Social Accounting

Social Impact Assessment Tools

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Our Social Impact Assessment tool service will be launched next year. To whet your appetite, Eifion Williams, our CEO, provides a guide to Social Impact Assessment in the article below:

Greenwash (noun) definition ‘disinformation disseminated by an organization so as to present an environmentally responsible public image’

We might have all been susceptible to greenwash when making purchasing choices; a little more frustrating if you’re a community facing enterprise who’s just lost out on a contract or funding bid when you know perfectly well that your business beats all others on social and environmental impact. Across the social economy in Wales, businesses have been gearing up to taking advantage of the status given to social and environmental benefit within new procurement arrangements. Do Social Enterprises account for their true impacts? Has the sector been slow?

Let’s try and untangle the confusion and the myths and see if social impact assessment can be done more simply whilst targeting the efforts of social businesses towards their identified strategic goals. Has the time come for governments to legislate and make triple bottom line accounting, the consideration of environment and social impacts alongside the annual requirement to produce financial returns? Registered businesses submit financial accounts for auditing, and then to Inland Revenue, each year since the dawn of time. Triple bottom line accounting, as it emboldens our drive towards a sustainable planet where business activity doesn’t deplete future resources, should certainly be a legislative requirement. For now a cherry pick option, based on strategic needs could pave the way ahead to gleaming many benefits in terms of financial bids and procurement as well as leading by example and hopefully changing the way all businesses operate.

Social Impact Assessment tools have been around for some time, so firstly, why should we look at this now? The British Council’s report, ‘Social Enterprise in the UK’, points out:

“Government, commissioners and investors are putting more emphasis on the evidence of outcomes across the sector. As a result, a growing number of social enterprises are being asked to quantify and demonstrate their value”

In Wales, ever since the Welsh Government commissioned a report on procurement in 2012, social and environmental benefits alongside the cost consideration when public services are put out to tender, has been gathering momentum among policy makers and commissioners alike. For the sector to take full advantage of current changes and to push for the biggest change in company law in decades, it would obviously be beneficial if it were well versed in all of the different Social Impact Assessment tools (SIA) available; how each one has a different function and what benefits could be achieved from them.

Firstly let’s look at some of the benefits of Triple Bottom Line accounting:

  • Tells the whole story of business performance
  • Gives a competitive advantage in a market where cutting costs constantly doesn’t necessarily work
  • Informs strategic development for the enterprise
  • Builds social capital with clients
  • Builds reputation and attracts partners and/or investors
  • Reports impact to funders with greater credibility
  • Motivates internal teams and increases awareness of the enterprise’s impact internally
  • Proves CSR, Public Benefit and Social Value obligations etc.
  • 2010 saw the launch of the Nat West SE100 (formerly RBS SE100). This provides a live platform for social enterprises to measure and report their own social impact. This platform ranks the 100 best performing social enterprises and awards an annual prize.
  • Also, launched by the New Economics Foundation alongside Groundwork is ‘Prove It’, a tool specifically for community regeneration projects.
  • ‘Outcomes Star’ is used to measure the progress made by vulnerable people over time
  • And the ‘New Philanthropy Capital Well-being Measure’ is an online tool focusing on the social benefit of an enterprise to young people.
  • The ‘deadweight’ percentage is deducted, e.g. the % of job seekers that would normally find work anyway within a set period is deducted
  • The ‘attribution’ percentage is deducted, i.e. an acknowledgement of the activity/impact of other complimentary services provided by other agencies in the same area of operation.

If the benefits are clear enough, which tools should businesses use use? The problem is, there are many, and that can initially be off putting. But is it really a problem? This might be the sector’s advantage if we all had a degree of fluency in what they’re for and can achieve. Most of the tools available have a slightly different function which we’ll address individually. The other consideration is that many of the tools are variations of three distinct types so let’s not get too overwhelmed. Let’s explore the three, but first there are others worthy of note.

None of these tools are mandatory, but neither is being good at winning contracts and funding; it’s up to enterprises themselves to prove all reaching benefit: and the ground has certainly been shifting.

Many organisations have found extremely innovative means of placing themselves strongly within the market and solving the capacity issue. Menna Jones of Antur Waunfawr, whose organisation produced a set of externally verified social accounts about eight years ago, reflected on their adopted SIA tool, which for them hasn’t proved too onerous,

“A full audit process, with the scope of delivery we have across multiple sites with different clients and services, would have been a big capacity issue for us. Recently we’ve teamed up with Bangor University’s Behavioural Change Department, who’ve conducted an ‘Impact Report’ for us alongside our team. Keeping the facts updated within later editions, which stakeholders to question and what to ask is something we’ve rehearsed; it’s a far more sustainable approach for our needs”

The Social Impact report model is interesting. Whilst it’s not a set of evidence externally verified by a Social Audit Chair; it is externally produced. A Medieval Welsh court poet paid to eulogise his Prince paymaster this is not. A partnership with the local University, academic scrutiny applied and the prestige that comes of having a valued author, is a big bonus when trying to demonstrate that the added value is real. Antur’s impact report is well designed with hyperlinked buttons leading the commissioner, grant provider, politician etc. towards vibrant examples of the social and environmental benefit that they might be specifically interested in.

Social Accounting: Understanding all of the tools shouldn’t just be about looking for the short cuts. Of course for some, their business structure and practices lend themselves perfectly to an annual or bi-annual social accounting process (one of the big three ‘types’ of SIA). For many, the systems of engaging stakeholders on an annual basis, which provide the essential pre-requisite to compiling a set of ‘social accounts’, already exist. Some simply do this as part of their core delivery. Others may have found their own resource-lite approach to Social Accounting by focusing upon just one area of their activity or by seeking the external verification of a verified Social Audit Chair, let’s say once every three years or at an interim stage in a grant cycle. It’s a myth that Social Accounting, or any other Social Impact tool for that matter, has to report on everything and has to do so every year.

Social Return on Investment: SROI focuses upon a financial/numerical assessment of performance, …put another way it’s a tool to arrive at a notional figure of money saved from a given budget e.g. local authority, health, prisons etc. as a result of the social business’s activities. SROI allows you to create £ for £ ratio, showing the numerical financial saving achieved, by e.g helping people into employment, for every £1 spent on the social business through any given grant or contract.

What this tool, and others show, is that there has been a process. Financial proxies to pin an achieved figure on social and environmental investment can be an extremely useful tool to engage procurement commissioners and start conversations with them. If for example we look at a job created, we could look at the unemployment benefit payments that would have been paid out had the job not been created. To give credibility to the figures, SROI does two things:

Openly and honestly showing a process demonstrates credibility, but let’s not forget these are starting points for discussion with funders and commissioners. There’s no new money here, just indicators of money saved. SROI draws attention to the process in a simple way. A single table in a single A4 sheet might fit certain circumstances.

“Where’s the voice of the people served?” is what Liz Allen, a Social Accounting advocate who works with the ‘Connectives’ says. The voice of the people will never be heard fully by means of conventional financial accounting alone. It’s time to move forward.

Local Multiplier 3 (LM3). The simple aim of LM3 is to track how effective our enterprises are in keeping money circulating in the community. It focuses on the financial impacts of local spending, looks at where money has leaked out in the past and assesses where money is spent whilst developing retention strategies. Social enterprise and local businesses have impact that continues beyond the purchasing of local goods and creating jobs in the community. Each time money changes hands within the community of operation there’s inevitable ‘leakage’. By assessing these processes it’s been found that money can be tracked as far as 3 rounds of spending, virtually tripling the £ impact of the enterprise. Whilst we might know that social enterprise are effective at circulating local wealth, by purchasing and employing locally, the majority will be unaware of that impact. LM3 drills down much further and could give a competitive advantage to the social economy.

Just understanding the basics of SIA tools means that social enterprises could adopt a Pick ‘n’ Mix approach tailored for their needs and from there be the standard bearers of change in the wider economy, across all sectors. These tools can sit alongside each other; perhaps using elements of a few approaches to make an individual case that shines and wins. Picking an inappropriate too will undoubtedly be a hindrance to time and resources. A degree of fluency in what’s available will hopefully pave the way for fundamental change.

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We hope to offer this in 2020. Sign our EOI today.

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