Tag Archives: social audit

Are we really creating ‘value’ and how do we know?

I attended two events recently and both got me thinking about the question in the title of this blog.

One was a seminar led by Stephen Osborne which examined the ‘value’ created by public services.  The other was the Social Audit Network (SAN) Annual Gathering.

Stephen Osborne is an esteemed and well-regarded academic at the University of Edinburgh Business School and has written extensively on public services.  He was speaking at Glasgow Caledonian University and three things struck me about his talk and the subsequent discussion.

The first was that delivering services in response to public needs requires a quite different approach from running a business that sells products. Apparently, legislation states that public sector organisations have a duty to respond to ‘need’ in the population. Some discharge this by delivering services, others commission or buy the services from others.

The key point is that the public sector must address ‘need’ which is evidenced in the population rather than creating demand for a service or product. In any case, the delivery of the service should use a ‘different business logic’ which is dependent on the co-operation and trust of citizens.  This working together and collusion is about adding value and positive change for citizens – in terms of meeting the needs, improving people’s quality of life, creating capacity within the community and generally making a better society.

The second was that public service delivery has fundamentally different values and a different end-game in comparison to running an enterprise.   The delivery can use business management methods to improve internal systems, but it is essentially quite a different animal with a different set of values.  This possibly has implications for social and community enterprises that also address social needs – they may need to look at their values as well as their financial bottom line.

The third relates to the discussion following the presentation, where there was a debate on accountability and the need to track, measure and report on whether or not the public service delivery was actually achieving its goals.  The verbal exchanges recognised that tangible and often measurable indicators can be used to explain what has been delivered and to what effect, however, the less tangible, outcomes in terms of happiness, confidence and self-esteem are harder to account for.

Osbourne said that these highly important factors require a more investigative approach and one that often is inevitably more time-consuming and more expensive.  It is interesting, in passing, that many local authorities have not re-instated previously abolished national performance measures – mainly due to cost.  There would seem to be an opportunity to set local and meaningful targets on ‘social impact’ which is happening in Salford and reportedly across Greater Manchester as part of the devolution agreement.

The SAN Gathering was held in Liverpool on 20th October and was in two parts.

The morning looked at the basis of social accounting and audit and a number of case studies were presented which examined things that had worked well and others that were more of a challenge.  There appeared to be a general consensus that regular reporting on the change that happens as a result of what a social or community enterprise does, is a good thing.

The afternoon concentrated on how we can believe what is contained in social reports.

An increasing number of annual social reports are being written by a wide range of organisations – from the small community-based enterprises running lunch clubs to the mega-corporate bodies providing a range of social services – both often under contract to, or at least working alongside, the public sector.  With more and more organisations being contracted to deliver services for citizens in our society – how do we know they are doing a good job?

Looking at unsubstantiated and unverified social reports makes me concerned that self-reporting as advocated by approaches such as social accounting, may descend into purely marketing exercises.  There must be some kind of ‘audit’ of social reporting to ensure faith in, and the rounded integrity of, social reports.

Over many years SAN has worked with social, voluntary and community organisations in developing a ‘social audit process’ where qualified SAN social auditors chair a Panel meeting which is a learning and supportive process as well as providing rigorous and robust scrutiny of an organisation’s social report.

The afternoon session at the Gathering also considered standards for audit processes and in particular, the forthcoming BSI standards for social value assessment reports were mentioned.  This has to be welcomed as a way of ensuring that social organisations are not pedalling ‘fake news’.

A nagging concern, however, is that standards will be created by umbrella bodies without the active involvement of organisations on the ground – things will be done to people and grassroots organisations rather than with them.  In applying national standards across the board, there is a significant danger of turning the ‘social audit’ into yet another tick-box compliance exercise, especially if it is controlled by a national standards institute.

In conclusion, I want to tie these two events together as in my mind there would appear to be common threads.

  • ‘Value’ for society is being created, but as a society, we need to be able to track it and in doing so, we need to see the degree of value created and how to improve on it, thus being as effective as possible.
  • Self-reporting is the only practical way of tracking change created by the expanding plethora of different organisations that soon will be delivering all sorts of public services – either off their own bat or on contract to the public sector.
  • We, the public, need to have faith in the social reports and one way of creating this is to insist on some form of ‘social audit’.
  • Standards have to be established for the ‘social audit’ to ensure a procedural uniformity – but those standards should not be created in a vacuum but in some form of co-creation with social and community organisations. Thus, ensuring that they are understandable, transparent and trustworthy – and perhaps there is an opportunity to recognise the context with local measures.

Finally, there would appear to be a considerable degree of consensus within the public and social sectors on the need for social reporting – not only of the tangible but also the intangible.

There is wide recognition that there has to be some form of check or audit to ensure that reality is reflected in the reporting.

My plea is that in setting social audit standards they are not too complicated but are understandable and accessible (in all its meanings).  Only that way will they become accepted and adopted by all.

Alan Kay – 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

What is the role of funders in social impact matters?

He who pays the piper calls the tune.  Old British saying

Explanation in Cambridge Dictionary: the saying is said to emphasise that the person who is paying someone to do something can decide how it should be done…

This above saying is widely used and often in connection with funders and investors – those that provide funds to enable social economy organisations to get on and do things that have social or community benefit.

There is a fine dividing line between those that provide the financial resources and those organisations that carry out the work.  How much right have funders in dictating what the work should be, who should do it, how it should be done and how should the benefits be reported back?  It is not an easy and straightforward relationship, as often the funders are not always fully aware of the context, do not always understand the difficulties in the delivery of services, and, at times, can get overly involved in how the delivery organisation is managed and how it reports.

At times those that provide the money can over step the mark.  I used to work with overseas aid organisations and UK Government departments that provided much of the funding in the 1980s and they used to dictate to the aid organisations which consultants they should use, what suppliers they should buy from and so on.  In a benign way, this may have been meant to be helpful; but at worst it could be seen as interfering and dictatorial.

In the distant past when I worked for a community enterprise support organisation in Scotland we received a grant from the local council.  Each year we were expected to report on how the money had been spent.  They trusted us to deliver beneficial impacts arising from how the money had been used.

Over the past ten years the situation has changed dramatically.  Organisations in receipt of funding are now asked to provide proof of the positive differences that they have made – and, on top of this, the funders themselves are increasingly getting involved in how an organisation reports on its social and community impact.  This may be very positive but I feel it is important to understand that there is now a shift in the relationship between funders and the recipients – and that this shift may not be entirely positive.

It comes down to who actually is guiding the social and community change.  Should it be funders with often limited staff most of whom have distribution and monitoring roles?  Or should it be the delivery organisations who know the social and community needs, the local situations and the way needs can be addressed?

As the UK currently appears to be turning its back on Europe and aping the culture and traditions of the United States, we are placing more emphasis on philanthropy as a substitute for state funding – especially in areas of social and community change.  Personally, I feel this is a very worrying trend as economically successful individuals are now resorting to use the profit they have gained from neoliberal business practices in doing ‘good’.  Often, they will want to give ‘something back’ through redistribution to those less well-off.  There is nothing intrinsically wrong with this, but the nature of the relationship between the philanthropic funder and the recipient requires more open understanding.

There are a number of factors that can considered in understanding this relationship:

  • funders often want to fund organisations that are familiar to them in what they do, and how they practice
  • funders are sometimes remote from the sharp end of delivery. What do they really know of juggling social and business objectives, of having to lay people off, of struggling to make ends meet?
  • funders will often talk of working in partnership. But is it really a partnership when one partner wields financial power over another
  • when it comes to reporting back on the difference made by the recipients of the funds are we really reporting on the ‘right’ things and the real change that has happened or just on a bunch of targets

So now turning to social impact.  In the Social Audit Network we believe that the monitoring and evaluation process should be owned and controlled by the organisation. Without doubt, the recipient of funds should report back to a funder on what has been done with the money and what difference has occurred – but the control of the evaluation should be empowering the organisation and not undermining it by funders pushing for only their agenda to be addressed.

We argue that accounting for social and community change is an integral part of what a social economy organisation should be doing.  And perhaps more controversially, we feel that funders are just one of a number of stakeholder groups that have to be reported to… They are often highly influential stakeholders but should not be dominant.

Another important element to reporting on social impact, is that mechanistic and highly structured impact reporting can miss the point.

I read an article from Australia recently called The politics of social impact: ‘value for money’ versus ‘active citizenship.  The author, Jenny Onyx, argues that we can get too bogged down in filling out output, outcome and impact boxes that we miss the point of how a community-based organisation can have a wider impact on local and active citizenship – with all the socialistic, caring, roles and responsibilities attached to that….

So, having said all this – what’s to be done?  I met a representative from a large funding organisation in Scotland recently.  They stressed listening, partnership, exchange, trust, openness…and I agreed with them.  But the relationship is often precarious – but here goes with some suggestions:

  • trust is often quoted glibly but it is crucially important as the basis between a funder and a recipient. The thing about trust is that it takes time and shared experience to build up and, unfortunately, can be broken easily and suddenly;
  • linked to trust is for both parties to adopt a more enlightened attitude to failure. If funders recognised and accepted failure, more risks can be taken, new things tried, and importantly learning can result from failed attempts;
  • if possible, funders should be less prescriptive in how an organisation reports on the difference it is making. Of course, some parameters need to be set down and agreed but the contextual situation should be understood fully by both parties;
  • there is also an issue over size and familiarity. Generally, those providing funds want to deal with larger organisations with recognisable ‘business’ systems and procedures.  This is often to the exclusion of smaller organisations.  This tension around ‘size’ will not go away especially when neoliberal economic systems measure success by how much entities have ‘grown’.  There may be a way of getting round this – but I am not sure what it is…

Finally, and to go back to the quote at the beginning – arguably ‘he’ in the saying should learn from social economy organisations how to play the pipes and learn the tune before putting his hand in the funding pocket…

Alan Kay Social Audit Network (SAN)

www.socialauditnetwork.org.uk

A Flexible Approach to Reporting on Social Impact

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

ultd-potential

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