Tag Archives: social accounting principles

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  As services to communities are gradually withdrawn, local people who are concerned with their community’s future will react by forming local multi-functional community based enterprises intent on improving the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

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