Social Accounting

Social Accounting is a broad term for a process that enables an organisation to systematically record those things it does that have an impact on society, to report that impact, and through counting them, improve their performance. Social accounts are in addition to the financial accounts and reports.

The purpose of this process is to maximise the positive impact on society by the organisation by improving its performance, together with its accountability, transparency, and sustainability.

Wikipedia has a page on Social Accounting which provides an overview of its many facets. Social accounting is mostly used by for-purpose organisations but is equally applicable to private businesses that wish to improve their positive impact on their community. Impact was described in the Double Bottom Line Project Report thus: ‘by impact we mean the portion of the total outcome that happened as a result of the activity of an organisation, above and beyond what would have happened anyway.’

One of the starting points for social accounting was a 1981 publication by Beechwood College in Leeds of a booklet by Freer Spreckley entitled Social Audit – A Management Tool for Co-operative Working. The 4th edition was published in 2008. This publication is also noted as the first recorded use of the term “social enterprise”.

The audit sought to “measure social performance in terms of benefit or loss to the working members, the local community and the wider community”. 

The idea of an audit was a parallel to the financial aspects, in that it was a confirmation that the system of activity and its measurement was working well.

But as with the financial side, an audit itself was not the objective, although it became the focus for some. An audit verifies that the accounts are correct and reflect the activity undertaken. The accounting is the measurement of the activity. The goal is to maximise the efficiency and efficacy of the organisation, that the work of the organisation it is done well with the least amount of resources, and that it has the desired impact.

The idea that community organisations should measure and account for their impact fed into calls for other sectors to do the same. Societal concerns with the structure, power, and excesses of large corporations, joined with a genuine desire of many in government and the corporate world to be accountable.

This led to the evolution of ideas such as triple bottom line (reporting on social and environment as well as financial), and corporate social responsibility. Accountability standards were developed using the approach of the quality standards. A range of templates and processes were developed by service providers each looking to capitalise on the opportunity.

Some organisations saw the opportunity of reputation protection and enhancement with reports meant to show the best of their impact rather than full and honest reporting. Some service providers saw the opportunity of the development of a social accounting industry with the focus of making money, rather than the development of client organisations. 

The tendency to promote practices, systems and processes where engaging an external consultant was the norm flowed to the middle sized organisations. In many cases, external resources were obligatory. For areas reliant on external funding, the needs of funders sometimes drove the response of the organisations they funded.

For some consultants, the drivers were the commercialisation of the product rather than serving the client organisation. This led to the creation of alternatives which did not address the needs of organisation development. Sometimes, the main outcome was a glossy report. Other issues arose, an example being confusing outputs with outcomes – a thousand interviews was seen as a success although everyone was still unemployed.

In this environment, small organisations are not well served.

Mercury has been at the forefront of putting the spotlight back on organisational development as the key objective of a measurement process.

We take the view that it is crucially important for a collaborative enterprise to have a governance system that works well. provides accountability and transparency, as well as supporting the sustainability and viability of the enterprise.

As well as traditional governance systems, Social Accounting provides a way of maximising the positive impact on society of an organisation by improving its performance, enabling engagement with its community, and providing a key point of differentiation in a sometimes crowded market place.

We have had many conversations in support of social accounting and will continue to do so. Three resources that may help you join that conversation are provided below.

Mercury Co-operative Director, Alan Greig provided an article to Pro Bon News which was published in December 2016.

The artilce examined the role that social accounting can play in re-building social capital.

The article can be found on the Pro Bono News site.

Mercury partnered with Social Audit Network Limited of the UK, the University of New England (UNE) and the City of Parramatta to deliver a webinar and learning event in May 2017.

The webinar will introduce you to the essentials of Social Accounting:
•   Proving the difference that your organisation is making
•   Improving your organisation’s operating and monitoring systems
•   Accounting for your organisation’s social impact and value

The webinar is available online on our PIA Webinar page.

Social Impact Measurement Toolbox

The Social Impact Measurement Toolbox  has been incorporated into a free on-line course designed for UTS students and available to all visitors.

Much of the course material has originated from that developed for social accounting internationally and focuses very much on broader aspects of organisational development rather than shorter-term ‘returns on investment’.

In conjunction with the webinar video above, this on-line course is a good start for researching and developing social accounting for smaller, social organisations using this social accounting framework.

We continue to converse with those who have an interest in the area of social accounting, while we consider how we might next add value.

If you are interested in being part of the conversation, or have a question or comment, please use the form below to make contact.

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