Email: alan.kay20@gmail.com or alan.kay@gcu.ac.uk

 

 

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Giving social value a mandate to flourish

Over the last couple of months, I have had the pleasure of speaking at several events where ‘social value’ featured strongly on the agenda.

In Liverpool, the Social Audit Network Annual Conference examined how social accounting can support civil society organisations to tackle poverty….

In Edinburgh, at an event convened by Community Enterprise, social and community enterprise organisations debated the changing practice of social impact measurement….

Developing Devolution with Social Accounting & Audit

I believe that Social Accounting and Audit (SAA) can be a framework for accountability and reporting, which, if used to support public procurement, will enable devolution. Despite the current move towards greater control of purchasing by central government in Westminster, SAA can be a way to make devolution work.

Devolution is commonly understood to be the transfer of functions previously exercised by ministers and the national parliament to a subordinate elected body on a geographical basis.

In Greater Manchester (GM), we have been leading the way. Budgets for health and social care, planning and housing, business support and low carbon technologies have been entrusted to sub-regional level by Government.

Furthermore, ‘social value’ is now enshrined in GM-wide Procurement Policy, and the need to maximise spending power for the benefit of local people – to achieve a social, environmental and economic impact – is recognised as a major way to ‘sweat’ public, private and third sector investment for the common good.

Over 10 years ago, at the New Local Government conference, David Milliband announced, ‘at the local level we need a stronger framework of opportunity and responsibility …. – in fact a double devolution, not just to the Town Hall but beyond, to neighbourhoods and individual citizens’.

The Office of the Third Sector (now Civil Society) was created and local authorities were encouraged to devolve the delivery of local services to local people.

But it didn’t quite happen like that…

What we have in GM isn’t a ‘double devolution’, but it is one where the voluntary, community and social enterprise sector has a strong voice. Words like ‘co-production’, ‘co-design’, ‘asset based approaches’ and ‘reform’ are used to indicate an evolving sense of, ‘we are all in it together’. The delivery isn’t yet devolved to local people.

At the heart of GM devolution is a need to make the local economy sustainable. It is recognised that if this is to work, voluntary, community, social enterprise organisations, neighbourhoods and citizens must be ready and able to take the opportunity and responsibility.  And they must convince Town Halls that they can deliver. Maybe therefore, this is why the double devolution hasn’t really happened?

SAA is not a new concept, having been implemented in various forms and by a wide range of organisations since the 1970s.  But there is a growing number of organisations in GM that have adopted this approach to help them measure their overall impact and quality by integrating the ‘proving – improving – and be accountable’ processes into their day-to-day operations.

SAA accurately describes what an organisation is achieving in economic, social and environmental terms, and allows it to demonstrate to others what its principle purposes are and what it does. It assesses social and community enterprises in a holistic way, incorporating both the views of everyone connected with the organisation and measuring indicators of its success.

The framework also includes independent verification, an audit process whereby the results can be proved to be robust and reliable, which can give confidence to both the organisation and the Town Hall looking to devolve responsibility or place a contract.

One of the main elements of SAA is the comprehensive involvement of an organisation’s stakeholders, and this can prove one of the most important reasons for procuring from the voluntary, community and social enterprise sector.  SAA can demonstrate to health and other commissioners that service users and staff are indeed involved in the planning, operation and management of services from social enterprises.

Unlimited Potential (UP) is a social enterprise providing health and happiness services, which grew up in the Charlestown and Lower Kersal area of Salford.

Formed by residents participating in a local health task group, and now tackling health issues in partnership with local people, its work includes managing services at two local healthy living centres, health outreach services and work which addresses the specific health and happiness issues of local residents.

UP is very keen to prove its ‘positive impact’ as it develops a sustainable business strategy, and has used social accounting and audit to do this.

UP’s ability to demonstrate the benefits of its work through social accounting and audit, adds ‘value’ to public service commissioners who are provided with evidence of partnership working, involvement of local people in the design and management of services, innovation, responsiveness to local need and local ownership. This has contributed to UP becoming a nationally recognised and respected social enterprise.

SAA can be used to demonstrate individual and collective strengths, prove the sector’s competence as providers of public services, and meeting the challenge of taking local responsibility and citizen led action.

It can help devolution to happen.

Anne Lythgoe, Vice Chair & Treasurer/Finance Director  www.socialauditnetwork.org.uk

Social impact: should we be talking process or product?

I was reminded recently of the story about Jason and his quest for the Golden Fleece.  It is the well-known story of a young man with a goal in mind but in order to achieve that end, he has a long, challenging and arduous journey.   It was an adventure, and throughout the journey Jason grew as a person, became wiser, tackled problems and overcame obstacles.  Although the final product was obtaining a prize, the process involved in trying to attain the prize was equally important.

The lesson learned from this story being…the journey is as important as the destination.  In today’s media parlance – we were on a journey and it was a bit of a rollercoaster but we got through it!

With a bit of a stretch of the imagination it is similar with social impact reporting.  The activities that are done to understand the degree that one’s organisation is making a difference can be as important – if not more important – than the resultant social report.

I have been involved with social accounting and audit for many years.  Working with others, we developed a PROCESS to help organisations collect relevant quantitative and qualitative information relating to their central purpose.  This happens each year in the same way that financial accounts and ‘books’ are kept.

Organisations then bring this information together and report on their performance and on their impact on their stakeholders.   The process is internal to the organisation, owned and controlled by the organisation – thereby empowering it to self-monitor and self-evaluate.

At the end of a year the organisation will produce its own social impact report – this is the PRODUCT.  Thus. the process can be regarded as the ‘journey’ and the social report is the ‘destination’.

With social accounting and audit there is a wee sting in the tail in that the product is externally verified with an audit – again similar to financial annual accounts.  The audit ensures that the final product of the report is valid and a true interpretation of what the organisation has, and has not, achieved during the year.  On passing the audit, a statement is issued – not golden fleece I am afraid – just a signed certificate.

Organisations who regularly keep a set of social accounts and subject them to audit report a number of significant benefits.

The PROCESS helps them understand more clearly what they do to achieve an overall purpose; it forces them to listen to a wide range of different stakeholders; it can keep them on track; it can help them in explaining more clearly what they do; it can be used in organisational record-keeping and learning; it can get people to work together more effectively; and so on.

There are benefits too from producing a report – the PRODUCT.  It can be summarised and distributed widely to stakeholders and the wider public; it can be used to report back to funders; it can be the basis for future planning; it can track change that an organisation has had to deal with; it can be used, in part, to brief outsiders; and so on.

So in social accounting and audit both the PROCESS and the PRODUCT have value.

The Social Audit Network (SAN) was set up to help third sector and community organisation to introduce social accounting and audit into their organisations – and to help them with the process of social accounting as well as producing a social report.

Within SAN we often have the debate – is process more important than the product or vice versa.

I fall more into the process ‘camp’.  For me the final report does have value and I can see the advantages of having the statement endorsing the social accounts.  But it is going through the process that can have a more influential effect on the organisation.  It can help all parts of an organisation not only to take stock on a regular basis but also to reflect on what the organisation is trying to do and how it is doing that.

So many social and community enterprises see a need, respond to it, try and address it, and then get caught up in delivering whatever it is that they do.  Building into the annual organisational cycle a process of data collection and stakeholder engagement to quantify outputs and to understand and to be able to report on outcomes, can be hugely beneficial.  Is the organisation doing the best it can?  Could it be doing something better or more effective? How can it change? How can it plan to improve?

The folk in the product camp stress the value of a report in that it can be used as the central document in an organisation.  It can be used to prove or evidence the work that has been done by the organisation in achieving its ends.

Now if you are a process-type person, you have to be able to accept that processes can be messy.  Through trial and error…and trial again, one learns – and through that learning a deeper understanding begins to emerge.

In researching this blog I came across a website – Prek and K Sharing which deals with working with children to create art.  They argue that in encouraging art the PROCESS of doing is more important than the final PRODUCT.

In the picture below the process is messy and undefined but reflects the learning, while the well-structured neat product is more presentable and more accepted.

It is the same with social impact reporting.  The process of collecting, collating and making sense of information and opinions can be messy – while the learning from it can be immense.

So which would you choose?  The process (read Jason’s adventurous journey) or the product (read ‘golden fleece’) or both…

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

Social reporting – a pretty penny or not?

Sharp intake of breath………’that’ll cost you a pretty penny’.

Those of us who have at various times in life owned older cars will appreciate immediately the unwelcome tones of a garage mechanic delivering his verdict on that elusive ‘knocking sound’.

For 10 years I’ve led an organisation committed to annually completing the Social Accounting and Audit cycle. Every year we have published our Social Accounts in an attractive, professionally produced form.

I am a Social Accounting and Audit enthusiast. I make no apology! No sooner does a network colleague or contact from the charitable or social enterprise sector start to reflect on their challenges around funding, outcome measures, and the demanding competitive environment, then they walk straight into my slightly evangelistic pitch!

The responses I get when I’ve waffled on for a while about how brilliant Social Accounting and Audit is and the incredible transformational impact it has had on my own organisation, ranges from; “tell me more, that sounds good”, to; “sharp intake of breath……that must cost a pretty penny?” And if not the latter then something along the lines of; “We’re just so busy at the moment we haven’t got the time to even think about those lovely add-ons like measuring social impact”.

I think most people will realise that over a 10 year period a charity like ours will have had some extremely busy times and have often been tempted to play the “we’re just too busy” card! But we never have. Why?

At the risk of slipping this blog into the style of a Ronnie Corbett monologue and going backwards more than forwards…….I need to set the scene a bit.

The NeuroMuscular Centre (NMC) is the charity I work for. We’re a medium sized charity with a regional focus but national UK-wide reach. We are the Centre of Excellence for People with Muscular Dystrophy and their families. We provide a wide range of treatment, advice, and training services along with carer’s breaks. As well as this, the jewel in our crown, is providing supported employment in a graphic design and print social enterprise.

In 2015 we won the GSK IMPACT Award. This recognises the best small/medium charities working in the Health and Wellbeing sector. We won partly because we so effectively and consistently measure and assess the impact of our work.

Back in 2005 NMC was like so many others in our sector. We relied on case studies and pen pictures to evidence that we made a positive difference to a few people. But we had nothing to show the scale of the impact we made for lots of people.

Meanwhile back at the Car Mechanics with my 1974 Vauxhall Viva and the sharp intake of breath; ”if you want my advice mate, it’ll cost you a pretty penny if you don’t measure Social Impact!” Never mind the couple of person-weeks it takes to produce them and never mind the £1200 Social Audit fee. These are tiny (but significant of course) investments in the life cycle of vibrant small and medium sized charities and social enterprises. The payback from Social Accounting and Audit is huge.

The investment in time? “2 weeks you say?” Yes around 2 person-weeks are spent in total each year to produce the draft of our Social Accounts – the stage at which we’re audited. This investment of time is shared between a number of people in the team and so is not onerous.

This investment gets easier every year as Social Accounting gets increasingly embedded in the soul and culture of the organisation. Things that begin as chores become the normal way of working. The whole team, and indeed our service users, begin to think about measuring impact automatically, NOT because we have to do it for a feedback return for a funder or contract partner, but because we want to do it.

Social Accounting and Audit puts our organisation in the driving seat in the relationships we have with our funders and contract partners. We have powerful feedback and measured impact information instantly to hand. We use it to make our funding applications stronger and more impactful than those who still rely on case studies. We use the analysis and data that we’ve produced to provide updates and feedback.

Here’s my knockout question(s)………….

Do you ever have to go and hurriedly ask people for feedback in order to complete a feedback report for a funder with a tight deadline? How many times a year does this happen? Is that unplanned activity disruptive and mired with duplicated effort?

Does that 2 person-week investment still seem like an onerous commitment that you couldn’t possible justify?

If the mechanic had mentioned a £1200 bill to fix my Viva then I know what I’d have done! But the £1200 fee for the Social Audit is not a reason to consider changing your vehicle.

The Social Audit is a day packed with influencing opportunities, diagnostics, recognition and endorsement that will not only remove that worrying knocking sound but will turn your old Viva into a much more rounded, accomplished, economical and environmentally sensitive organisation.

It will be one of the most important events in the life of your organisation. You and your team will enjoy it, be stimulated and informed by it. The sense of achievement and reflection that will flow from it will outweigh EVEN the pleasure you got from the plushest furry dice you ever bought for your Viva.

Matthew Lanham – Chief Executive – Neuromuscular Centre

matthew.lanham@nmcentre.com

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.

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.

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

Understanding the principles and history of social accounting and audit

History is not another name for the past, as many people imply.  It is the name for stories about the past. A. J. P. Taylor

I increasingly believe that to understand why things are the way they are and why they are not something else we have to know about the past and try to understand it.

I am currently helping to advise on a research programme called CommonHealth which is co-ordinated by the Yunus Centre for Social Business and Health at Glasgow Caledonian University.  One of the really interesting elements of the research is a look back at what happened with the community business movement mainly in Scotland in the 1980s and 90s.  It is extraordinary how we interpret the past in different ways adding and detracting bits and pieces to fit our view of the present.  The past is definitely open to interpretation but, if we manage to be as objective as possible, it can help us see the present and the immediate future with more clarity.

One interesting aside, and an issue that has arisen within the research project, is that the years ‘post-internet’ are much more widely accessible than the time before the internet which is sometimes overlooked as it involves reports and archives on dusty shelves…

Involvement in this research has recently led me to think about the historical roots of social impact assessment – where it has come from.  In this blog I want to consider the reporting on impact and in particular the historical development of the principles around social accounting and audit.

Long before the establishment of the Social Audit Network and back in 1993, Community Enterprise Lothian (who I worked for at that time) worked jointly with others to hold a conference in Edinburgh called ‘Counting Community Profit!: Defining and Measuring Community Benefits of Local Development and Business Enterprises’.  The conference attracted a number of important speakers – George McRobie (new economics foundation and Founder of the Intermediate Technology Development Group), James Robertson (author of ‘Future Wealth’ and ‘Future Work’), Rob Gray (then Professor at University of Dundee and author of ‘The Greening of Accountancy’) – to name just a few.

The conference was over-subscribed and pivotal in many ways as the Institute for Social and Ethical Accountability (ISEA) – now called Accountability – was formed shortly after and the new economics foundation went on to explore ‘social audit’ more and subsequently wrote the ‘Social Audit Workbook’ with John Pearce.  Those working in ‘social audit’ as it was known then, used much of what had been discussed in the conference to devise principles for ‘social audit’.

After further consideration following the conference ‘social audit’ adopted the following principles:

Multi-perspective: reflect the views of (all) those involved with or affected by the organisation.

Comprehensive: (ultimately) embrace all aspects of an organisation’s social etc. performance.

Regular: take place regularly (annually) and not on a one-off, occasional basis, and become embedded in the culture and operation of the organisation.

Comparative: offer a means whereby an organisation can compare its own performance over time; relate performance to appropriate external norms; and make comparisons with other organisations doing similar work.

Verification: audited by one or more persons with no vested interest in the organisation.

Disclosure:  findings made available to all stake-holders and published for the wider community.

The over-arching principle of continuously improving social performance.

It is interesting that the principles do not include measurability as it was recognised at the time that many social aims are not measurable in the sense that you use a standard yardstick and give it a numerical or standardised value.  Those pioneers in social accounting accepted that it would be a nonsense to try and measure everything – but where you can, do; and where you cannot, still try to assess the change in qualitative terms.

The above principles were espoused for quite a number of years.  In the mid-2000s connections were made with those keen on advocating Social Return on Investment and following a joint meeting in 2008 the fledgling SROI Network and the more established Social Audit Network (SAN) agreed to share a number of the same principles.  There was not complete agreement as SAN felt it was not possible to financialise all outcomes.  However, in the interests of collaboration a joint document (updated in 2010) was written and made publicly available.

Shortly after this meeting both organisations changed them slightly and adopted slightly differing principles to satisfy their differing audiences – the current Principles of Social Value have been published by Social Value UK (previously the SROI Network and the Social Impact Analysists Association). And for reference check out the eight SAN principles.

So what does mean for us now?

Certainly principles around social impact are important especially with the expanding interest in enterprises with a central community or social benefit.  Both approaches – Social Accounting and Audit; and Social Return on Investment – use their respective set of principles to assess the veracity of social reports using one or other of the approaches.  My problem with both sets is that ‘process’ has got in the way of ‘principles’.  That is some of the ‘principles’ are really about the process itself.

I would like to suggest that with the benefit of hindsight – which is where this blog started – we should have a rethink about the principles of social impact.  Concurrent with the evolution of these principles we should also look at the key aspects of all organisations to see if they are socially responsible.  Those key aspects being how an organisation treats its staff and volunteers; how is it governed; how it uses surplus; its financial sustainability; its impact on the environment; and how it affects the local economy.

By building on what has happened in this field of social impact in the past, we should be able to develop tools, approaches and key principles for the future.

The ‘stories about the past’ provide the bedrock for understanding the present, and the development of the future.  Is this what progress is?

Finally – and I hesitate – I would like to suggest a tweaked set of principles for social value…

Clarifying the true change and purpose that an organisation is working towards	Focus
Tracking changes so that comparisons can be made over time and between organisations	Improvement
Embedding the social impact process and making it central to what the organisation does	Regular
Considering more than one view in assessing social value created by an organisation	Multi-perspective
Demonstrating that data and information used is important and significant	Materiality
Checking that the interpretation of the change that happens is as true as possible	Verification
Involving stakeholders in assessing change that happens	Engagement
Being open and disclosing what an organisation has achieved or not	Transparent

Bingo!

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