Tag Archives: SROI

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 

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

Should we put a financial figure on all the impacts made by a social enterprise?

In Jonathan Coe’s book ‘Number 11 or Tales that Witness Madness’ one of the characters joins the ‘Institute for Quality Valuation’ that is intent on putting a financial value on practically anything and everything.  The character is describing society in general when they say…

“We are dealing with people who have no notion at all that something is important unless you can put a price on it.  So rather than have them dismiss…well, human emotion, altogether, as something completely worthless, I think it’s better if someone like me comes along and tries to help them out.  Makes some sort of case for the defence.  Se we’ve coined a new term – ‘hedonic value’ that might refer to, say, the feeling you get when you look at a beautiful stretch of coastline. And we try to prove that this feeling is actually worth a few thousand pounds…”

This is, of course, fiction and other characters in the book are skeptical at the idea of putting financial value on all things.  But it is surprising how in a relatively short period of time the seemingly accepted way of assessing social impact for organisations with a central social purpose is to convert all their social outcomes into a financial figure.

This idea was first introduced into the UK by the new economic foundation who built on and developed pioneering work carried out by the Roberts Enterprise Development Fund in California.  It was referred to as Social Return on Investment or SROI.    This has led in the further development of the ‘social impact industry’ although there is a whole array of other measures which are forming part of that industry – such as ‘value for money’ figures, extending the role of Cost Benefit Analysis, and so on.

But should we really, as a society, be trying to put a financial value on all things? Certainly, to do this has a function.  If you were a policy-maker and trying to decide how to spend restricted financial resources on, say, building more care homes for elderly people or putting the resources into taking care services to people in their own homes, you could then assess the costs, use an ‘impact map’ to identify outcomes, provide them with a financial value and finally work out the most cost effective path.

As a tool to decide on investment, it might work well.  Investors like the idea of providing a more tangible value on things that, although valued, have not traditionally had a financial value put on them.  Very often investors and funders want to know the ‘bang they get for their buck’ – what amount of ‘social value’ comes from their initial investment expressed in pounds and pence.

But my argument is that if this is what is required by investors then investors should be the ones that calculate the social return on their investment.  It does not follow that all social enterprises should be encouraged to measure their success by using an approach that monetises all the outcomes from the social enterprises’ activities.

To go back to Coe’s entertaining book, the same character as before was trying to put a price on the myth (is it a myth?) of the Loch Ness Monster.  Belief in the Monster does contribute to the tourist industry and you can translate the myth into some sort of financial figure.  I would argue that that should be done by people wanting to sustain the myth and support the tourist industry.  We do not put the onus on the Loch ness Monster to carry out an SROI!  They, no doubt, are busy being monstrous…

We at the Social Audit Network (SAN) believe that although looking at the social return arising from an input of resources has a place, it is much more helpful for an organisation with a social purpose to keep an account of their performance and to try as much as possible to demonstrate their impact on people, the environment and the society more generally.  Since the mid-2000s SAN has engaged with SROI colleagues, discussing and considering our different approaches, undertaken research which helped to shape underpinning principles to this whole area of social impact.  However, whilst SROI has its place, for us there are a number of central reasons that make our approaches distinct. I would like to outline them here.

Firstly, context matters.  Where a social or community enterprise is working and with whom, can matter tremendously.  Therefore, within social accounting the contextual information is encouraged – as it provides background and explains more fully the social need being addressed.

Secondly, by requiring to put a financial figure on all outcomes, there is a tendency to see the solution to addressing the social need as financial.  Often people working in the development of communities or in addressing a deficient social need will tell you that putting money into addressing these needs solves only part of the problem. A social need requires social solutions.

Thirdly, social accounting and audit tries to get organisations to address their overall performance against their objectives and does not only ask for the impact an organisation has.  For us, it matters what type of structure and values an organisation espouses – and this should be reported on.

Fourthly, there is a danger in having to put a financial figure on all the outcomes in order to come up with a financial ‘return’.  We believe that not everything can be valued in financial terms and the extensive use of financial proxies (which is often the case using SROI methodology) can lead to spurious claims and begins to move further away for a ‘real’ or tangible ‘return’.

Fifthly, although developing an ‘impact map’ of inputs, outputs and outcomes can be really helpful for a social enterprise to plan its strategy, carrying out an exercise in looking at the social return does not necessarily help the organisation to perform better.  The SROI process is often very specific and focussed – whereas social accounting is more holistic and a broader approach – thus of more directly related to improvement.

Sixthly, the value for an organisation to regularly report on its performance and impact can be hugely beneficial when the organisation does it themselves.  Many exercises in calculating the social return on investment are done by consultants and people outside the organisation.  The real value of not only proving the impact you might be having, is also in improving through learning more about your own organisation and retaining that knowledge.

So where does this leave us?  Certainly, reporting on one’s own organisation in terms of how well the organisation has performed and what kind of impact and degree of social impact one has had, is important.  In the future it will inevitably become a requirement –  particularly for those organisations in receipt of funding or investment.

The argument that SAN has, is that financialising everything is not a desirable avenue to be going down.  A social enterprise should be assessing whether or not it is performing well and what sort of beneficial social change is happening as a result of its activities. But having to stick a financial value on all of that changes seems to us to be crazy.

There are other characters in Coe’s novel who listen to the reasons for monetizing social value and poke fun.  I do not advocate this, but feel that putting a financial value on all the intangibles that make up a life is a diversion.  Instead we should be supporting organisations that improve people’s lives and livelihoods and to report regularly on their performance and impact – more generally…

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

February 2016

 Disclaimer: the views included in the above blog are not necessarily the universal views of the all the members of the Social Audit Network

Assessing social enterprise and their impacts? Are we looking at the right stuff?

With the rapid expansion of what is now really an ‘industry’ surrounding the measurement and assessment of social impact, it may be beneficial to reflect on whether or not we are looking to assess the ‘right’ things.  Are social enterprises, in particular, focussing their energy on the things that matter?

In this blog I would like to look at two things.

The first is the seemingly dogged emphasis on ‘impact’ and not always paying sufficient attention to the performance of an organisation.  Linked to this is a lack of attention to an organisation’s approach, its values and its way of doing things that make it different from other organisations – particularly privately owned businesses.

The second is much wider and I shall argue that the accepted and traditional triple bottom line impacts of social, environmental and economic should be questioned.  Arguably, social enterprises should be aiming to impact on people, the environment and society or ‘culture’.

So taking the first…and to do this I want to look at the history of social accounting and audit.  Back in the 1990s social and community enterprises, along with voluntary organisations tried reporting regularly and in a systematic way on their overall performance against their objectives.  In the mid-2000s, there was a pendulum swing away from performance and much more stress given to the impact an organisation has on its stakeholders.  This was largely linked to the meteoric rise in Social Return on Investment (SROI) and, I believe, driven by investors and funders wanting to get a bigger bang for their buck.  Reporting by social enterprises and similar third sector organisations focussed almost entirely on the outcomes for stakeholders and not nearly so much on how well the organisation performed given the context in which it was working, or on what type of organisation it was trying to be – its approach, its shared values and so on.

There are recent signs that this pendulum swing is beginning to move back and people are now also wanting to know if the organisation is performing well – not least of all the organisation itself.  There is also a need to know if it is a ‘good’ organisation to be seen to be investing in, to be working for and to be proud to support.

With Social Accounting and Audit (SAA) an organisation is expected to report not only on its outcomes and impacts on stakeholders, but also on its performance against its overall purpose and objectives.  Again, context is important as often organisations are operating under difficult circumstances and providing goods and services in often the most challenging of situations.

In addition, and using the SAA framework, organisations are obliged to report on their internal processes and values.  This is mainly through the use of a simple checklist called the Key Aspects Checklist which prompts the organisation to consider its own approach to 6 aspects common to all organisations:

  • how the people who work for an organisation are treated;
  • how the organisation is governed and how accountable is it;
  • how surplus is used and whether or not there is an asset lock;
  • its financial sustainability;
  • how it impacts on the environment; and finally
  • how it contributes to the local economy if it is community based.

Turning to the second thing I want to look at…the impacts.  Traditionally, it has been widely regarded that social enterprises have a ‘triple bottom line’ of social, environmental and economic impacts.  I am increasingly of the opinion that social enterprise should be using economic activities as a means to an end – the end being working towards social, environmental and societal impacts (see diagram).

environmental impact

Rather than perceiving the economy as an ‘impact’, the use of economic activities is what a social enterprise does – a means. But this is different from the final ends, which are impacts on individual and groups (social), impacts on the planet (environment) and impacts on the relationship between people and groups (society).  Thus, economic activities are a means to an end and not an end in themselves.

A social enterprise has to ensure that it impacts on people and their livelihoods in a positive way ensuring prosperity and well-being.  I am defining prosperity here, as being more than money and distinct from wealth for its own sake.

All organisations and people have an impact on the environment.  At the very least, a social enterprise can monitor that it does not have an adverse or negative affect on the environment.

 In this model society is defined as the relationships between people and groups.  It includes the culture of a society – the way we do things, the rules and behaviours and the expectations of how things should be.  All social enterprises operate in a societal context and social enterprises in particular should monitor and at least account for their impact on the wider society in which they it operate – their contribution to a culture that promotes fairness, equality and the ‘common good’.

Social Accounting and Audit is not rocket science.  It is a holistic framework that enables an organisation to report on all aspects of its performance and impact, internally and externally.  It is only in having this well rounded view that an organisation can be in a position to improve and at the same time be able to prove thus evidencing its achievements and its contribution to social change.

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

December 2015