Tag Archives: social change

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

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

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

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

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

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

So what is this thing called social capital?

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

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

  • Trust, social networks and reciprocity/mutuality are about the relationships between individuals and organisations;
  • Shared norms of behaviour (values) and shared commitment and belonging are about more than one individual and/or organisation sharing values and sharing a way of thinking
  • Effective information channels permit individuals and organisations to access information from outside and within the community

This can be summarised diagrammatically…

soc capital diagram

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The need for social ‘audit’…

Is it me or is there a huge increase of almost epidemic proportions of social impact reporting amongst organisations and social enterprises that wish to explain the social difference they make.

This is to be welcomed, but it does raise the question of how much credibility we should attribute to these reports.  Some of them are well-researched and detailed, others are more grandiose in their claims – but surely there must be some way of ensuring they possess integrity and are a true representation of what the organisation has achieved and the social impact it has made.

Understanding what changes as a result of an organisation’s actions is important, but it is also important to know that the claims made, have integrity.  Thus, in the same way that financial accounts are given credence with an independent audit of the financial detail, it is clear that an account of the social change achieved by or organisation should be independently audited.  This would enable on organisation to be confident of its claims and would show it to be accountable to a wide range of its stakeholders as well as to the wider public.

Organisations often employ independent evaluators to assess the degree of change that has happened as a result of their activity.  This is fair enough, but it is expensive.  Should an organisation not, therefore, keep social accounts using a social book-keeping system comprising of output and outcome information – and then subject that account to a ‘social’ audit?  This would lie alongside the financial accounts and provide a more holistic picture of an organisation’s performance and impact.

The Social Audit Network (SAN) has be wrestling with these issues since the early 1990s.  Through the experience of working with grassroots organisations and believing that organisations themselves can be empowered by keeping a track of their own monitoring and evaluation, we developed a process of ‘social accounting and audit’.

Annually an organisation would produce a social account of its performance and impact.  This would then go to audit.  In the early development of the process, a single ‘social auditor’ was used and this worked up to a point.  However, a single person does not know everything and we plumped for the idea of having a panel of people – one who is a ‘social auditor’ and chairs the Panel meeting; at least one who knows the field of the organisation’s operation; and at least one other that knows the geographical area in which the organisation operates.  To keep the costs down only the chair gets paid and the others volunteer.

The independent panel meets with the organisation for one day, having received the Draft Social Accounts in advance, and goes through them in detail suggesting changes, revisions, etc.  There is a process which allows for feedback and discussion and also includes a random trail back to source materials and a checklist matching the draft against the eight social accounting principles (include here).

The Panel is not evaluating the organisation but, instead is assessing whether or not the Draft Social Accounts are credible.  Once revisions have been made the Panel issues a statement – similar to a financial audit statement – that says, in their opinion, the social accounts are a fair reflection of what the organisation has achieved in terms of its performance and impact over the last social accounting period.  The accounting process and audit is then built into the life cycle of the organisation.

In assessing the operations and activities of complex organisations over, say, a year, can be complex and result in long and complicated reports that have to be audited.  For this reason often an organisation will write a summary version that is more widely distributed.  However, this summary could not be written as an accurate document if the evidence had not been included in a more substantial report.

The social accounting and audit process is not completely fool-proof, but actual experience shows that it is effective and can provide valuable and impartial feedback to an organisation that not only wants to prove what it does but also want to improve in its effectiveness.

SAN believes that the audit part of social accounting and audit is essential. If not, we are going to get swamped with detailed reports, purporting to explain the social, environmental and cultural change that has happened as a result of and organisation’s activities…without necessarily knowing if we, as the wider public, can take them seriously or not.

The social audit should not become a way of consultants and other companies making money.  It is about subjecting what one says about the performance and impact of an organisation, is true, meaningful and based on acquired and collected information – both quantitative and qualitative.  It would re-assure the wider public of the authenticity of ‘social impact reports’ and at the same time can be used to plan focus and future actions.

These are key reasons why social audit is badly needed – particularly for organisations with a central purpose around social change.

Lastly it has to be said that carrying through with social accounting and audit is not for the faint hearted…  An interesting early quote about ‘ethical accounting’ (which has much in common with social accounting) is…

“Ethical accounting is not for softies or funks. It takes guts to hang your dirty linen in public and to walk your talk.” Jorgen Giversen, former CEO of SBN Bank

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