Tag Archives: social enterprises

Are social enterprises creating white elephants?

Legend has it that the King of Siam once gave rare albino elephants to courtiers who had displeased him, that they might be ruined by the animals’ upkeep costs.

These days, the term ‘white elephant’ more often refers to an extravagant but useless gift that cannot be easily disposed of or serves little purpose, or perhaps a beautiful but functionless building that nobody visits….

A few weeks ago, I spoke at a conference for social enterprise organisations. I work in local government, so I talked about how commissioners of public services are increasingly looking for the ‘social value’ which a business in the social economy might bring. I was followed by three speakers from the private sector, all of whom had committed to ‘buy social’ and include social enterprises in their supply chains.

A group of local social enterprises spoke about their good work and the social impact that they were creating through activities ranging from support for people with mental health problems, disabled young people being able to visit the beach, to training for families to eat healthily and take more exercise.

All valuable and necessary goals in local communities.

After the conference, one of my private sector colleagues confided in me that he was struggling to purchase from social enterprises because they just didn’t sell the things that his company needed to buy…

And I thought about my own experience of public sector commissioning and how few of our contracts are placed directly with social enterprises (despite my employer having put a great deal of effort into trying to do so).

So, what is going wrong? Why are some social enterprises more successful than others?

Although the private and public sectors often want to buy goods and services from organisations with a social purpose, perhaps they can’t directly buy the social value or social impact that those organisations are keen to sell? Buyers want to purchase a product and get the social value ‘added’?

Maybe the social enterprises that ARE successful have found a way to sell products which by their very nature create social impact? Maybe they understand their market as well as their social value?

NMC Design and Print is an enterprise linked to the Neuro Muscular Centre in Winsford, Cheshire. NMC has used its social accounting http://www.nmcentre.com/nmc/about-us/social-accounts/ to engage with its market and create a commercially successful social enterprise providing a Design and Print service run by, and employing, designers with muscular dystrophy.

The products that they are selling include graphic design, other digital services and printing. The ‘social value’ comes with the fact that people with muscular dystrophy, who would otherwise struggle to find employment, provide these services.

NMC knows and engages with its market, understands its social value and has expanded rapidly.

See Detail is a company that makes the best use of the skills of the staff to provide services that are exceptional and rewarding for everyone.  In addition, they provide autism awareness training to the companies and organisations that they work with, and finally they are lifting people out of the, so-called benefits trap, and making a real contribution to society both in terms of wealth generation and in innovation and creativity.  See Detail’s main business is software testing  which people on the autistic spectrum are ideally suited.

Both NMC Design and Print and See Detail have managed to combine their business model and their social impact to create a commercially successful social enterprise. They have ‘packaged’ their social value for their own specific market. Sadly, many ‘social enterprises’ that I come across have not managed to do that.

Instead, social value dominates their purpose. This might be too specific or on too small a scale to be beneficial to prospective customers and the ‘enterprise’ ceases to be viable. A ‘beast’ is created which is valuable to a discrete group and often outwardly impressive but which is impossible to sustain and not really wanted by those with the means to pay for it.

So, my ‘take-away’ messages to social enterprises everywhere are;

  • don’t create white elephants, when dull looking, grey beasts are often stronger and more successful;
  • use tools like social accounting and audit to engage with your market, and
  • be very careful in the presence of Kings….

Anne Lythgoe

SAN Vice- Chair

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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

Social impact: the use of language and why it matters…

In this world of a Trump election in the USA and Brexit in the UK – where facts and ‘truth’ are being stretched to a frightening degree, I am reminded of George Orwell and his concept of doublethink.  He writes…

War is peace. Freedom is slavery. Ignorance is strength. The very concept of objective truth is fading out of the world. Lies will pass into history. (George Orwell, 1984)

This idea of words and language being used to manipulate thinking is at the heart of Orwell’s work.  He recognised that language and words are crucially important.

As we enter a world of post-truth and increasingly instantaneous information and communication, we are going to have to be more scrupulous in filtering out fact from a tidal flood of fiction which has been designed to influence the way we think.

Of course, language can be used to explain and clarify things.  The late James Cameron in an article in the Guardian in the 1980s wrote about how he did not really know or understand his opinion on things until he had tried to express it in words.  He relates how he became surprised at the opinions – often strong opinions – that he held which only really come to light when he put his thoughts into words.

This resonated with me at that time – and it still does – as it reveals the strong link between our culture – the way we think about things in the world, and the language we use to explain it to ourselves and to others.

But language can also be used to confuse and obfuscate the truth intended in the meaning.

Often there is a difference between what people say they are doing and what they are actually doing. This lack of a clear link with reality may just the absence of clear thinking, but it may be deliberate to manipulate how others think about things and what they do about it.

In the world of social enterprise, words are used in ways that intend to influence.  Indeed, the term ‘social enterprise’ originated from the French, ‘economie sociale’, and its early use was not to explain the impact of economic activity in ‘social’ ways or in benefitting people.  Rather the term was used to explain that the economic activity was owned by people.  For me this is an interesting distinction, and one that is often forgotten.  But, of course, the term has evolved from its roots into what we understand ‘social enterprise’ to mean today, that is, the impact on people.

Another example from the history of social enterprise…

A precursor to social enterprise in the UK was the Scottish community business movement that started in the 1970s with rural community co-operatives supported by the then Highlands and Islands Development Board (now Highland and Islands Enterprise).

The idea of community ownership of economic activity spread to urban areas with community-owned businesses supported by local authorities using Urban Programme funding. This movement flourished, became established and mainstream. In the early 1990s it came in for a lot of criticism (some of it quite valid) but this led to people changing the terminology – if not the concept.  They started to refer to these types of organisations as ‘community enterprises’.  Not the old guard, ‘community business’, but the fresh and new, ‘community enterprise’.

Similarly, in the early 1990s a range of versions of community-owned businesses emerged.  In my view, they were more-or-less the same thing but with a new twist: ‘development trusts’, ‘social firms’ – to name but two.  Old wine in new bottles.  The newly formed terms implied a new concept.

Turning to the world of ‘social impact’ there are similar things happening.

I have been actively involved in ‘social accounting and audit’ for many years.  We started to use this term in the early 2000s replacing ‘social audit’ as we felt the longer term more accurately described the two parts of ‘social accounting’ and ‘social audit’.  As you can imagine it is not a particularly popular term and we thought of changing it into something more immediately appealing like, ‘SEE Visioning’ or similar.

It was thought that a change of name might attract those that associated ‘accounting’ and ‘audit’ with arduous and stressful connotations.  For better or for worse we stuck with the accuracy of ‘social accounting and audit’.  You get what is says on the tin…

More recently I have become aware of a subtle change of word usage in the social impact field.

A few years ago, the term ‘impact measurement’ was on everyone’s lips.  We were being encouraged to ‘measure’ the change that happens on people, the environment and on the local economies.  If we could not, the argument was that the impact could not be managed – or so we were told.

The Social Audit Network has always disputed this and said that just because one cannot measure something, one can still put a value on it.  In fact, many of the things that most people personally would value in their lives, cannot be measured – like love, close friendship, the warmth of company, the delight in a beautiful view, the exhilaration of achievement, and so on.  Others in this area of social impact insisted that ‘measurement’ was key.

Inevitably, those that insisted on measuring things and often reducing the good things in life to a financial value are now recognising that they may have been wrong.  But instead of accepting that – yes, you are right – they change the words.  ‘Impact management’ has been introduced.  Recognising the absurdities of trying to measuring everything, which one cannot sensibly do, let’s change it to managing and understanding our impact.

Perhaps what is not so strange is that those advocating ‘impact management’ now are not a million miles away from what ‘social accounting and audit’ has been suggesting for decades.

So the use of language may just be a minor skirmish within the social impact.  But it is arguably a reflection of something much more important – that is, the way we use language and what we really mean.

I can see that in a future more nationalist, more fearful, more defensive and exclusive world, the connection between language and ‘truth’ will become more divergent.

The writing of Orwell will no doubt come back to haunt (or is it taunt us?).  In his work, ‘Politics and the English Language’, he writes…

The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns, as it were, instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink.

I am not sure what a cuttlefish is, but there seems to be a lot of them about.

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

Social impact and our peculiar understanding of ‘community’…

Many social enterprises, and perhaps more accurately, community enterprises, say that they are having an impact on The Community.  But do we really understand what we mean when we talk about ‘community’?

I have been involved with a number of EU funded projects over the years and conversations with European partners turns to semantics and discussion on whether or not there is a shared understanding of some of the major concepts that we in the UK bandy about with abandon.

One of those, and one that often forms a bit of a stumbling block, is the word ‘community’.  The Germans say it is untranslatable; the French use it in other ways; the British say it all the time in the hope that the others get their meaning.

Turning to definitions, the Oxford Living Dictionaries states that it is, ‘a group of people living in the same place or having a particular characteristic in common’, which implies a ‘geographical community’.  But it also goes on to say that community can be, ‘the condition of sharing or having certain attitudes and interests in common’.  This suggests more of a ‘community of interest’.

These discussions remind me of when I worked with community businesses in Scotland in the late 1980s.  Talking about a geographical community made sense as local people in hard pressed areas got together, formed an enterprise that created benefits for the locality by providing employment for long term unemployed and much needed services to benefit residents in the area.

But then ‘community of interest’ emerged.   This broadened the definition and at one meeting we realised that a golf club could be a community business serving the ‘community of golfers’.  Was this right?  And so the argument continued within, in those days, a smoke-filled room of activists…

Added to this are two critical dilemmas worthy of consideration.

The first is that ‘community’ is not a homogenous unit.  Within a geographical area there are a range of different people with differing values, outlooks, social and economic status, faiths and ethnic groupings.  How do we, as community-based organisations, whose central purpose is to work for community benefit, serve the whole community?

What are the priorities; how are they decided; and so on?   Local people on a Board of a community enterprise would be expected to understand the local community better than an outsider – but they may have their own interests and views that may not address the problem of all people living and working in the community.

The second is how the geographical community is defined.  Where are the boundaries outlining the community?   For some communities this is relatively straightforward as they may be islands, or particularly remote and self-defining, or they may be a housing estate squeezed into an area bounded by a major road or railway line.  But for many community based organisations this is an issue and one that has to be tackled and re-addressed.

Many community enterprises over the years have tried to report on the impact that they have on their community.  If they keep social accounts they are expected to draw out a local stakeholder map that charts the nature of the relationship they have with different stakeholder groups.

This is an exercise that many find particularly useful as it exposes many in their organisation to the dilemmas mentioned above.  Often there is not total agreement, but the discussion over stakeholder relationships can create a better understanding of differing positions within and around the organisation.

Also, as part of social accounting, there would be a need to consult or engage with the ‘community’ – some refer it to as the ‘wider community’.  This presents a problem as the community may be made up of thousands of households.  Through my involvement with social accounting and audit, I have tried to do and suggest a number of things.

One time we worked with a community enterprise in carrying out a survey that involved a questionnaire going to each household distributed in a community newsletter.  The returns were few.

Another time we worked on visiting a random selection of households in an area and conducted interviews.  This was more successful but fraught with difficulties over people being out, not wanting callers, not to mention fatigue and a wearing down of shoe leather…

However, something that did seem to work well, was the creation of a kind of ‘community jury’.  The community enterprise identified a local councillor for the area; a head of school, a local social worker, a prominent business person, a faith leader, a local MP.  These were people who were not close stakeholders but who would know about the community enterprise and a little about its work and impact.

Ideally this group would be brought together and issues about the performance and impact of the community enterprise would be discussed.  In practice this was very hard to achieve and the fall-back position was to interview these people with the same questions.

The consultation and engagement with a ‘community of interest’ may be clearer in some ways, as the community enterprise may only be consulting those people that have expressed an interest in what the enterprise is trying to do.  But that leaves out all the people that could be in the community of interest but do not know about or have never used the services provided.  Difficult or what?

I think defining and understanding ‘community’ is crucially important.  At a meeting several years ago a prominent member of the social enterprise sector in Scotland was asked what he thought was the future of social enterprise.  He said he thought it would be ‘community based enterprise’.  This harks back to the burgeoning community business movement in Scotland in the 1980s – plus ça change, plus c’est la même chose

I also think that community enterprises are going to be more and more important.They tend to be tenacious organisations due to their close connections within communities.  This is evidenced by the number of community co-operatives in the Highlands and Islands that are still around in one form or another.

Community enterprises are also like ‘anchor organisations’ – a conduit for local development.  They usually have a clearer purpose compared to the plethora of recent social enterprises that are currently emerging – which are not community-based and struggle to show their distinction from being traditional businesses with a philanthropic arm.

Finally, we all live in ‘communities’ in one form or another.  We are not only individuals but part of something that underlines the connections and relationships between us that make life worthwhile.  I leave you with a quote from Cesar Chavez (1927 – 1993), an American labour leader and civil rights activist…

We cannot seek achievement for ourselves and forget about progress and prosperity for our community… Our ambitions must be broad enough to include the aspirations and needs of others, for their sakes and for our own.

Alan Kay, Social Audit Network (SANwww.socialauditnetwork.org.uk 

Social impact reporting and marketing: a hazy divide?

“Marketing is manipulation and deceit. It tries to turn people into something they aren’t – individuals focused solely on themselves, maximising their consumption of goods that they don’t need.” Noam Chomsky

It is a powerful quote from Chomsky and not one that I entirely agree with as I feel that businesses have to promote and sell their products in the competitive environment which is part of our prevailing economic system.

The whole idea of marketing reminds me of a time I was wisely told by a colleague that there is often a difference between what people say they are doing and what they are actually doing.  This brings me to the main thread running through this blog which is the relationship between ‘marketing’ and ‘social impact reporting’.

In some ways it comes back to why should social and community enterprises regularly report on their performance and their impact on people, the environment and on the society in which they exist.  They do not have to.  So why do they?

Often social enterprises will say they are doing it in order to market what they do and to be able promote and ‘sell’ what they can provide – ‘selling’ it to investors or funders and other stakeholders.  This is quite legitimate and to be applauded but I would argue should not be the sole reason to report on social impact.

The last few decades have shown a huge and pervading expansion and emphasis on ‘marketing’.  Entrepreneurs starting out or wanting to expand will come up with a ‘product’ and then spend an inordinate amount of time, resources and energy to try and sell that product in the market.  Arguably, organisations with a central social objective should by definition not need to spend as much on this, as they should be responding to a social need and through their activities provide for that need to those that benefit from their work.

The area where social impact reporting and marketing meets manifests itself in Corporate Social Responsibility (CRS) reporting.  It is admirable and to be encouraged that businesses report more holistically and include the positive impact that they are having on the environment, on people and on the wider culture.  But this is basically philanthropy.  Their core business, if you like, is to maximise profit for their owners or founders.  They also have wider impacts but they remain secondary to their core purpose.

Social enterprises, on the other hand should be reporting regularly on their core business with is positive social change.  Social enterprises should be assessed and judged on how well they are achieving their central purpose and the impact they are having.

Social impact reporting should not only be used for marketing but also to contribute to planning, to the management of the whole organisations, to review what has worked and what has not, to understanding priorities, to involve processes that listen to stakeholders, to understand costs and outcomes of differing strategies, and so on.  It is about reporting and accounting and not just a way of providing marketing information.

Social Accounting and Audit takes organisations through a process that asks for a regular review of the mission, values and objectives alongside an analysis of stakeholders (all those individuals and organisations that can affect an organisation and are affected by it).  It requires an ‘impact map’ identifying outputs and outcomes to emerge from the activities of an organisation.  This is followed by collection of quantitative and qualitative data that is brought together in an annual set of draft social accounts.  The social accounts should seek to accurately reflect the performance and impact of the organisation during the past year.  This ‘account’ then is subject to an independent audit and the revised draft becomes the social report.  The process runs parallel to the financial accounting and audit process.

A social report for social and community enterprises is about proving what your organisation has achieved – backing up the claims with evidence; improving as an organisation as inevitably decisions on the future will be based around hard facts; and finally, and this is of increasing importance, about being accountable to all stakeholders.

It is important to recognise that the audit checks the thoroughness and veracity of reporting and does not pass judgement.  The judgement about performance and impact is left to stakeholders and the report should be openly disclosed to them.  They then make a judgement about the organisation.

Some organisations going through regular social accounting and audit consider the final report as of huge importance.  I would argue that going through the process is equally important.

It would be a mistake to think of social impact reporting only in terms of how it can be used to market the organisation.

The quote from Chomsky at the start of this blog reflects the cynicism around marketing – claiming that it is only about businesses trying to persuading people to spend their money.

Social and community enterprises are more about responsibly and regularly reporting on how they have effected change that contributes to benefits for people and the wider society.   In social reporting what an organisation says it does should be as close as possible to what it actually does.

Telling people about what an organisation does is one thing; but doing this in order to sell more and more products and services is another…

…and never the twain should meet…

Alan Kay

Social Audit Network (SAN) www.socialauditnetwork.org.uk